[bitcoin-dev] BIP proposal - Dandelion: Privacy Preserving Transaction Propagation

[Bradley Denby]

Hi all,

We're writing with an update on the Dandelion project. As a reminder,
Dandelion
is a practical, lightweight privacy solution that provides Bitcoin users
formal
anonymity guarantees. While other privacy solutions aim to protect
individual
users, Dandelion protects privacy by limiting the capability of adversaries
to
deanonymize the entire network.

Bitcoin's transaction spreading protocol is vulnerable to deanonymization
attacks. When a node generates a transaction without Dandelion, it transmits
that transaction to its peers with independent, exponential delays. This
approach, known as diffusion in academia, allows network adversaries to link
transactions to IP addresses.

Dandelion prevents this class of attacks by sending transactions over a
randomly
selected path before diffusion. Transactions travel along this path during
the
"stem phase" and are then diffused during the "fluff phase" (hence the name
Dandelion). We have shown that this routing protocol provides near-optimal
anonymity guarantees among schemes that do not introduce additional
encryption
mechanisms.

Since the last time we contacted the list, we have:
 - Completed additional theoretical analysis and simulations
 - Built a working prototype
   (https://github.com/mablem8/bitcoin/tree/dandelion)
 - Built a test suite for the prototype
   (https://github.com/mablem8/bitcoin/blob/dandelion/test/
functional/p2p_dandelion.py)
 - Written detailed documentation for the new implementation
   (https://github.com/mablem8/bips/blob/master/bip-
dandelion/dandelion-reference-documentation.pdf)

Among other things, one question we've addressed in our additional analysis
is
how to route messages during the stem phase. For example, if two Dandelion
transactions arrive at a node from different inbound peers, to which
Dandelion
destination(s) should these transactions be sent? We have found that some
choices are much better than others.

Consider the case in which each Dandelion transaction is forwarded to a
Dandelion destination selected uniformly at random. We have shown that this
approach results in a fingerprint attack allowing network-level botnet
adversaries to achieve total deanonymization of the P2P network after
observing
less than ten transactions per node.

To avoid this issue, we suggest "per-inbound-edge" routing. Each inbound
peer is
assigned a particular Dandelion destination. Each Dandelion transaction that
arrives via this peer is forwarded to the same Dandelion destination.
Per-inbound-edge routing breaks the described attack by blocking an
adversary's
ability to construct useful fingerprints.

This iteration of Dandelion has been tested on our own small network, and we
would like to get the implementation in front of a wider audience. An
updated
BIP document with further details on motivation, specification,
compatibility,
and implementation is located here:
https://github.com/mablem8/bips/blob/master/bip-dandelion.mediawiki

We would like to thank the Bitcoin Core developers and Gregory Maxwell in
particular for their insightful comments, which helped to inform this
implementation and some of the follow-up work we conducted. We would also
like
to thank the Mimblewimble development community for coining the term
"stempool,"
which we happily adopted for this implementation.

All the best,
Brad Denby <bdenby at cmu.edu>
Andrew Miller <soc1024 at illinois.edu>
Giulia Fanti <gfanti at andrew.cmu.edu>
Surya Bakshi <sbakshi3 at illinois.edu>
Shaileshh Bojja Venkatakrishnan <shaileshh.bv at gmail.com>
Pramod Viswanath <pramodv at illinois.edu>
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