Author: Adam Gibson 2019-08-02 14:24:11
Published on: 2019-08-02T14:24:11+00:00
JoinMarket, a market for coinjoins, is vulnerable to sybil attacks, which can be made expensive by using fidelity bonds. A paper from 2016 calculated the cost of such an attack to be $32,000, but since then, JoinMarket has improved and more makers have joined, so the true requirement is perhaps two or three times higher today.Sybil attacks are solved by making them expensive, and fidelity bonds can achieve this goal. Bitcoins can be sacrificed with burner outputs and time-locked addresses to make a cryptographic identity expensive to obtain. Makers would sacrifice bitcoins and publish a proof along with their coinjoin offers, and takers would choose offers based on the sacrificed amount, knowing that a sybil attacker would also have to sacrifice a certain amount of coins in order to unmix the taker's coinjoins.The value of a fidelity bond made by sending V bitcoins to a burner address is V^2, while the value of a fidelity bond made by locking up V bitcoins in a time-locked address for time period T is V^2 (exp(rT) - 1)^2.JoinMarket's proposed use of fidelity bonds aims to improve privacy in CoinJoin transactions. Fidelity bonds require makers to lock up a certain amount of bitcoin for a period of time, serving as collateral to ensure their participation in the transaction process. This system increases the cost of sybil attacks, making it more difficult for an attacker to take over the network.The income generated by makers from higher valued fidelity bonds will come from takers' coinjoin fees, which may be higher depending on the level of privacy desired. JoinMarket's wallet could also create time-locked addresses, which can be held offline but still used to prove ownership of an IRC nickname. Links and references related to the proposal are provided.
Updated on: 2023-06-13T20:20:46.365112+00:00