[Bitcoin-development] Censorship-resistance via timelock crypto for embedded consensus systems
pete at petertodd.org
Fri Dec 20 16:54:34 UTC 2013
Embedded consensus systems such as Mastercoin face the risk that the
data they need to embed in the host consensus system will be subject to
censorship. This censorship can take two forms: whitelists and
blacklists. The former we can't do anything about, however the latter
requires someone to identify the data-carrying transactions that are to
Embedding data steganographically in transactions is known to be
possible in ways that can-not be detected. Even if P2SH^2 (1) is
implemented data can be hidden in pubkeys in P2SH scriptSigs, either by
using unused pubkeys in CHECKMULTISIG transactions with a simple
transform(2) to turn arbitrary data into valid-looking pubkeys, or with
some ECC math even usable pubkeys can have data hidden in them.(3)
However these methods are unsuitable if the data needs to be provably
made public; without the encryption key the data is securely hidden.
Almost all consensus systems rely on proof-of-publication(4) and even if
the encryption keys are later made public - perhaps by broadcasting them
on a P2P network - we've only shifted the problem to proving that the
keys were released. Of course, if we then publish them via our host
consensus system, *that* act of publishing can itself be censored!
Timelock cryptography offers a solution to this problem. Let S(n, k) be
a sequential-hard strengthening function that takes key k and number of
rounds n, outputting k'. A suitable S() might be the scrypt function.
Let E(d, k) be a symmetric encryption algorithm. Finally let H(m) be a
cryptographic hash function.
To hide data D in a transaction we set k to some random and publicly
known value in the transaction and compute k'=S(n, k) and D'=E(D, k')
Then D' is hidden in the transaction, perhaps in an unused pubkey of a
Our intended audience can also calculate k' from the public data, and
thus recover D in time ~t, thus we know that after time ~t has elapsed
all participants in the system can reliably come to consensus.
However miners and other parties who may wish to censor D face a
dilemma: If they repeat the calculation for every transaction that may
be hiding data they delay all transactions for all users. In addition
miners have a financial incentive to defect and mine transactions
without checking for hidden data.
Efforts should be made to limit the scope of possible transactions as
much as possible to reduce the computation required, e.g. by restricting
the search space to only transactions with scriptPubKeys starting with
some short prefix. This is a balance between computation and censorship
Consideration needs to be made as to how the data will be validated as
part of the embedded consensus system, for instance via a checksum or
Participates in the embedded consensus system should share k' keys among
each other to reduce overall effort. This ties back to validation: it
must not be possible to distribute a fake k' undetectably.
Picking n, and thus the time taken, is a balance. Also there should be
some mechanism to update n as technological improvements warrant. Along
those lines this method works best when t can be large and immediate
consensus is not required. A suitable use-case could be a key-value
consensus system for name information where mappings are infrequently
The source of k should be such that k' can be computed in advance,
however only by the sender. For instance simply using the first txin
hash allows the attacker to compute k' in advance themselves. A better
choice would be the first (real) pubkey in a scriptPubKey, a value we
can both compute in advance, yet is not known publicly.
Censorship resistant voting
With due care the scheme can be used to allow for censorship-resistant
voting. While previously it was believed that miners would inevitably be
able to censor any voting scheme - with the exception of certain special
cases(5) - provided that the financial incentive to collect fees
outweighs the incentive to not count votes we have strong censorship
resistance with strong consensus in a fixed amount of time.
1) Gregory Maxwell, [Bitcoin-development] To prevent arbitrary data
storage in txouts — The Ultimate Solution,
2) Peter Todd, Re: MasterCoin: New Protocol Layer Starting From “The
3) ByteCoin, Untraceable transactions which can contain a secure message
are inevitable, https://bitcointalk.org/index.php?topic=5965.0
4) Peter Todd, [Bitcoin-development] Disentangling Crypto-Coin Mining:
Timestamping, Proof-of-Publication, and Validation,
5) John Dillon, Proposal: We should vote on the blocksize limit with proof-of-stake
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