[bitcoin-dev] Formalizing Blind Statechains as a minimalistic blind signing server

[Ruben Somsen]

Hi ZmnSCPxj,


>Basically, the "Stale Factory" and "Broken Factory" problems.

I see, I'll have to read up on those.


>Combining it via MuSig is probably best, as the server is now unable to recognize even the pubkey (assuming it never is informed `X`).

Yes, that's the current thinking. See also:
https://twitter.com/SomsenRuben/status/1138199578996555784 (sorry no
time to make a gist)


>As the server is blinded, it cannot determine anything about the message being signed.

Yes, you could build a non-blind variant with scripting, but that
would be quite different.


>a simple scripting that allows "if somebody provides x of H(x) plus signature A, sign a blinded message M1, else if after 2:30PM PST on Jun 24 2019 if somebody provides signature of B, sign a blinded message M2" could still potentially be useful

I believe adaptor signatures are enough to replace hashing. A time
lock could potentially be added with some very basic scripting, but my
feeling is still that this is better avoided. We're essentially
relying on the Bitcoin blockchain for that, because the off-chain
transactions can be encumbered by any script you like.


>anything that can be done with a UTXO onchain, can also be done offchain via any updateable offchain cryptocurrency system

You're right that I didn't properly point to the key difference, which
is transfer of UTXO ownership. Other off-chain systems don't allow you
to go from e.g. 2-of-2 to 3-of-3, but of course we're adding a
federation in order to make this happen, so it's not exactly a fair
comparison.


>(I should probably look up the authors of the Statechains paper to make my naming convention consistent)

That would be "Somsen". I am the sole author.


>By presenting those "further transactions" to the offchain system, we can provide an argument that the offchain system can just "append" those "further transactions" to the existing unilateral-case transactions, then cut-through the further transactions on its next update

That's an interesting way of looking at it. This is currently achieved
in Statechains by making the top-level on the Statechain N-of-N, so
all participants of the "further transactions" have to agree in order
to achieve full cut-through on the Statechain. In practice this would
mean that the final signature requested from the server is a
"cooperative close".


Cheers,
Ruben


On Thu, Jun 13, 2019 at 3:22 AM ZmnSCPxj <ZmnSCPxj at protonmail.com> wrote:
>
> Good morning Ruben,
> > > an early draft
> >
> > I meant an early draft of Statechains, sorry if that was confusing.
> > But yes, it's essentially no different from channel factories without
> > eltoo.
>
> Sorry, I am referring to current issues with channel factories, which were not addressed in the original channel factories paper.
> Basically, the "Stale Factory" and "Broken Factory" problems.
> Broken factory seems unsolvable.
> Stale factory is fixable if the channels within the factory use `SIGHASH_NOINPUT` (assuming it gets into Bitcoin) for all unilateral paths (use `SIGHASH_ALL` for cooperative paths).
>
> >
> > > If `SIGHASH_ANYPREVOUT` ends up requiring a chaperone signature, it seems this transitory/common key can be used for the chaperone.
> >
> > That is a good point. One thing I have not yet fully analysed are the
> > privacy considerations. Perhaps we don't want to reveal X on-chain.
>
> On reflection, probably best not to.
> It requires a script that reveals the pubkeys.
> And it now becomes possible for the server to monitor the blockchain for revelation of server pubkey in a spend path.
> This will let the server know, after-the-fact, that it was signing blockchain transactions.
> This might not let it preemptively censor or otherwise disrupt, but it *could* sell the private fact that a statechain was used.
> Combining it via MuSig is probably best, as the server is now unable to recognize even the pubkey (assuming it never is informed `X`).
>
> >
> > > This would be nearer to my own Smart Contracts Unchained
> >
> > Adding scripting is not my preferred approach. The beauty of the
> > system is that the server doesn't evaluate any scripts whatsoever.
>
> On reflection, this is probably best.
> As the server is blinded, it cannot determine anything about the message being signed.
>
> On the other cognition sub-agent, however, a simple scripting that allows "if somebody provides x of H(x) plus signature A, sign a blinded message M1, else if after 2:30PM PST on Jun 24 2019 if somebody provides signature of B, sign a blinded message M2" could still potentially be useful, and might allow "programmable escrow" like I imagine Smart Contracts Unchained could allow.
>
> >
> > That being said, Smart Contracts Unchained (SCU) can be inserted quite
> > elegantly as a separate smart contracting layer.
> >
> > The observation is that anything that can be done with a UTXO
> > on-chain, can also be done off-chain via Statechains, including SCU.
>
> The Real (TM) observation is that anything that can be done with a UTXO onchain, can also be done offchain via any updateable offchain cryptocurrency system, whether Statechains, Spillman, Decker-Wattenhofer, Poon-Dryja, or Decker-Russell-Osuntokun.
> (I should probably look up the authors of the Statechains paper to make my naming convention consistent)
>
> One might observe that any updateable offchain cryptocurrency system worth its salt would have some way of unilaterally dropping transactions onchain.
> Those transactions would create new UTXOs that can be spent by further transactions.
> By presenting those "further transactions" to the offchain system, we can provide an argument that the offchain system can just "append" those "further transactions" to the existing unilateral-case transactions, then cut-through the further transactions on its next update (i.e. delete the current UTXOs spent and insert the new UTXOs introduced by the "further transactions").
> (In the case of Statechains, you would present this argument to the signers of the latest `userPubKey`, not to the server, who is unaware of the semantics of what it is signing)
>
>
> Regards,
> ZmnSCPxj