Oct 30, · What are Confidential Transactions? Last Updated: 30th October Conceived by former Bitcoin developer, Adam Back, a confidential transaction (CT) is a method of increasing the privacy of a transaction by homomorphically encrypting the inputs and outputs using a blinding factor. A blinding factor is simply a string of numbers that is used to encrypt the inputs and outputs of a Bitcoin. Amazing schemes and technological innovations are being tried and implemented to continuously enhance Bitcoin’s scalability, fungibility, financial confidentiality, and privacy. The Confidential Transactions (CT) tool is one of these schemes proposed to improve security and privacy. Confidentiality of Bitcoin pros and cons has been praised and criticized. Critics noted its use in illegal proceedings, the bear-sized add up of electricity used by miners, price irresoluteness, and thefts from exchanges. whatever economists, including several altruist laureates, have characterized it as a theoretical bubble.
Bitcoin confidentialitySecurity Concerns and Risks Related To Bitcoin
Reports circulated widely after the Mt. Gox heist indicates that hackers had been trying to get into the system for almost a year. When they did, they made off with , Bitcoins. Gox never recovered from the attack and filed for bankruptcy. Other major Exchanges like Bitfinex remain under threat, which is a security concern, too.
The frequency is increasing, with Bitfinex, one of the largest exchanges, reporting that it had faced repeated DDoS attacks towards the end of With some mining pools becoming powerful enough to command significant mining ratios, they may engage in selfish mining. Also called block withholding, a pool may use their computational power to mine a block and then hide it from honest miners instead of broadcasting the new block to the network.
The selfish pool then attempts to find the second block while the rest grope in the dark. If the greedy miners manage to find a new block before the other miners, then broadcasting the two blocks makes the forked chain the longest. The selfish miners will be ahead of the other miners, getting all the rewards. Such conspiracies, on a large scale, can be combined with the Sybil attack to cause considerable harm to mining because selfish miners can then use their power to invalidate transactions on the network.
Although reinforcements have been instituted to mitigate this severe concern, fears still abound concerning this transaction risk to Bitcoin. Bitcoin is becoming increasingly sturdier against coordinated double-spends. However, some people might still be able to constitute attacks that would make them benefit from using the same coin twice in the same transaction.
For instance, Bob purchases items from Alice and sends Alice x bitcoins. At the same time, Bob executes a similar transaction to an address he controls using the same Bitcoins. Irreversibility then makes it pointless for Alice to get the transaction invalidated. And there is no recourse because Bitcoin is unregulated.
The so-called over 50 percent or 51 percent attack is a security concern for Bitcoin though not one that is easy to carry out. The increasing difficulty of mining Bitcoin has meant that miners get into pools to harmonize their computational power. Some of the pools have so much power that it can be misused. For instance, Antpool, the Chinese mining pool operated by Bitmain Tech.
We present Bulletproofs, a new zero-knowledge argument of knowledge system, to prove that a secret committed value lies in a given interval. Bulletproofs do not require a trusted setup. They rely only on the discrete logarithm assumption, and are made non-interactive using the Fiat-Shamir heuristic.
A zero-knowledge proof is a technique by which one party the prover can prove to another party the verifier that she knows a value x, without conveying any information apart from the fact that she knows the value x.
Bitcoin and cryptocurrency enthusiasts welcome the advent of CT and Bulletproofs. After a proper review, enthusiasts hope that these technologies can be implemented successfully and soon.
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