Tunneling Trust into the Blockchain: A Merkle Based Proof System for Structured Documents

Abstract

The idea of Smart contracts foresees the possibility of automating contractual clauses using hardware and software tools and devices. One of the main perspectives of their implementation is the automation of interactions such as bets, collaterals, prediction markets, insurances. As blockchain platforms, such as Ethereum, offer very strong guarantees of untampered, deterministic execution, that can be exploited as smart contracts substrate, the problem of how to provide reliable information from the 'outside world' into the contracts becomes central. In this article, we propose a system based on a Merkle tree representation of structured documents (such as all XML), with which it is possible to generate compact proofs on the content of web documents. The proofs can then be efficiently checked on-chain by a smart contract, to trigger contract action. We provide an end-to-end proof of concept, applying it to real use case scenarios, which allows us to give an estimate of the costs.