Increasing Anonymity in Bitcoin

Abstract

Bitcoin is a peer-to-peer cryptocurrency that prevents double spending using a distributed public ledger (known as the blockchain). Due to this, true anonymity is not present in Bitcoin because funds can be traced as they pass via different addresses. It is sometimes possible to link various addresses and obtain information not apparent in the beginning (such as loops). We present a method to enhance the anonymity of Bitcoin-type cryptocurrencies. Our method uses a new primitive known as one-way aggregate signature (OWAS). The anonymity in our scheme is based on the hardness of the computation Diffie-Hellman assumption in bilinear maps and the knapsack problem. At a high level, the idea is based on 'mixing' funds and can be summarized as follows. In the blockchain, each individual block holds a list of transactions that cryptographically link the sending and receiving addresses. We modify the protocol so that transactions (and blocks) do not contain any links between sending and receiving address. Using this, we obtain a far higher degree of anonymity than what is currently offered. We use two techniques to unlink the input and output addresses of a transaction-using OWAS and applying the knapsack problem to further obfuscate the funds going in and out.

Where Is Current Research on Blockchain Technology?—A Systematic Review

“…The test results showed that linking the input and output transactions was possible in 1 out of 3 tested services. Other than mixing techniques, Saxena et al [28] suggest use of composite signatures to prevent linking between sending and receiving addresses.…”

Identifying the vulnerabilities of bitcoin anonymous mechanism based on address clustering

“…The input address of a transaction is derived from the output of the previous transaction, which is used as the input of other transactions, as depicted in Figure 1(a). However, there are some defects in the anonymity of blockchain addresses that allow the attackers to infer the relation between the addresses and the actual identity of a user [15][16][17]. There are three common defects.…”

Proof-of-Prestige: A Useful Work Reward System for Unverifiable Tasks

“…For Progressive Mining (Section III-D), acknowledgments are composite signatures [18]. Each node in the DAG branch composes its signature with the initial signature generated by the DAG root, forming a composite signature that contains the signature of each node involved in the task.…”