Author: Ali Sherief 2022-08-06 14:16:08
Published on: 2022-08-06T14:16:08+00:00
The idea presented is to trade replacement transactions for privacy. The proposal involves Alice, Bob, and Carol. Carol creates an API to manage trades that will use a 2-of-3 multisig. Alice and Bob create orders for replacement, which could be matched automatically using some algorithm or manually accepted by Bob. A 2-of-3 multisig is created with Alice, Bob, and Carol keys. Bob locks 0.01 BTC in it and shares outputs e2 and f2 with Alice. Alice signs tx2 and shares the transaction with Bob. Alice locks 0.011 BTC in it and shares outputs b2 and c2 with Bob. Bob signs tx2 and shares it with Alice. Both replacement txs can be broadcasted, and funds are released from 2 of 3 multisig with a tx having 3 outputs (one to pay fee which goes to Carol). However, it would probably only work out if each output got their own private keys, since otherwise, Alice can't share any outputs with Bob and vice versa. The whole thing sounds like an HTLC with an additional trading of private keys for the actual trades instead of in the HLTC. It is unclear how they are going to share their private keys securely, with PGP. Perhaps Taproot with its selective revealing of certain script branches can help here, but details are uncertain. While this method provides privacy, there are some negatives, including extra fees, time consumption, and the need to lock bitcoin with the same amount used in tx1. Additionally, amounts could still be used to link txs in some cases where Carol and other peers know the details.
Updated on: 2023-06-15T23:40:06.611520+00:00