[bitcoin-dev] Question regarding Confidential Transactions

[bitcoin-dev] Question regarding Confidential Transactions

[Henning Kopp]

Hi all,

I am trying to fully grasp confidential transactions.

When a sender creates a confidential transaction and picks the blinding
values correctly, anyone can check that the transaction is valid. It
remains publically verifiable.
But how can the receiver of the transaction check which amount was
sent to him?
I think he needs to learn the blinding factor to reveal the commit
somehow off-chain. Am I correct with this assumption?
If yes, how does this work?

All the best
Henning

-- 
Henning Kopp
Institute of Distributed Systems
Ulm University, Germany

Office: O27 - 3402
Phone: +49 731 50-24138
Web: http://www.uni-ulm.de/in/vs/~kopp

Re: [bitcoin-dev] Question regarding Confidential Transactions

[Jeremy Papp]

My understanding of the paper is that the blinding factor would be 
included in the extra data which is incorporated into the ring 
signatures used in the range proof.

Although, since I think the range proof is optional for single output 
transactions (or at least, one output per transaction doesn't require a 
range proof since there's only one possible value that it can be to make 
the whole thing work, and that value must be in range, I'm not entirely 
sure how you'd transmit it then, though in any case, since using it will 
pretty much require segwit, adding extraneous data isn't much of a 
problem.  In both cases, I imagine the blinding factor would be 
protected from outside examination via some form of shared secret 
generation... Although that would require the sender to know the 
recipient's unhashed public key; I don't know of any shared secret 
schemes that will work on hashed keys.

Jeremy Papp

On 2/9/2016 7:12 AM, Henning Kopp via bitcoin-dev wrote:
> Hi all,
>
> I am trying to fully grasp confidential transactions.
>
> When a sender creates a confidential transaction and picks the blinding
> values correctly, anyone can check that the transaction is valid. It
> remains publically verifiable.
> But how can the receiver of the transaction check which amount was
> sent to him?
> I think he needs to learn the blinding factor to reveal the commit
> somehow off-chain. Am I correct with this assumption?
> If yes, how does this work?
>
> All the best
> Henning
>

Re: [bitcoin-dev] Question regarding Confidential Transactions

[Henning Kopp]

Hi Jeremy,

> My understanding of the paper is that the blinding factor would be included
> in the extra data which is incorporated into the ring signatures used in the
> range proof.

Yep, that is a possibility. The blinding factor could be encrypted
with the public key of the receiver. Thus it is only visible for the
receiver who can then check that the correct amount has been sent.

> Although, since I think the range proof is optional for single output
> transactions (or at least, one output per transaction doesn't require a
> range proof since there's only one possible value that it can be to make the
> whole thing work, and that value must be in range, I'm not entirely sure how

I understand and agree.

> you'd transmit it then, though in any case, since using it will pretty much
> require segwit, adding extraneous data isn't much of a problem.  In both
> cases, I imagine the blinding factor would be protected from outside
> examination via some form of shared secret generation... Although that would
> require the sender to know the recipient's unhashed public key; I don't know
> of any shared secret schemes that will work on hashed keys.

Here you lost me.
Why do we need to create a shared secret? Is this shared secret used
as the blinding factor?
Also I think the sender knows the unhashed public key of the receiver.
The only reason not to include it in the transaction script is that an
external observer is unable to see the receiver directly in the
blockchain.

Best
Henning


On Tue, Feb 09, 2016 at 04:12:37PM -0600, Jeremy Papp via bitcoin-dev wrote:
> My understanding of the paper is that the blinding factor would be included
> in the extra data which is incorporated into the ring signatures used in the
> range proof.
> 
> Although, since I think the range proof is optional for single output
> transactions (or at least, one output per transaction doesn't require a
> range proof since there's only one possible value that it can be to make the
> whole thing work, and that value must be in range, I'm not entirely sure how
> you'd transmit it then, though in any case, since using it will pretty much
> require segwit, adding extraneous data isn't much of a problem.  In both
> cases, I imagine the blinding factor would be protected from outside
> examination via some form of shared secret generation... Although that would
> require the sender to know the recipient's unhashed public key; I don't know
> of any shared secret schemes that will work on hashed keys.
> 
> Jeremy Papp
> 
> On 2/9/2016 7:12 AM, Henning Kopp via bitcoin-dev wrote:
> >Hi all,
> >
> >I am trying to fully grasp confidential transactions.
> >
> >When a sender creates a confidential transaction and picks the blinding
> >values correctly, anyone can check that the transaction is valid. It
> >remains publically verifiable.
> >But how can the receiver of the transaction check which amount was
> >sent to him?
> >I think he needs to learn the blinding factor to reveal the commit
> >somehow off-chain. Am I correct with this assumption?
> >If yes, how does this work?
> >
> >All the best
> >Henning
> >
> 
> _______________________________________________
> bitcoin-dev mailing list
> bitcoin-dev@lists.linuxfoundation.org
> https://lists.linuxfoundation.org/mailman/listinfo/bitcoin-dev
> 

-- 
Henning Kopp
Institute of Distributed Systems
Ulm University, Germany

Office: O27 - 3402
Phone: +49 731 50-24138
Web: http://www.uni-ulm.de/in/vs/~kopp

Re: [bitcoin-dev] Question regarding Confidential Transactions

[Jeremy Papp]

