Communications of the ACM
New System Makes It Harder to Track Bitcoin Transactions
Researchers from North Carolina State University, Boston University, and George Mason University have developed a bitcoin-compatible system that could make it significantly more difficult for observers to identify or track the parties involved in any give
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Researchers at North Carolina State University, Boston University, and George Mason University have developed TumbleBit, a program that could make it more difficult for observers to track any single bitcoin transaction.
TumbleBit utilizes the "mixing service" concept, in which different parties pay an intermediary "tumbler," which then pays the receiving parties. The more parties that are involved, the harder it is to determine which specific parties are involved in any one transaction. However, if an outside observer can compromise the tumbler, it could learn who was paying whom.
The researchers say TumbleBit solves this problem with a three-phased approach. The first phase, called escrow, operates on the public blockchain. The second phase involves using cryptographic tools to pay the correct parties without knowing which parties are involved. In the third phase, called cashout, all of the transactions are conducted simultaneously, making it difficult to identify which parties are involved in a transaction.
From NCSU News
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