Combined summary - Ecash and lightning via ZKCP

Combined summary - Ecash and lightning via ZKCP

The recent exchanges have delved into the intricate process of enhancing ecash systems, particularly focusing on their integration with lightning wallets and the pioneering use of Zero-Knowledge Proofs (ZKPs).

A noteworthy proposal considered for Cashu involves a mechanism requiring users to bridge their lightning and ecash wallets through the acquisition and utilization of a preimage. This concept, while promising, has yet to be implemented within Cashu due to its complexity. In a significant stride forward, Cashu has introduced a ZKP as a proof of knowledge for a message (m) via a Discrete Logarithm Equality (DLEQ) proof, a development that is openly available for scrutiny on their GitHub repository.

A pivotal challenge in the realm of ecash systems is maintaining the anonymity of token transfers between users without allowing the mint to correlate these transactions to specific Lightning invoices. The primary concern revolves around ensuring the uniqueness and security of a token's claim when ownership transitions occur, especially since the mint is oblivious to the K value for which users seek signatures. This opens up avenues for potential exploitation, such as re-minting tokens linked to identical invoices with varied parameters, thus threatening the system's integrity. Despite these hurdles, optimism persists about devising solutions that uphold ecash privacy during user-to-user transactions while preventing the mint from associating transactions with particular Lightning invoices, thereby reinforcing the system's overall functionality and security.

The discourse further explores the integration of ecash mints with the Lightning Network, aiming to retain anonymity and reduce trust dependencies. This model encompasses using Hashed Timelock Contracts (HTLCs) for atomic payments on the Lightning Network and blind signatures for ecash dealings. Within this framework, the mint plays a crucial role by backing coins with its Bitcoin reserves and authenticating payments via blind signatures. The issuance process for new ecash involves users submitting a blinded challenge to the mint, which responds with a calculated answer alongside a ZKP and a Lightning invoice. Upon settling this invoice, users acquire ecash, consequently increasing the mint's Bitcoin holdings. Although this method leans on the mint's reliability, it introduces cryptographic techniques aimed at diminishing trust requirements, particularly in handling private keys and blind signatures. Redeeming ecash for Bitcoin over the Lightning Network is facilitated by the user providing a signature verified by the mint before initiating an HTLC back to the user. This ensures the atomic swap of funds following successful signature verification, with the transaction marking the ecash as spent or reserved. This transaction flow eschews the need for a ZKP, capitalizing on the Lightning Network's infrastructure to secure anonymous interactions between users and the mint. Proposals of this nature aspire to synergize the distinctive features of ecash and the Lightning Network, enhancing digital currency transactions' efficiency and security while adhering to the core principles of anonymity and minimal trust. Further insights into this integration can be gleaned from expanding on a tweet and examining zero-knowledge contingent payments as highlighted in Bitcoin Core's announcement.

Discussion History

ajtowns Original Post
February 19, 2024 11:57 UTC
February 19, 2024 14:12 UTC
February 20, 2024 01:47 UTC