Oct 31, 2018
Many, including Satoshi, believed cryptocurrencies provided privacy for payments. In reality, cryptocurrency is Twitter for your bank account. Worse, the current set of decoy transaction–based approaches commonly believed to provide privacy—including coinjoin and cryptonote/Monero—provide fundamentally flawed privacy protections. Where did we go wrong? This talk covers how to critically evaluate the privacy provided by any proposed protocol for payment privacy. Through a series of thought experiments, it outlines three plausible attacks on existing decoy-based schemes: an “overseer” attack where customers can be tracked across colluding merchants or advertisers, a “flashlight” attack that identifies the real owner of an address intended to anonymously receive funds, and a “tainted dust” attack that allows anyone to see where a target regularly spends their money. These issues show the unintuitive nature of privacy protections, as well as the need to both evaluate protocols in the context of real world threats, and use approaches with formal and peer reviewed privacy guarantees such as Zcash.
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