Johns Hopkins University in the United States released a white paper: Anonymous off-chain lightweight transaction Bolt achieves highly private micropayments (full text download)

Can blockchain micropayments be performed quickly and privately in a decentralized environment?

Researchers from The Johns Hopkins University in the United States recently published a white paper on this issue (full text download at CoinWenKu), aiming to explore the anonymity of off-blockchain micropayment networks.

In this white paper, researchers Matthew Green and Ian Miers explore the privacy of micropayment channels and develop a new scheme for anonymous off-chain lightweight transactions (Bolt), which they believe can achieve private, instant and anonymous transactions.

With so much focus these days on the privacy of on-chain payments, off-chain solutions have received far less attention, despite projects like Bitcoin’s Lightning Network playing a vital role in promoting cryptocurrency adoption.

Miers said the white paper also draws on concepts from bitcoin anonymity project Zcash and the Zerocoin protocol.

The question is: can we successfully provide confidential transactions like the Lightning Network? This is the original intention of publishing this white paper.

The three biggest problems with cryptocurrencies

In Miers' view, cryptocurrencies face three major problems: scalability (whether it can handle more transactions), transaction confirmation time (Bitcoin takes 10 minutes, while Zcash takes 2.5 minutes), and transaction confidentiality.

Small payment channel networks, such as the Lightning Network or the Thunder Network, can only solve the first two problems. Instead of storing all transactions between users on the blockchain, they open payment channels to the outside world. Perhaps one day, you can handle transactions on the blockchain yourself by just opening a mobile app.

Supporters believe that this approach not only solves the block capacity problem and increases the number of transactions processed, but also completely eliminates the third party in the transaction.

As for the privacy issue, the content covered in the Zerocoin protocol is not comprehensive, and although Zcash covers this aspect more extensively, it announced a delay in its release last week.

Researchers say that although the above two anonymous projects can hide the information of the transaction parties when the transaction channel is opened and closed, they cannot hide the information of small payment channels.

The official blog of the Bolt project explains the seriousness of this problem: IOUs can actually form a unique identifier, which is similar to cookies (data stored on the user's local terminal) and can be used to track Alice (a user's name). People who intend to track transactions do not know the ownership of this identifier at first (Alice's identity information is still protected by the anonymous service), but they can easily obtain information such as web page visits and access patterns, because transactions in the payment channel (no matter how many) are connected together.

Researchers say that the number of web page visits and access patterns alone are enough for malicious people to learn users' personal information or other online activities.

Anonymization of the Lightning Network

Bolt primarily addresses privacy issues by untying the connections between transactions in a payment channel. Miers explained:

This allows you to complete transactions while still keeping your identity hidden.

Bolt uses two mature cryptographic techniques to anonymize IOUs: commitments (hiding transaction amounts) and blind signatures (transaction signatures will not be made public).

Bolt is primarily used for bidirectional payment channels, where parties can establish direct contact and update transactions in real time. However, Bolt currently faces a key problem: it is a one- hop network ^[1] and is therefore not as decentralized as developers would like.

Miers said that the risk of centralization in payment channels still exists, but the multi-hop ^[2] small payments provided by the Lightning Network are likely to fail.

If this were to happen, Bolt could step up to protect user information.

If the Lightning Network is actually launched, it will likely be in the hands of only a few people. It will eventually become a third-party institution that collects fees like Visa or MasterCard. Not only that, these people will also be able to access all transaction information.

Bolt is specifically used to hide transaction information.

The Future of Bolt

The researchers say Bolt can be used with any cryptocurrency as long as they natively support the necessary cryptographic architecture.

Bitcoin can use Bolt, but it must go through hash-based commitments and multi-party computation (MPC) to use ECDSA for anonymous signing.

However, Miers said Bolt would be more compatible with anonymous currencies such as Zcash. When using Bolt, the transactions in a micropayment channel are decoupled from each other, but this is different when you establish a transaction channel on the blockchain.

Overall, Miers believes that Bolt and micropayment channels can solve important problems facing Bitcoin and other cryptocurrencies.

In addition, the researchers said that a test version will be released soon. But it will take more time to actually use it in cryptocurrency.

Notes (↵ returns to text)

1. In a traditional wireless local area network (WLAN), each client accesses the network through a wireless link connected to an AP. If users want to communicate with each other, they must first access a fixed access point (AP). This network structure is called a single-hop network.

2. A "multi-hop network" is made up of nodes, including devices such as computers and mobile phones, that are all connected to each other wirelessly, and can then forward data across the network. Data hops from node to node until it reaches its destination. ↵