Abstract
As transaction records are public and unencrypted, Bitcoin transactions are not anonymous and the privacy of users can be compromised. This paper has explored several methods of making Bitcoin transactions anonymous, and Zerocoin, a protocol that anonymises transactions based on Non-Interactive Zero-Knowledge proofs, is identified as a promising option. Although theoretically sound, the Zerocoin research has two shortcomings: (1) Zerocoin transactions are vastly inefficient compared to Bitcoin transactions in terms of verification time and size; and (2) despite this inefficiency, the protocol has not been tested in an actual Bitcoin network to validate its practicality. This paper addresses these two problems by first making performance improvements to the Accumulator Proof of Knowledge (AccPoK) and Serial Number Signature of Knowledge (SNSoK) in the Zerocoin protocol, and then integrating both the original and improved protocol into the Bitcoin client software to evaluate their performances in a Bitcoin network. Results show that the improved Zerocoin protocol reduces the verification time and size of the SNSoK by 80 and 60 times, respectively, and reduces the size of the AccPoK by 25%. These translate to a 3.41 to 6.45 times reduction in transaction latency and a 2.5 times reduction in block latency in the Bitcoin network. Thus, with the improved Zerocoin protocol, anonymising Bitcoin transactions has become more practical.
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Notes
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Values are obtained by running libzerocoin.
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A proof-of-work puzzle involves adjusting the nonce field in a block until the hash of the block is under a certain value. Currently, this value of set to a level such that only specialized hardware can solve the puzzle in a cost effective manner.
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A coinbase transaction is a special transaction in a block that pays the block reward and mining fees to the miner. The block reward is fixed for all blocks at a given point of time while the mining fees are collectively paid by all the other transactions in the block. Block reward and mining fees serve as incentives for miners to invest resources to mine blocks.
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Estimated for a block containing all Zerocoin Spend transactions under the original Zerocoin protocol. From the microbenchmarks results, each of such transaction takes about 300ms to verify. Since block verification mainly involves verifying the transactions in the block, the maximum time taken to verify a block containing 15 transactions is estimated to be less than 5Â s.
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Paul, J., Xu, Q., Fei, S., Veeravalli, B., Aung, K.M.M. (2019). Practically Realisable Anonymisation of Bitcoin Transactions with Improved Efficiency of the Zerocoin Protocol. In: Arai, K., Kapoor, S., Bhatia, R. (eds) Advances in Information and Communication Networks. FICC 2018. Advances in Intelligent Systems and Computing, vol 887. Springer, Cham. https://doi.org/10.1007/978-3-030-03405-4_8
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