Cryptographic wallets are an essential tool to securely store and maintain users’ secret keys and consequently their funds in Blockchain networks. A compelling approach to construct such wallets is to share the user’s secret key among several devices, such that an adversary must corrupt multiple machines to extract the entire secret key. Indeed, many leading cryptocurrency companies such as Coinbase, Binance, or ZenGo have started offering such distributed wallets to their customers. An important feature of a cryptographic wallet is its compatibility with the so-called BIP32 specification, the most widely adopted standard for cryptographic wallets. Essentially, BIP32 specifies the notion of a hierarchical deterministic wallet, which allows to create a key hierarchy in a deterministic fashion. Unfortunately, despite significant interest, no practically efficiently solution for a fully distributed wallet scheme, that also follows the BIP32 standard, exists. In this work, we show the first concretely efficient construction of a fully distributed wallet that is compliant with the BIP32 standard. To this end, we first provide a game-based notion of threshold signatures with rerandomizable keys and show an instantiation via the Gennaro and Goldfeder threshold ECDSA scheme (CCS’18). We then observe that one of BIP32’s key derivation mechanisms, the so-called hardened derivation, cannot efficiently be translated to the threshold setting. Instead, we devise a novel and efficient hardened derivation mechanism for the threshold setting that satisfies the same properties as the original mechanism as specified by BIP32. As a final contribution, we evaluate our solution with respect to its running time and communication cost.

Cryptocurrency networks crucially rely on digital signature schemes, which are used as an authentication mechanism for transactions. Unfortunately, most major cryptocurrencies today, including Bit-coin and Ethereum, employ signature schemes that are susceptible to quantum adversaries, i.e., an adversary with access to a quantum computer can forge signatures and thereby spend coins of honest users. In cryptocurrency networks, signature schemes are typically not executed in isolation, but within a so-called cryptographic wallet. In order to achieve security against quantum adversaries, the signature scheme and the cryptographic wallet must withstand quantum attacks.

Permissionless blockchain systems such as Bitcoin or Ethereum are slow and expensive, since transactions are processed in a distributed network by a large set of parties. To improve on these shortcomings, a prominent approach is given by so-called 2nd-layer protocols. In these protocols parties process transactions off-chain directly between each other, thereby drastically reducing the costly and slow interaction with the blockchain. In particular, in the optimistic case, when parties behave honestly, no interaction with the blockchain is needed. One of the most popular off-chain solutions are Plasma protocols (often also called commit-chains). These protocols are orchestrated by a so-called operator that maintains the system and processes transactions between parties. Importantly, the operator is trustless, i.e., even if it is malicious users of the system are guaranteed to not lose funds. To achieve this guarantee, Plasma protocols are highly complex and rely on involved and expensive dispute resolution processes. This has significantly slowed down development and deployment of these systems.In this work we propose CommiTEE – a simple and efficient Plasma system leveraging the power of trusted execution environments (TEE). Besides its simplicity, our protocol requires minimal interaction with the blockchain, thereby drastically reducing costs and improving efficiency. An additional benefit of our solution is that it allows for switching between operators, in case the main operator goes offline due to system failure, or behaving maliciously. We implemented and evaluated our system over Ethereum and show that it is at least 2 times (and in some cases more than 16 times) cheaper in terms of communication complexity when compared to existing Plasma implementations. Moreover, for protocols using zero-knowledge proofs (like NOCUST-ZKP), CommiTEE decreases the on-chain gas cost by a factor ≈ 19 compared to prior solution.

In many cryptocurrencies, the problem of key management has become one of the most fundamental security challenges. Typically, keys are kept in designated schemes called wallets, whose main purpose is to store these keys securely. One such system is the BIP32 wallet (Bitcoin Improvement Proposal 32), which since its introduction in 2012 has been adopted by countless Bitcoin users and is one of the most frequently used wallet system today. Surprisingly, very little is known about the concrete security properties offered by this system. In this work, we propose the first formal analysis of the BIP32 system in its entirety and without any modification. Building on the recent work of Das et al. (CCS '19), we put forth a formal model for hierarchical deterministic wallet systems (such as BIP32) and give a security reduction in this model from the existential unforgeability of the ECDSA signature algorithm that is used in BIP32. We conclude by giving concrete security parameter estimates achieved by the BIP32 standard, and show that by moving to an alternative key derivation method we can achieve a tighter reduction offering an additional 20 bits of security (111 vs. 91 bits of security) at no additional costs.

Current permissionless cryptocurrencies such as Bitcoin suffer from a limited transaction rate and slow confirmation time, which hinders further adoption. Payment channels are one of the most promising solutions to address these problems, as they allow the parties of the channel to perform arbitrarily many payments in a peer-to-peer fashion while uploading only two transactions on the blockchain. This concept has been generalized into payment channel networks where a path of payment channels is used to settle the payment between two users that might not share a direct channel between them. However, this approach requires the active involvement of each user in the path, making the system less reliable (they might be offline), more expensive (they charge fees per payment), and slower (intermediaries need to be actively involved in the payment). To mitigate this issue, recent work has introduced the concept of virtual channels (IEEE S&P’19), which involve intermediaries only in the initial creation of a bridge between payer and payee, who can later on independently perform arbitrarily many off-chain transactions. Unfortunately, existing constructions are only available for Ethereum, as they rely on its account model and Turing-complete scripting language. The realization of virtual channels in other blockchain technologies with limited scripting capabilities, like Bitcoin, was so far considered an open challenge.In this work, we present the first virtual channel protocols that are built on the UTXO-model and require a scripting language supporting only a digital signature scheme and a timelock functionality, being thus backward compatible with virtually every cryptocurrency, including Bitcoin. We formalize the security properties of virtual channels as an ideal functionality in the Universal Composability framework and prove that our protocol constitutes a secure realization thereof. We have prototyped and evaluated our protocol on the Bitcoin blockchain, demonstrating its efficiency: for n sequential payments, they require an off-chain exchange of 9+2n transactions or a total of 3524+695n bytes, with no on-chain footprint in the optimistic case. This is a substantial improvement compared to routing payments in a payment channel network, which requires 8n transactions with a total of 3026n bytes to be exchanged.

Most blockchain solutions are susceptible to quantum attackers as they rely on cryptography that is known to be insecure in the presence of quantum adversaries. In this work we advance the study of quantum-resistant blockchain solutions by giving a quantum-resistant construction of a deterministic wallet scheme. Deterministic wallets are frequently used in practice in order to secure funds by storing the sensitive secret key on a so-called cold wallet that is not connected to the Internet. Recently, Das et al. (CCS'19) developed a formal model for the security analysis of deterministic wallets and proposed a generic construction from certain types of signature schemes that exhibit key rerandomization properties. We revisit the proposed classical construction in the presence of quantum adversaries and obtain the following results.