The Math Behind Bitcoin

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The buyer and seller do not need to trust each other or depend on arbitration by a third party. This type of sale is inherently irreversible, potentially zero knowledge proof bitcoin calculator multiple jurisdictions, and involves parties whose financial stability is uncertain—meaning that both parties either take a great deal of risk or have to make difficult arrangement.

Using a ZKCP avoids the significant transactional costs involved in a sale which can otherwise easily go wrong. I played my part in the transaction remotely from California. I first proposed the ZKCP protocol in in an article on the Bitcoin Wiki as an example of how tremendously powerful the existing primitives in Bitcoin Script already were.

My ZKCP protocol required as a building block a zero-knowledge proof for arbitrary programs. Many kind of specialized zero-knowledge proofs exist: A zero-knowledge proof for general computation is a cryptographic system which lets a person run an arbitrary program with a mixture of public and secret inputs and prove to others zero knowledge proof bitcoin calculator this specific program accepted the inputs, without revealing anything more about its operation or the secret inputs.

As my initial write-up on ZKCP noted, no such system was readily available in but they zero knowledge proof bitcoin calculator believed to be possible, especially under specific constraints that would have worked zero knowledge proof bitcoin calculator ZKCP.

Since then, several groups have continued to advance this work, creating compilers, performance improvements, and most critically, practical tools like libsnark. Because of this work, ZKCP can now become a practical tool. Because these efficient ZKPs are cutting-edge zero knowledge proof bitcoin calculator which depend on new strong cryptographic assumptions, their security is not settled yet. But in applications like ZKCP where our only alternatives are third-party trust, they can be used in ways which are a strict improvement over what we could do without them.

If you accept the existence of the zero-knowledge proof system as a black box, the rest of the ZKCP protocol is quite simple. The buyer first creates a program that can decide zero knowledge proof bitcoin calculator the input it is given is the data the buyer wants to buy. This program only verifies the information, it does not produce it—the buyer does not even have to have any idea how to produce it. For example, it is easy to write a program to verify that a Sudoku solution is correct, but harder to write a Sudoku solver, Sudoku is NP-complete.

The buyer here only needs to write the solution verifier. The buyer performs the trusted setup for the proof system and sends the resulting setup information over to the seller.

The seller sends Ex, Y, the proof, and his pubkey to the buyer. So the buyer initially wanted to buy an input for his program, but now he would be just as happy to buy the preimage of a hash. As it turns out, Bitcoin already zero knowledge proof bitcoin calculator a way to sell hash preimages in a secure manner.

The effect of this payment is that the seller can collect it if he provides the hash preimage of Y and a signature with his key. As a result, when the seller collects his payment he is forced to reveal the information that the buyer needs in order to decrypt the answer. This Zero knowledge proof bitcoin calculator is also the same as would be used for a cross-chain atomic swap or a lightning payment channel.

Wallet support for these transactions has been implemented for Bitcoin Core in PR This wallet support is used by the sudoku ZKCP client and server available at https: There are two primary restrictions of this approach. First, that it is interactive: And second, that the ZKP system, while fast enough to be practical, is still not very fast. For example, in our demo the ZKP system proves 5 executions of SHA and the Sudoku constraints, and takes about 20 seconds to execute on zero knowledge proof bitcoin calculator laptop.

The verification of the proof takes only a few milliseconds. In Paypub, instead of using a zero-knowledge proof the buyer is shown a random subset of the data they are attempting to buy, and the seller is forced to unlock the rest when they collect their payment. Paypub avoids the complexity of dealing with a zero-knowledge proof— and also allowing the exchange of information that only humans can verify—, but at the cost of some vulnerability to cheating, and only being usable with a relatively large set of randomly verifiable information.

I look forward to the exciting applications people will find for them as the technology becomes increasingly practical. The first successful Zero-Knowledge Contingent Payment. The transfer involved two transactions: See the slides from the live demo. Background I first proposed the ZKCP protocol in in an article on the Bitcoin Wiki as an example of how tremendously powerful the existing primitives in Bitcoin Script already were. The seller picks a random encryption key and encrypts the information the buyer wishes to buy.

Using the ZKP system, the seller proves a composite statement: Y is the sha hash of the decryption key for Ex. The buyer makes his payment to the following ScriptPubkey: Recommended View all posts Bitcoin Core 0.

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I am going to tell you about zero-knowledge proofs for Bitcoin scalability. Even though this is an overview talk, many of the results I will be telling you about are based on work done by people in the slides and also here at the conference.

First I will give a brief introduction to zero knowledge proofs. Then I will try to convince you that if you care about Bitcoin scalability, then you should care about zero-knowledge proofs and you should keep them on your radar. The instance here is that a circuit and a witness. The circuit output is 1 then it's an input.

Both prover and verifier know the circuit, and the prover knows the witness. Finally, the verifier gets the final answer from the prover.

It either accepts or rejects. We want the following three properties for this. If the prover didn't know the valid witness, and finally and most interestingly, we wanted just given this interaction, the verifier learns nothing about it other than the witness exists. The verifier would not learn anything about what made the circuit accept.

So those are interactive zero-knowledge proofs. They become more useful when they are non-interactive provers. The prover sends just one message, a proof to the verifier, and the verifier either accepts or rejects, just like before. It's very useful because the prover can post a proof, and later go away, and nobody needs to interact with the prover again, and everyone can verify the proof for the rest of the time.

This is a formal notion. What I have told you is a little bit of a lie, however it becomes possible if you let a trusted pre-computation, just one time, and how to make a common reference string. Here's how it works. There needs to be a trusted generator, this is required only once, the prover and verifier can use the CRS to prove statements and verify them respectively.

