Privacy-preserving KYC on Ethereum Introduction A decentralized - - PowerPoint PPT Presentation

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May 31, 2023 615 likes •831 views

Privacy-preserving KYC on Ethereum Biryukov, Khovratovich, Tikhomirov Privacy-preserving KYC on Ethereum Introduction A decentralized KYC-compliant identity Alex Biryukov, Dmitry Khovratovich, Sergei Tikhomirov Conclusion and future work

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Privacy-preserving KYC on Ethereum Biryukov, Khovratovich, Tikhomirov Introduction A decentralized KYC-compliant identity Conclusion and future work 1/20

Privacy-preserving KYC on Ethereum

Alex Biryukov, Dmitry Khovratovich, Sergei Tikhomirov

SnT, University of Luxembourg

9 May 2018 CWI, Amsterdam, The Netherlands

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Privacy-preserving KYC on Ethereum Biryukov, Khovratovich, Tikhomirov Introduction A decentralized KYC-compliant identity Conclusion and future work 2/20

Outline

Introduction A decentralized KYC-compliant identity Conclusion and future work

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Privacy-preserving KYC on Ethereum Biryukov, Khovratovich, Tikhomirov Introduction A decentralized KYC-compliant identity Conclusion and future work 3/20

Identity is data that represents a user

Identity is used for:

◮ Authentication: proves the user is who they claim to be; ◮ Authorization: ensure the user is eligible for an action.

In cryptographic terms, user is represented by a private-public key pair.

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Centrally managed identity

◮ Prevalent model today ◮ User delegate identity management to companies, get

access using password

◮ Risks: identity theft, central point of failure

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Privacy-preserving KYC on Ethereum Biryukov, Khovratovich, Tikhomirov Introduction A decentralized KYC-compliant identity Conclusion and future work 5/20

Decentralized identity

◮ Putting users in charge of managing their data ◮ Can be implemented using blockchains ◮ Does it respect privacy? ◮ Does it comply with regulations?

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Bitcoin

◮ A decentralized digital currency [Nakamoto 2008] ◮ Combines cryptography and economics to prevent

double spending without a trusted third party

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Ethereum: generalized blockchain

◮ A blockchain-based application platform [Buterin 2014] ◮ Key feature: Turing complete programming

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Privacy-preserving KYC on Ethereum Biryukov, Khovratovich, Tikhomirov Introduction A decentralized KYC-compliant identity Conclusion and future work 8/20

Ethereum tokens

◮ A popular use case for smart contracts ◮ A fungible unit of value maintained by a smart contract ◮ ERC20 is the de-facto standard token API ◮ Decentralized exchanges – a promising direction

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ERC20 functions

◮ transfer – send tokens to an address ◮ approve – allow other user to transfer my tokens ◮ transferFrom – send other user’s tokens

(only if approved)

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A decentralized KYC-compliant identity

Our identity management design for financial services is:

◮ Decentralized (on-chain) ◮ Privacy-preserving ◮ Can be made compliant ◮ Extendable to many application types (consider a token

exchange as an example)

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Cryptographic accumulator

◮ A cryptographic primitive: absorbs algebraic objects ◮ Provides interface to verify whether a value was

accumulated

◮ Preserves privacy: individual values are not disclosed

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Accumulator-based identity workflow (1/2)

◮ A KYC Provider publishes a contract with an empty

accumulator

◮ A User interacts with the Provider (possibly offline)

and gets their value accumulated

◮ The Provider issues a witness s.t. the User can later

prove their eligibility

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Accumulator-based identity workflow (2/2)

To prove eligibility, a user submits an (atomic) zero-knowledge proof of the statement:

◮ I know the private key corresponding to msg.sender; ◮ I know a signature and a witness for some value which

was previously accumulated.

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KYC Provider interface

◮ add(user, token) – makes user eligible ◮ remove(user, token) – makes user not eligible ◮ isEligible(user, token) – check if the user is

eligible

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Use case 1: compliant exchange

◮ An exchange verifies users before making transactions ◮ Traded tokens do not need to be aware of KYC

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Use case 2: compliant token

◮ A token verifies users before making transactions ◮ Services (exchanges) do not need to be aware of KYC

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Implementation details

◮ A PoC implementation (not privacy-preserving): joint

1st prize at the Luxblock hackathon in May 2017

◮ (The team also included: Daniel Feher, Dmitry

Khovratovich, Aleksei Udovenko, Maciej Zurad)

◮ Accumulator implementation depends on new opcodes:

currently Ethereum does not natively support all required cryptographic operations

◮ Updating the accumulator is expensive if done on-chain

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Conclusion and future work

◮ Ethereum provides ways to encode and enforce digital

agreements

◮ Cryptography allows for additional eligibility checks

which minimally impact the users’ privacy

◮ Many technical challenges to overcome before realizing

this idea

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Research question Can we leverage sophisticated cryptography in public blockchains to provide stronger security and privacy guarantees?

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