On 2/10/2016 5:53 AM, Henning Kopp wrote:
> Hi Jeremy,
>
>> My understanding of the paper is that the blinding factor would be included
>> in the extra data which is incorporated into the ring signatures used in the
>> range proof.
> Yep, that is a possibility. The blinding factor could be encrypted
> with the public key of the receiver. Thus it is only visible for the
> receiver who can then check that the correct amount has been sent.
ECC doesn't work like RSA; you can't encrypt directly with a public 
key.  That's why you generate a shared secret between sender and 
receiver.  See also, ECDH. (Basically, if (m, M = m*G) is your 
private/public key pair, and (n, N = n*G) is your recipient's private 
public key pair, you can both generate shared secret S = m*N = n*M = 
m*n*G without revealing your private keys to each other, and without 
revealing the secret to anyone else as long as they don't know either 
private key. You then use S as the basis for the key to some symmetric 
algorithm.)
>> you'd transmit it then, though in any case, since using it will pretty much
>> require segwit, adding extraneous data isn't much of a problem.  In both
>> cases, I imagine the blinding factor would be protected from outside
>> examination via some form of shared secret generation... Although that would
>> require the sender to know the recipient's unhashed public key; I don't know
>> of any shared secret schemes that will work on hashed keys.
> Here you lost me.
> Why do we need to create a shared secret? Is this shared secret used
> as the blinding factor?
> Also I think the sender knows the unhashed public key of the receiver.
> The only reason not to include it in the transaction script is that an
> external observer is unable to see the receiver directly in the
> blockchain.
Normal Bitcoin transactions are made to the hash of a public key because 
once the public key is known, it becomes easier to break it if we ever 
develop quantum computers. That's why it's recommended that you only 
spend from a particular address once (if possible) since its only in 
spending that you are required to reveal your public key.   Since you 
can't do a shared secret with a public key hash, AFAIK, you'd have to 
know the public key of your recipient to be able to do ECDH.

Jeremy Papp

Re: [bitcoin-dev] Question regarding Confidential Transactions

[Adam Gibson]

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Hash: SHA1

In case it helps:
The elements alpha sidechain uses a different address format, which
includes an ECDH pubkey used for creating an ECDH shared secret.
That shared secret is used to seed a RFC6979 prng, which allows both
sides to generate the blinding factors used in the rangeproof.

So the situation is: both sides can generate the blinding factors, but
also the fake signatures used in the rangeproof (the basic idea there
is to have N signatures in a ring, but only one of them real; the rest
are forged and can be (must be) entirely random numbers. I say 'basic'
because the Borromean sig design is to link together several rings,
not just one). This allows the sender to embed the amount into one of
those fake signatures (usually the last one) using xor, with certain
formatting details.

It would be possible to not bother to embed the amount in this way;
the receiver, knowing the stream of fake/real signatures (again -
because he knows the seed for the prng), could simply observe which
ones are real and therefore know the digits of the amount. But if he
did it this way, it would not be possible to embed any other data into
the range proof (such as: auditing related information) using xor as
above.

I did some detailed explanation/investigation of this in sections 3.3
and 3.4 of
https://github.com/AdamISZ/ConfidentialTransactionsDoc/blob/master/essayonCT.pdf
; with apologies for any errors, it was just an investigation I did
last summer.


On 02/10/2016 06:39 PM, Jeremy Papp via bitcoin-dev wrote:
> On 2/10/2016 5:53 AM, Henning Kopp wrote:
>> Hi Jeremy,
>> 
>>> My understanding of the paper is that the blinding factor would
>>> be included in the extra data which is incorporated into the
>>> ring signatures used in the range proof.
>> Yep, that is a possibility. The blinding factor could be
>> encrypted with the public key of the receiver. Thus it is only
>> visible for the receiver who can then check that the correct
>> amount has been sent.
> ECC doesn't work like RSA; you can't encrypt directly with a
> public key.  That's why you generate a shared secret between sender
> and receiver.  See also, ECDH. (Basically, if (m, M = m*G) is your 
> private/public key pair, and (n, N = n*G) is your recipient's
> private public key pair, you can both generate shared secret S =
> m*N = n*M = m*n*G without revealing your private keys to each
> other, and without revealing the secret to anyone else as long as
> they don't know either private key. You then use S as the basis for
> the key to some symmetric algorithm.)
>>> you'd transmit it then, though in any case, since using it
>>> will pretty much require segwit, adding extraneous data isn't
>>> much of a problem.  In both cases, I imagine the blinding
>>> factor would be protected from outside examination via some
>>> form of shared secret generation... Although that would require
>>> the sender to know the recipient's unhashed public key; I don't
>>> know of any shared secret schemes that will work on hashed
>>> keys.
>> Here you lost me. Why do we need to create a shared secret? Is
>> this shared secret used as the blinding factor? Also I think the
>> sender knows the unhashed public key of the receiver. The only
>> reason not to include it in the transaction script is that an 
>> external observer is unable to see the receiver directly in the 
>> blockchain.
> Normal Bitcoin transactions are made to the hash of a public key
> because once the public key is known, it becomes easier to break it
> if we ever develop quantum computers. That's why it's recommended
> that you only spend from a particular address once (if possible)
> since its only in spending that you are required to reveal your
> public key.   Since you can't do a shared secret with a public key
> hash, AFAIK, you'd have to know the public key of your recipient to
> be able to do ECDH.
> 
> Jeremy Papp _______________________________________________ 
> bitcoin-dev mailing list bitcoin-dev@lists.linuxfoundation.org 
> https://lists.linuxfoundation.org/mailman/listinfo/bitcoin-dev
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