Published on: 2016-08-10T08:37:37+00:00
A proposed design has been suggested to enhance the privacy of Bitcoin transactions. Unlike current methods such as CoinJoin, ring signatures, and Confidential Transactions, this proposal aims to hide the entire inputs and outputs by only publishing their hashes on the blockchain. The plaintext of inputs and outputs would be sent directly to the recipient via a private message.The main concept behind this design is to ensure that the entire inputs and outputs remain hidden while only their hashes are visible on the blockchain. To prevent double-spending, the payer also needs to publish another hash representing the output being spent. Each private payment must include a blinding factor for every output.To track the ownership of the private coin, each new owner must store its complete history. When spending the coin, the user forwards the entire history to the next owner and extends it with their own transaction. Merging coins is prohibited, but splitting them is allowed. However, to avoid excessive fragmentation, private coins must be issued in specific denominations.To issue the new private coins, regular BTC can be burned by sending it to unspendable bitcoin addresses assigned to each denomination. This burning process entitles the user to receive an equal amount of the new private coin, referred to as "black bitcoins" (BBC).After user A sends a private payment to user B, user A will know when the coin is spent by B through the spend proof. However, A will not have any knowledge about the new owner or subsequent movements of the coin. There may be concerns regarding larger outputs being split into smaller ones, potentially causing exchanges and large merchants to accumulate significant coin histories. However, using multiple addresses and storing small amounts on each address can help avoid privacy leakage.Overall, this proposed design offers increased privacy for Bitcoin transactions without requiring a hard or soft fork. It utilizes the same private keys and addresses for both BBC and the base currency BTC, allowing for seamless integration into the existing blockchain infrastructure. The author of the proposal is seeking feedback from the community but has not received any so far. The discussion continues on the bitcoin-dev mailing list, where contact information for Dr. Fabian Kopp, a member of the Institute of Distributed Systems at Ulm University in Germany, can be found.
Updated on: 2023-08-01T18:51:36.883189+00:00