Preserving transaction privacy in bitcoin

As bitcoin has received considerable attentions, a large number of transactions are increasingly published through the Internet. The potential threat to online transactions is not only limited to the anonymity of identities such as address and pseudonyms, but also other sensitive information shown on scripts like transaction amounts. We propose a framework to hide the amounts by employing the Paillier cryptosystem for encryption and decryption. Due to its homomorphic properties, we create a dumb account which can receive the same amounts of bitcoins in each transaction but cannot spend them. This ensures that the hidden amounts are always positive, and keeps the equality between the Input-sum and the Output-sum via the commitment proofs. Our framework achieves delicate anonymity and prevents active and passive attacks, which effectively improves the transaction privacy. Analyses show that our proposal is secure and practical. (c) 2017 Elsevier B.V. All rights reserved.