A privacy preserving identification protocol for smart contracts

If on one hand the possibility of using pseudonymous identities is an important feature of blockchains and smart contracts, on the other hand official identity can be required in some applications to comply with regulations such as Know Your Customer and Anti Money Laundering. These regulatory compliance issues are usually dealt with either through "custodial" approaches, which however neutralize the decentralization of these systems, or with "whitelisting" mechanisms, that present critical issues with regard to privacy. In this paper we propose a protocol that allows only potentially identifiable users to use a given decentralized applications. The system ensures that users are identifiable only by a competent authority, under certain conditions, and that in any other case they remain pseudonyms. To evaluate performance and costs, we present an Ethereum implementation of the protocol.