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OK, you and I exchanging coins do not know about each other's wallets or even the origin & destination of our transaction. This anonymity depends on encryption

by toss1 6y ago

OK, you and I exchanging coins do not know about each other's wallets or even the origin & destination of our transaction. This anonymity depends on encryption to hide the wallets & transaction, and decryption to verify it, and for the receiver to be able to use the funds in the future. So, who/what controls those keys? Seems they've just exchanged an open ledger problem for a key management problem - why is this not the case?

knuthsat 6y ago
The keys are yours. The maths is here https://elementsproject.org/features/confidential-transactions/investigation https://elementsproject.org/features/confidential-transactio... The key insight is that you design a cryptographic algorithm that will preserve addition between amounts, even when encrypted but you need to also provide some encrypted data that will allow an independent verifier to validate the whole transaction. The problem is more nuanced because you need to guarantee that coins aren't produced from thin air. The problem of the approach in the linked article is that proofs are large. To support encrypted verification (there is no need to decrypt anything in any step of the process) you need thousands of bytes for verifying a 32-bit amount. Bulletproofs reduced the proof size significantly. There are then additional approaches like MimbleWimble where the proofs on the ledger can be discarded to make it even smaller.
- lottin 6y ago
  To be honest, I don't see any maths. I see a document titled "investigation" which contains a bibliography consisting of a single forum post from 2013 by someone named Adam, and then the author goes on saying that he has invented some maths that allegedly would allow confidential transactions. Forgive me if I'm a bit sceptical... better wait until some experts review this material.
  - knuthsat 6y ago
    https://crypto.stanford.edu/bulletproofs/ https://crypto.stanford.edu/bulletproofs/ Start reading this paper above then, it goes from the simplest form to data optimized form.

by toss1 6y ago

knuthsat 6y ago

The keys are yours. The maths is here https://elementsproject.org/features/confidential-transactions/investigation https://elementsproject.org/features/confidential-transactio... The key insight is that you design a cryptographic algorithm that will preserve addition between amounts, even when encrypted but you need to also provide some encrypted data that will allow an independent verifier to validate the whole transaction. The problem is more nuanced because you need to guarantee that coins aren't produced from thin air. The problem of the approach in the linked article is that proofs are large. To support encrypted verification (there is no need to decrypt anything in any step of the process) you need thousands of bytes for verifying a 32-bit amount. Bulletproofs reduced the proof size significantly. There are then additional approaches like MimbleWimble where the proofs on the ledger can be discarded to make it even smaller.

lottin 6y ago
To be honest, I don't see any maths. I see a document titled "investigation" which contains a bibliography consisting of a single forum post from 2013 by someone named Adam, and then the author goes on saying that he has invented some maths that allegedly would allow confidential transactions. Forgive me if I'm a bit sceptical... better wait until some experts review this material.
- knuthsat 6y ago
  https://crypto.stanford.edu/bulletproofs/ https://crypto.stanford.edu/bulletproofs/ Start reading this paper above then, it goes from the simplest form to data optimized form.