Blockchain Privacy Through Merge Avoidance and Mixing Services

Abstract

Cryptocurrencies typically aim at preserving the privacy of their users. Different cryptocurrencies preserve privacy at various levels, some of them requiring users to rely on strategies to raise the privacy level to their needs. Among those strategies, we focus on two of them: merge avoidance and mixing services. Such strategies may be adopted on top of virtually any blockchain-based cryptocurrency. In this paper, we show that whereas optimal merge avoidance leads to an NP-hard optimization problem, incentive-compatible mixing services are subject to a certain class of impossibility results. Together, our results contribute to the body of work on fundamental limits of privacy mechanisms in blockchainbased cryptocurrencies.

Bringing Privacy, Security and Performance to the Internet of Things Through Usage Control and Blockchains

“…For the same reason, mixing is more efficient as the nodes involved in the mixing service do not have to pay for the transactions. Indeed, if IOTA nodes were encouraged to participate for money, decentralised mixing services would become vulnerable to edge insertion attacks [26] where nodes can claim undue rewards. Therefore, our framework uses a decentralised mixer to remove the threat of linkage and re-identification, and without introducing the edge insertion issue.…”

Crypto Currency Regulation and Law Enforcement Perspectives

“…The main point is that privacy is temporary, and can be disappear if additional future events take place, or if additional countermeasures against anonymity are in place, or if additional data are collected and appropriate actions are taken by certain entities. When some academics are trying very hard to enhance anonymity [4], others are wiser showing that privacy is impossible to achieve in general [35]. We need to get the basic facts right.…”

“…In particular problems at operation due to human factors cf. [52], [54] and unexpected additional events which are deliberately engineered [35]. A mix of cryptography and secure hardware devices with anti-cloning protections is nevertheless an undeniable helper at the heart of our "Chip and Pin" bank cards and today's bitcoin wallets.…”

“…We have a broad spectrum of "privacy enhancing technologies" and a lot of innovation such as Zero-Knowledge proofs, all of which however are in fact imperfect. Yet privacy is potentially impossible to achieve in general [35]. All we need is to apply current law enforcement and AML rules [41].…”

“…Cybersecurity is in general an endless game between attackers and defenders, and even if cryptography makes unbreakable locks, so that bitcoins cannot be altered or stolen even by very powerful entities, modern cryptography is yet weak and poorly suited to solve or address our privacy preoccupations. In fact potentially no technology can solve these problems in a satisfactory way [35]. The law enforcement and security services simply need to adapt and pay more attention to technology (and cryptography), which works on both sides, helping attackers and defenders alike.…”