This might sound very abstract, but I will moderate this example for how this is useful for Bitcoin scalability. My claim is that there are many Bitcoin scalability problems that can be traced back to questions about privacy. If all transactions are public, then receiving the wrong coin could be disastrous because it could taint all of your other bitcoin.

Solvency is another example. Exchanges could claim that proving solvency is a privacy liability, well you could use zero-knowledge proofs.

Mining centralization could also push back issues of privacy. Zero-knowledge proofs could be helpful for all of the above. I am going to prove my claim by example. I will choose fungibility and solvency examples, to show how you can use zero-knowledge proofs from the previous slides, to solve this. I will show you how to develop a currency that is completely private. This is based on a scheme by Sanderson Tosha. Suppose you have the Bitcoin blockchain, and you want to have anonymous currency sitting right So CM is just going to be a hash of a serial number, and a note.

You can go on like this and create wonderful anonymous coins like this, and it's not really useful is it-- so what you do next is you need some way to spend those coins, presumably in a private way. How can you spend a coin? Just choose one of your anonymous coins from the nice bubble and publish it You can construct a merkle tree over all of your coin commitments in your wonderful bubble, then you publish a serial number plus a zero knowledge proof.

There exists a nonce such that when you compute the serial number plus the nonce, is indeed in the merkle tree. You can see that this is private, the serial number does not reveal anything about where the CM came from. The proof doesn't reveal this either since it's zero knowledge. So the transaction is completely unlinkable, yet a zero knowledge proof ensures integrity. There exists a coin in this anonymous bubble, and more over you can only spend this coin once, since you tried to spend this coin in the bubble twice, you would spend the same serial number twice and you would be caught.

This is the basic idea behind zerocash, at a high level. Zerocash adds divisibility and some other concepts. The basic idea remains the same. You have a ledger note of transactions, but a ledger of proofs that the transactions are valid. So that's one example of zero-knowledge proofs.

Another example is how to use zero-knowledge for privacy-preserving proofs of solvency. Here by solvency I just mean the simple claim that my assets are greater than my liabilities, and privacy-preserving should mean that the exchange not reveal anything about its fees or balances. All of this is 10, feet overview of Provisions, which works as follows. You need to publish two commitments, one to all your assets, one commitment to your liabilities, then three kinds of zero-knowledge proofs.

You want to claim that the exchange is solvent, which means that the asset commitment is greater than the liabilities commitment. This is not enough because anything could be in those two commitments. So what you need next is you prove that the liability commitment is correctly formd, meaning. I will publish commitmnts to all balancs, t, htn I will go tach of my users and prove that each user will And that's how I prove liability.

Of course, finally, I need to prove that I can control the set amount of asset. I will do this first by choosing a large anonymity set, say the entire set of Bitcoin public keys on the blockchain and their associated balances. Then I would try to prove knowledge of private keys for a subset, that can open up at least the minimum amount of bitcoin required. A zero knowledge proof is quite involved, but you should believe this is doable.

There is a way to prove solvency here. These examples have demonstrated to us that zero-knowledge is something really useful to us. We should go and seek can we implement zero-knowledge in practice.

I'll tell you about that. First, I'll tell you about two kinds of zero-knowledge proofs. There's classical non-interactive zero-knowledge proofs, such as Schnoor proofs or range proofs. These proofs have been implemented and even deployed, but classical NIZKs These are proofs that are short in constant size, they are easy to verify in practically milliseconds.

This succinctness comes from somewhere, and this somewhere is cryptographic assumptions. For NIZKs, the common reference string just outputs random coins and you can get randomness from hash functons and sun spots or whatever, while for SNARKs the generator gives a lot of structure but it's really complex and you need someone to do it.

But we will see later how to address this. So for the rest of the talk I am going to be focusing on this cryptographic primitive. They are strong, powerful, do they exist? Yes, we have a beautiful line of research that have used theoretical constructions starting from the s.

Some of the constructions are in working prototypes from groups around the world. Most of those prototypes have full source code available online. You can go to those links and get implemenations. They are feasible for certain applications such as zerocash or inaudible. I have a relation in mind, what do I do? There's a bit of a challenge, which is representation.

The relation I have in mind might be high-level, like hashes and merkle trees and signatures, while the implemented constructions of SNARKs understand something like circuit satisfyability. This is a solved problem. There are three solutions on how to do that. Number one, there's the snarks-for-c approach which mimics the early days of computing. You can write a universal circuit that can decide any circuit written for this CPU.

Finally, you can compile the program down to assembly and assembly is something that your universal circuit can eat and all is happy. This approach is probably the only approach that I know that can give you universality or bootstrapping or what not, but it can also be quite inefficient because for each step of computation you need the entire CPU.

So, if your computation is sufficiently specialized, you can use a different approach called program analysis. You write your program that decides the relation in a restricted subset of C, your program must have all of its memory accesses there. If this is the case, then You can imagine being an electrical engineer and placing your breadboard for circuits, a component for SNARK verify or a component for elliptic curve verifying. This may seem crazy to write all of this by hand, but this only needs to be done once.

You could probably use a gadget approach. Okay so there are 3 approaches, that's quite a slide. Which one should I choose in practice? The verifier efficiency only depends on the input of your relation. Usually when you structure your relation write, it's milliseconds. The bottleneck seems to be prover performance which is essentially base SNARK performance, applied to the size of the circuit.

You can write a small circuit and that would be very nice, but what does it mean in concrete numbers?