Published on: 2019-12-20T17:01:50+00:00
In a recent discussion on the Lightning-dev mailing list, a proposal was made to modify the current 2-of-2 closing outputs in the Lightning Network to increase privacy. Currently, these outputs stand out as most people use either 1-of-1 or 2-of-3 outputs. One suggestion is to make the 2-of-2 outputs indistinguishable from 2-of-3 outputs by negotiating a random third public key with a nonexistent private key.However, this approach would result in a revealed script with three public keys instead of two. It is suggested that the upcoming BIP-Schnorr, with improvements in verifiable secret splitting, may allow for MuSig 2-of-2 to be indistinguishable from 2-of-3. To achieve this, a standardized NUMS point could be used, and both participants' one-time points would be added to that point. Precommit hashes of those points would be provided, and the sum of the standard NUMS plus their random points would be generated.The discussion also highlights potential security risks, such as the possibility of an entropy exhaustion attack on negotiation. However, it is suggested that this could potentially be prevented.Another topic of discussion is using Lightning Network channel closure transactions to block chain analysis software from tracing transactions. The idea is that if a compliant exchange address or gambling site address is found during tracing, the software would stop. It is proposed that an LN channel closure transaction could serve as an exit gateway from another world, preventing further analysis. This could potentially be used to fake LN-like transactions and obstruct analysis. A possible scenario is outlined, involving a channel funding transaction, a reasonable delay, and a channel closure transaction with an amount split.Advantages of this strategy over using actual LN include no liquidity problems, no data exchange with public nodes, and simplicity. However, it is noted that this assumes the use of LN itself is not blacklisted by surveillance companies. The discussion raises the question of whether this strategy would make sense and whether anything is missing from the proposed plan.
Updated on: 2023-07-31T22:29:34.180525+00:00