A brief introduction to cryptography in blockchainHistoryPeople in the cryptocurrency space often throw around the abbreviation ‘crypto’ when they mean cryptocurrencies. However, before cryptocurrencies were a thing, ‘crypto’ used to mean ‘cryptography’ — the practice and study of techniques for secure communication in the presence of, potentially malicious, third parties[1]. Cryptography in this sense has existed since mankind sought a way to communicate between allies without a potential third party being able to decipher what was being communicated.
Up until the invention of the internet, this was the main use case of cryptography. However, since the early days of the internet, people have started thinking of ways to decentralize ‘money’ and how to create a financial system which is beyond control of governments or central banks. But in order to convince the masses that such a radical system could be trusted and that it was in fact secure, this needed to be proved first. Thus, a cryptographic solution was sought. Because even though what would be communicated would not be a message in the strictest definition of the word, the communication, or transfer of value in this case, needs to be as secure as possible.
Multiple different ‘solutions’ were proposed: such as hashcash, which was developed by Adam Back; b-money, which was developed by Wei Dai; and Bit Gold, developed by Nick Szabo. These proposals had one or two things in common; they were based around a proof-of-work consensus mechanism and they had a limited supply. Especially the latter part was deemed to be important in order to gain widespread trust, and potentially adoption. Because how many people would trust a radical financial system invented by a random person, who, at any point in time, could inflate this monetary system to infinity? Many iterations were created, but it wasn’t until Satoshi Nakamoto came along that this idea started to grow some legs.
On the 31st of October, 2008, a link to a paper authored by Satoshi Nakamoto titled “Bitcoin: A Peer-to-Peer Electronic Cash System” was posted to a cryptography mailing list. This (white)paper discussed and proposed how to create a peer-to-peer network and generate a trust-less electronic cash system. On the 3rd of January, 2009, the Bitcoin network came into existence with Satoshi Nakamoto mining the so-called genesis block of the Bitcoin blockchain. [Contrary to what many people think, Satoshi Nakamoto did not coin the term ‘blockchain’ to refer to this system; Satoshi Nakamoto referred to this system as a ‘proof-of-work chain’, as it was secured by a proof-of-work consensus mechanism.] Satoshi Nakamoto realized early on that a central point of authority (or failure in this case) would hinder the progress and adoption of such a radical new system. This is why Satoshi Nakamoto left the Bitcoin [project] in 2011, and the name ‘Satoshi Nakamoto’ itself is just a pseudonym.
So whilst Satoshi Nakamoto is shrouded in mystery, blockchain technology is not. On the contrary, a blockchain is “an [immutable] digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value”[2]. These transactions are put into ‘blocks’, where new blocks are linked to previous blocks thereby forming what we call a ‘block-chain’. Transactions that take place on the Bitcoin blockchain are fully transparent and can be viewed by anyone who wish to do so.
Challenges & Advancements in CryptographyBlockchains ‘solve’ the cryptographic ‘problem’ of communication without possible third-party intervention and removes the need for intermediaries. Set up in a decentralized fashion, a blockchain allows you to: buy and sell without a bank, bet without a bookie, get a loan without an underwriter, create an identity without a government and verify records without a notary.
It is important to make a distinction here between centralized and decentralized blockchains. Blockchains, especially private (and often centralized) blockchains, continue to gain significant interest from corporations across the world. However, despite this growing interest in private blockchains, we are not convinced that these are all that they are promised to be. A centralized (private) blockchain is often just a slow, impractical, inefficient database. In our opinion true innovation lies with blockchains which are not only decentralized (like the Bitcoin blockchain) but also open-source, permission-less, trust-less, and featuring a fungible currency.
However, whilst blockchains are extremely secure, there is another challenge that comes with it: transparency, which is both a blessing and a curse. Blockchains, like the Bitcoin blockchain for example, are fully transparent where anyone can see all the details of the transactions which are being made. Sending addresses, receiving addresses and amounts are all publicly available. Which is why in the past some Bitcoin have been blacklisted due to their less than dubious origins in the eyes of authorities. This is also a reason why freshly minted Bitcoin, with little transaction history, have a higher asking price on the black market compared to ‘regular’ Bitcoin. In our eyes this is a deficiency, as it proves that Bitcoins themselves are not fungible, i.e. they are not interchangeable between one another, the way (fiat) cash is.
In order to mitigate this challenge, the Dusk blockchain will make use of various anonymity and privacy features in order to provide a private, yet fully auditable, blockchain. We believe that transparency and privacy are a trade-off, and that there should be flexibility. With the Dusk Network we aim to provide the best trade-off between transparency and privacy.
Dusk Network will make use of a whole stack of different technologies and mechanisms to boost privacy on both the application and networking layer. For a full, technical, explanation of these various mechanisms we invite you to consult our
whitepaper.
Stealth addressesInspired by the CryptoNote white paper, stealth addresses are the basis of Dusk recipient hiding technique. It is the proven choice for concealing the true recipient address of a transaction while keeping uniqueness within the context of the ledger. This means that no other address can be linked to a stealth address. Additionally, the creation of an unbound number of receiving addresses is also possible without any of them allowing traceability back to the recipient’s address. Effectively, stealth addresses are as secure as using a creating a different wallet for every single receiving transactions so that it becomes impossible to link the transactions to each other.
Ring Signature Confidential Transactions (RingCTs) and Bulletproof TransactionsRing Signatures are an efficient, established way to obfuscate the input of a transaction by making use of a sender’s account keys and a number of decoy keys (called outputs) taken directly from the blockchain. The procedure allows one of the members of the ring to sign messages on behalf of the whole group, and by doing so it renders it infeasible to know exactly which member signed.
Blockchains such as Monero (XMR) use a particular breed of ring signatures called Ring Signatures Confidential Transactions (RingCT). In this setup, privacy is taken one step further by not only giving anonymity at the sender level, but also on the amount spent and destination. RingCT technology makes transactions thus virtually unlinkable to the original sender.
However, in the future, Dusk aims to move away to RingCTs to Bulletproof Transactions once this technology is fully ready to be used. At the time of writing, first tests show a tenfold reduction in transaction size and verification times compared to RingCTs. Given the “pluggable” nature of Dusk core, the underlying software for transaction generation will be kept flexible through an architecture that facilitates the adoption of a future implementation of
Bulletproof Transactions.
Cryptographic accumulatorFinally, a cryptographic accumulator will be used. A cryptographic accumulator is a cryptographic construction that allows for efficient insertions and proofs of membership, without revealing the identity of the sender[3]. An accumulator takes a set of values and turns them into a single number of constant size[4]. Different technologies exist that implement accumulators with different level of computational efficiency and security requirements. In order to guarantee the anonymity of the transactions passing through the accumulator, Dusk is evaluating various technologies, such as: RSA accumulators, Expressive Bilinear Accumulators, and Elliptic Curve Multiset Hash (ECMH). ECMH is looking as an appealing alternative to the other known algorithms to construct Accumulators, especially since the method is unencumbered with the necessity of a trusted setup.
ConclusionDusk Features
untraceability through the use of RingCT,
unlikability through the use of stealth addresses and
protection from double spending or blockchain forks through the novel consensus mechanism called SBA. It takes the latest lessons learned in cryptography and prepares for the future through an adaptable core ready for bulletproof transactions.
How to learn more about Dusk NetworkThe Dusk Network is a project coordinated by the Dusk Foundation. We are a decentralized ecosystem entirely focused on providing the perfect trade-off between privacy and transparency. Dusk protects privacy and fits regulations in payments, communications and asset transfers.
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