Introduction
In the context of blockchain transactions, protecting personal privacy is paramount. Existing solutions emphasize achieving anonymity to safeguard user identities. However, mere transactional anonymity fails to meet evolving government audit policies. This paper proposes a solution balancing partial anonymity, confidentiality, auditability, and traceability while adhering to regulatory frameworks.
Core Features
Partial Anonymity & Auditability
- Combines Pedersen Commitment variants and randomized signatures to enable conditional privacy.
- Ensures user privacy while complying with audit requirements.
Confidential Transactions
- Leverages Twisted Elgamal encryption and tailored zero-knowledge proofs (ZKPs) to hide transaction amounts legally.
Security & Compliance
- Achieves traceability for regulatory oversight without compromising essential privacy protections.
System Testing & Validation
- Performance Metrics: Demonstrated feasibility through system tests, comparative analysis, and security evaluations.
Key Results:
- Efficiently meets auditability and privacy objectives.
- Maintains scalability under typical blockchain workloads.
Keywords
- Blockchain
- Privacy Protection
- Auditable Cryptocurrency
- Confidential Transactions
- Zero-Knowledge Proofs
FAQs
1. How does this scheme balance privacy and auditability?
By using randomized signatures and conditional commitments, it allows authorized entities to audit transactions while keeping user identities hidden from the public.
2. What makes Twisted Elgamal suitable for confidential transactions?
Its homomorphic properties enable encrypted arithmetic operations, while ZKPs verify correctness without revealing amounts.
3. Is this solution compatible with existing blockchain networks?
Yes, it can be integrated as a layer-2 protocol or embedded into native smart contracts for platforms like Ethereum.
👉 Explore blockchain security solutions
4. How does the system handle regulatory requests for traceability?
Designated auditors possess cryptographic keys to decrypt transaction trails, ensuring compliance with legal subpoenas.
5. What are the performance trade-offs?
Auditability introduces marginal latency (~15% slower than fully anonymous schemes), but optimization reduces overhead.
👉 Learn about advanced cryptographic audits
Conclusion
This scheme bridges the gap between privacy and compliance, offering a scalable framework for auditable cryptocurrencies. Future work includes optimizing ZKP efficiency and expanding cross-chain interoperability.
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