Re: [bitcoin-dev] Taproot: Privacy preserving switchable scripting

[ZmnSCPxj <ZmnSCPxj@protonmail.com>]

Good morning Greg,

I am probably being exceedingly naive, but I would like to compare Taproot to a generalization of funding transactions.

For instance, CoinSwapCS:

1.  It uses an HTLC in an off-chain transaction, and a funding transaction TX0 whose output is a "simple" 2-of-2.
2.  The HTLC tx spends this 2-of-2.
3.  If a branch of the HTLC succeeds, the parties contact each other and create a replacement of the (unconfirmed and unbroadcasted but signed) HTLC tx that assigns the funds to the correct owners.
4.  If the above step fails, individual parties can in isolation publish the HTLC tx and provide its requirements.

Both of #3 and #4 above, appear to me naively as similar to the two "top" cases of Taproot, i.e. either C is signed by all parties, or S is revealed and fulfilled.

The important bits of this "generalized funding transaction" pattern is:

1. The contract that enforces correct behavior spends an unsigned and unbroadcasted funding transaction output (which requires N-of-N).
2. The enforcement contract is signed first by all parties before the funding transaction is signed by anybody.  This is possible due to SegWit.
3.  Then, when all parties are sure they have the fully-signed smart contract, the initial funding transaction is signed and broadcast and confirmed.
4.  When the condition that the contract requires is achieved, then the parties contact each other and try to jointly create a simpler transaction that spends the funding transaction directly to whoever gets the money in the correct proportion.  This avoids publishing the smart contract onchain, and looks like an ordinary N-of-N spend.
5.  If they fail to get all required signatures for any reason, any party can publish the enforcement contract transaction and subsequently fulfill its conditions in another transaction.

Admittedly, Taproot if added to the consensus would reduce the number of transactions by 1 in the "S is revealed" case.
But the "generalized funding transaction" pattern is already possible today, and MuSig (to my limited understanding) can be used to make it indistinguishable from 1-of-1 (so, possibly, make it P2WPKH?).


(I am probably neglecting something very simple and direct, however...)

Regards,
ZmnSCPxj

-------- Original Message --------
 On January 23, 2018 8:30 AM, Gregory Maxwell via bitcoin-dev <bitcoin-dev@lists.linuxfoundation.org> wrote:

>Interest in merkelized scriptPubKeys (e.g. MAST) is driven by two main
> areas: efficiency and privacy. Efficiency because unexecuted forks of
> a script can avoid ever hitting the chain, and privacy because hiding
> unexecuted code leaves scripts indistinguishable to the extent that
> their only differences are in the unexecuted parts.
>
> As Mark Friedenbach and others have pointed out before it is almost
> always the case that interesting scripts have a logical top level
> branch which allows satisfaction of the contract with nothing other
> than a signature by all parties.  Other branches would only be used
> where some participant is failing to cooperate. More strongly stated,
> I believe that any contract with a fixed finite participant set
> upfront can be and should be represented as an OR between an N-of-N
> and whatever more complex contract you might want to represent.
>
> One point that comes up while talking about merkelized scripts is can
> we go about making fancier contract use cases as indistinguishable as
> possible from the most common and boring payments. Otherwise, if the
> anonymity set of fancy usage is only other fancy usage it may not be
> very large in practice. One suggestion has been that ordinary
> checksig-only scripts should include a dummy branch for the rest of
> the tree (e.g. a random value hash), making it look like there are
> potentially alternative rules when there aren't really.  The negative
> side of this is an additional 32-byte overhead for the overwhelmingly
> common case which doesn't need it.  I think the privacy gains are
> worth doing such a thing, but different people reason differently
> about these trade-offs.
>
> It turns out, however, that there is no need to make a trade-off.  The
> special case of a top level "threshold-signature OR
> arbitrary-conditions" can be made indistinguishable from a normal
> one-party signature, with no overhead at all, with a special
> delegating CHECKSIG which I call Taproot.
>
> Let's say we want to create a coin that can be redeemed by either
> Alice && Bob   or by CSV-timelock && Bob.
>
> Alice has public A, Bob has pubkey B.
>
> We compute the 2-of-2 aggregate key C = A + B.  (Simplified; to
> protect against rogue key attacks you may want to use the MuSig key
> aggregation function [1])
>
> We form our timelock script S =  "<timeout> OP_CSV OP_DROP B OP_CHECKSIGVERIFY"
>
> Now we tweak C to produce P which is the key we'll publish: P = C + H(C||S)G.
>
> (This is the attack hardened pay-to-contract construction described in [2])
>
> Then we pay to a scriptPubKey of [Taproot supporting version] [EC point P].
>
> Now Alice and Bob-- assuming they are both online and agree about the
> resolution of their contract-- can jointly form a 2 of 2 signature for
> P, and spend as if it were a payment to a single party (one of them
> just needs to add H(C||S) to their private key).
>
> Alternatively, the Taproot consensus rules would allow this script to
> be satisfied by someone who provides the network with C (the original
> combined pubkey), S, and does whatever S requires-- e.g. passes the
> CSV check and provides Bob's signature. With this information the
> network can verify that C + H(C||S) == P.
>
> So in the all-sign case there is zero overhead; and no one can tell
> that the contract alternative exists. In the alternative redemption
> branch the only overhead is revealing the original combined pubkey
> and, of course, the existence of the contract is made public.
>
> This composes just fine with whatever other merkelized script system
> we might care to use, as the S can be whatever kind of data we want,
> including the root of some tree.
>
> My example shows 2-of-2 but it works the same for any number of
> participants (and with setup interaction any threshold of
> participants, so long as you don't mind an inability to tell which
> members signed off).
>
> The verification computational complexity of signature path is
> obviously the same as any other plain signature (since its
> indistinguishable). Verification of the branch redemption requires a
> hash and a multiplication with a constant point which is strictly more
> efficient than a signature verification and could be efficiently fused
> into batch signature validation.
>
> The nearest competitor to this idea that I can come up with would
> supporting a simple delegation where the output can be spent by the
> named key, or a spending transaction could provide a script along with
> a signature of that script by the named key, delegating control to the
> signed script. Before paying into that escrow Alice/Bob would
> construct this signature. This idea is equally efficient in the common
> case, but larger and slower to verify in the alternative spend case.
> Setting up the signature requires additional interaction between
> participants and the resulting signature must be durably stored and
> couldn't just be recomputed using single-party information.
>
> I believe this construction will allow the largest possible anonymity
> set for fixed party smart contracts by making them look like the
> simplest possible payments. It accomplishes this without any overhead
> in the common case, invoking any sketchy or impractical techniques,
> requiring extra rounds of interaction between contract participants,
> and without requiring the durable storage of other data.
>
>
> [1] https://eprint.iacr.org/2018/068
> [2] https://blockstream.com/sidechains.pdf Appendix A
>
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