Bitcoin2019 and Liquid sidechain for anti-counterfeiting

Opening of Bitcoin2019 conference

This story is about the epic Bitcoin2019 conference and what Eonpass was doing there. We won the Liquid hackaton for testing the sidechain as backbone for the anti-counterfeiting infrastructure of tomorrow.

The main stage was an interesting alternation of technical and high-level panels, my favorite one was of course scriptless scripts [scriptless scripts], the idea of validating operations by validating signatures is neat. It enforces the view of computation done off-chain while producing cryptographic evidence of it being correct (commitments or proofs). Finally such evidence is uploaded to the blockchain for auditing. As an engineer I believe it’s the most efficient way to go. The other panel I really enjoyed was “Destroying Bitcoin”: always look at the attack surface, because, even when you don’t, someone else is working on it. Where there is a prize, there is an attacker.

On the second day, the take on privacy was thrilling, on one side I am excited that privacy is the next big thing to be implemented in Bitcoin, on the other side I also have quite a clear view on how it can be used. Quoting Snowden:

Privacy is not about something you hide, it’s about something to protect

Let’s just say that, percentage wise in terms of transacted volume, I believe it won’t be used to protect me, you, normal people in Iran (or elsewhere), percentage wise it will help enhancing the grasp of specific classes over the world. I don’t know if it’s good or bad, but the naiveté is long gone for me. As soon as corporates will find a better way than the double Irish-Dutch sandwich they’ll use it and so on. Evaluating the pros and cons requires an amount of thinking that I don’t have so I’ll let others do that.

If I have to find some room for improvement it could be in the content of high-level discussions, because at times it was just a guessing game or a list of wrong opinions. On main stage a guy was justifying altcoins as different tradeoffs whose value, not being priced zeroby the market, is still in discovery.. I mean, this is so 2014/5..we are in 2019 c’mon. The conference was a big show and “advertisement” for Bitcoin so there must have been abundance of “fast to digest” topics. Nonetheless another guy with a hat in the closing panel implied scarcity cannot be achieved with privacy, which is plain wrong and something you don’t want people to digest: with zero knowledge proofs you can have total supply proof without revealing all the hidden balances. Maybe, if I can give an input for next year, have a really technical secondary stage.

Big congrats to the organisers, it was all perfectly planned and dimensioned for the abundant crowd of enthusiast! I’m already looking forward next year.

Cryptograffiti outside the conference!

The liquid hackaton was a challenge to use the new liquid bitcoin sidechain. We took the first prize by showing how single use seals create irrefutable chains of owners. Truth be told the most interesting part comes with the confidential assets which can represent goods.

There are two distinct areas where Eonpass approaches the challenge of authenticity:

  • In the supply chain, when goods are carried from the producer to the distribution point. The players in this scenario are business entities involved with either the production or the shipment and storage of the goods.
  • In the secondary market, when a consumer wants to purchase a second-hand product on a platform like ebay and tmall.

In the supply chain you want to make sure that it’s easy to identify when fake goods are injected into the distribution. From a lawful player ‘s point of view it’s important to detect irregularities before the goods are physically in his/her hands, that’s because otherwise the player is already liable (i.e. if you take in charge an irregular shipment, now it’s your responsibility and you are liable, regardless of who sent it through you). To enhance security we use single use seals for the exchange of documents. A document protected with seals cannot be crafted upfront and cannot be tampered. This reduces the attacks to just injecting the goods without documentation which makes it easier to spot the wrong-doers.

In the secondary market we want to give the consumers a way to understand if the good at sale on ebay or tmall is authentic. When the good is initially purchased in the boutique a token is given to the consumer. An elegant way to prove that a seller has an authentic token would be for the buyer and the seller to set up a multisig wallet. Then the seller sends the token to the multisig wallet. This is a proof that he indeed had an authentic token. When the sale ends, the token is sent to the new owner’s wallet (possibly the multisig should be 2/3 for the brand to resolve disputes). There are two big reasons why these tokens ought be confidential assets:

  • they must be created only by the brand owner, therefore their movement must be undetectable as it leaks important production and distribution information
  • they may end up representing personal value for consumers, whose privacy must be protected (e.g. GDPR in EU)

In reality the implementation we are working on doesn’t provide wallets to consumers but only blinding keys. So the brand is the owner of all the addresses and it creates an address for every sale where a token is sent. The blinding key of the transaction is revealed to the consumer who can use such key to prove he has access to private data about the token. When a secondary market sale ends, the token is moved to a new address and the new blinding key of the new transaction is revealed to the new consumer. This avoids having customers data and avoid errors with wallets management.

Finally the document notarisation should be done still on BTC main chain, the reason is that you can put a price tag on how much expansive is to go back in time and change a transaction. This is unique of proof of works chains and it is a stronger and more elegant proof to produce in court w.r.t. explaining private agreements and swearing your network was not compromised (which is the private/permissioned blockchains approach). Moreover, a part from the price tag, the fact that someone tried to pull off a reorganisation is also public and can be detected which is another compelling argument in court. The alternative provided by private blockchains is so much weaker on these points that basically from a legal point of view it is possible to argue they are the same as any cloud computing services. Among the blockchain with proof of work bitcoin has the more dedicated hashing power therefore it’s the prime choice as store of secrets/commitments. The confidential assets though are specific of liquid so it makes only sense to create the document seals and pass them over in the OP_RETURNs along with the confidential assets over liquid and finally notarise such OP_RETURNs also on mainchain BTC.

Special Thanks To

  • Blockstream for hosting the hackaton and developing cool extensions on the safest and most powerful computational network humanity has ever built
  • Leo, pointing to the “good” parties and lol for Bozen, the world is so small
  • Christian, Lightning Hackaton winner
  • Koji, interview in Japanese with the Real Satoshi + help to spot the good asian cuisine
  • Marissa, super interesting project for tactile view and thanks for the patience at making eonpass comprehensible
  • Luck, Malwario & Fabian, the team strikes again
Microsoft presents ION, an identity protocol which notarises bulk of operations on BTC

Founder, cryptography enthusiast and bitcoin-aficionado (not enough surfing)