Confidential and efficient asset proof for bitcoin exchanges

Abstract

Technological advancements boost the business to play a crucial role in a country’s economic success. Cryptography-based currencies, called as cryptocurrencies, are now leading the world’s economy. With the increasing popularity of cryptocurrencies, cryptocurrency exchanges have emerged to support cryptocurrency-related services. Among cryptocurrencies, bitcoin takes the lead and it is widely accepted by the world community. Lots of security issues are arising day by day and the exchange should handle all of of them sensibly. It is necessary that the exchange should be solvent all the time in terms of its assets and liabilities for its survival. For this, periodic settlement of the accounts should be done using appropriate techniques. The information exchange needed for this should be concealed from the adversaries. Cryptography-based techniques with zero-knowledge protocols are suitable for this purpose. Maxwell’s proof of liabilities is the first cryptography-based method to verify the user assets. It makes use of binary Merkle hash trees for representing the proof of liabilities. The root node reveals the total assets of the exchange, which will attract the adversaries to execute an attack. Later the Dagher et al scheme, a privacy preserving proof of asset for bitcoin exchanges, was proposed. The scheme works in an interactive manner that requires the collaboration of the exchange and the user. This paper proposes an efficient non-interactive proof of assets for bitcoin exchanges.