Bulletproofs: The Latest Technique to Improve Bitcoin’s Confidentiality

Amazing schemes and technological innovations are being tried and implemented to continuously enhance Bitcoin’s scalability, fungibility, financial confidentiality, and privacy. The Confidential Transactions (CT) tool is one of these schemes proposed to improve security and privacy. Now, to enhance CT capabilities, researchers are introducing a new efficient zero-knowledge proof protocol called Bulletproofs.

Bulletproofs To Improve Bitcoin Confidentiality

A team of researchers has recently put forward a paper entitled “Bulletproofs: Short Proofs for Confidential Transactions and More.” In it, the team proposes:

[Bulletproofs are] a new non-interactive zero-knowledge proof protocol with very short proofs and without a trusted setup; the proof size is only logarithmic in the witness size.

A blog post about #Bulletproofs, their performance, applications, and history by Andrew Poelstra (cc @benediktbuenz): https://t.co/gAYHCtE763

— Pieter Wuille (@pwuille) February 22, 2018

According to the researchers, privacy for payments mostly depends on two properties: (1) anonymity: hiding the identities of sender and receiver in a transaction and (2) confidentiality: hiding the amount transferred.

However, researchers say, Bitcoin offers fragile anonymity because anonymity is provided through the unlinkability of Bitcoin addresses. Sending bitcoins to someone reveals the sender’s identity through the reuse of addresses.

Therefore, to improve the confidentiality of transaction amounts, Gregory Maxwell, building on Adam Back’s work, introduced the Confidential Transactions (CT) tool.

Confidential Transactions Keeps the Amounts Transferred Private

CT hides every transaction amount from public view by using a commitment to the amount. That is, instead of writing the amount involved in the transaction, CT writes a hash of this amount.

Specifically, CT is a cryptographic tool that enhances the security and privacy of Bitcoin-related transactions, by preserving security while at the same time masking these transactions. CT keeps the amounts transferred private. According to The Elements Project:

[CT] keeps the amounts transferred visible only to participants in the transaction (and those they designate), while still guaranteeing that no more coins can be spent than are available in a cryptographic way.

However, researchers point out that CT seems to inhibit public validation of the blockchain. Therefore, to overcome this weakness, a zero-knowledge proof of validity should be included in each transaction. However, this method would require a trusted set up. To overcome this issue, researchers propose:

We present Bulletproofs, a new zero-knowledge argument of knowledge system, to prove that a secret committed value lies in a given interval. Bulletproofs do not require a trusted setup. They rely only on the discrete logarithm assumption, and are made non-interactive using the Fiat-Shamir heuristic.

A zero-knowledge proof is a technique by which one party (the prover) can prove to another party (the verifier) that she knows a value x, without conveying any information apart from the fact that she knows the value x.

The proponents of the Bulletproofs method are Benedikt Bunz, Jonathan Bootle, Dan Boneh, Andrew Poelstra, Pieter Wuille, and Greg Maxwell.

It is exciting to see that new schemes and technologies to improve Bitcoin’s features are continuously streaming into the crypto-space. Bitcoin and cryptocurrency enthusiasts welcome the advent of CT and Bulletproofs. After a proper review, enthusiasts hope that these technologies can be implemented successfully and soon.

How do you think the Bulletproofs technique will impact Bitcoin transaction fees and speeds? Let us know in the comments below.

Images courtesy of Pixabay, Video from The Bitcoin Foundation

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