Cryptology ePrint Archive: Report 2016/1033

Decentralized Anonymous Micropayments

Alessandro Chiesa and Matthew Green and Jingcheng Liu and Peihan Miao and Ian Miers and Pratyush Mishra

Abstract: Micropayments (payments worth a few pennies) have numerous potential applications. A challenge in achieving them is that payment networks charge fees that are high compared to “micro” sums of money.

Wheeler (1996) and Rivest (1997) proposed probabilistic payments as a technique to achieve micropayments: a merchant receives a macro-value payment with a given probability so that, in expectation, he receives a micro-value payment. Despite much research and trial deployment, micropayment schemes have not seen adoption, partly because a trusted party is required to process payments and resolve disputes.

The widespread adoption of decentralized currencies such as Bitcoin (2009) suggests that decentralized micropayment schemes are easier to deploy. Pass and Shelat (2015) proposed several micropayment schemes for Bitcoin, but their schemes provide no more privacy guarantees than Bitcoin itself, whose transactions are recorded in plaintext in a public ledger.

We formulate and construct *decentralized anonymous micropayment* (DAM) schemes, which enable parties with access to a ledger to conduct offline probabilistic payments with one another, directly and privately. Our techniques extend those of Zerocash (2014) with a new probabilistic payment scheme; we further provide an efficient instantiation based on a new fractional message transfer protocol.

Double spending in our setting cannot be prevented. Our second contribution is an economic analysis that bounds the additional utility gain of any cheating strategy, and applies to virtually any probabilistic payment scheme with offline validation. In our construction, this bound allows us to deter double spending by way of advance deposits that are revoked when cheating is detected.

Category / Keywords: cryptographic protocols / decentralized currencies; micropayments; probabilistic payments; anonymity; Bitcoin

Original Publication (with major differences): IACR-EUROCRYPT-2017

Date: received 31 Oct 2016, last revised 18 Jan 2017

Contact author: alexch at berkeley edu

Available format(s): PDF | BibTeX Citation

Version: 20170118:185937 (All versions of this report)

Short URL: ia.cr/2016/1033

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