Researchers from three universities have proposed a new process for keeping transactions confidential over a public blockchain.
The proposal, dubbed Solidus and written by researchers from Cornell University, Shanghai Jiao Tong University and the University of Maryland, outlines a way in which network participants – cited as banks in the paper – could keep both transaction values and the identities of both payer and payee hidden.
At its heart, the proposal seeks to commit the concept of a bank-intermediated transaction system to a distributed ledger framework. Solidus, according to its authors, “closely aligns with the settlement process in the modern financial system”.
The authors explain:
“Solidus operates in a framework based on real-world financial institutions: a modest number of banks each maintain a large number of user accounts. Within this framework, Solidus hides both transaction values and the transaction graph (ie, the identities of transacting entities) while maintaining the public verifiability that makes blockchains so appealing.”
According to the paper, Solidus is “designed to be agnostic” when it comes to the kind of distributed ledger it is tied to, meaning that both permissioned and open systems could be utilized.
“While it does require a mutually-aware group of banks and transaction validation by the ledger maintainers, those maintainers can be a ‘permissioned’ (fixed-entity) group, an ‘unpermissioned’ (fully decentralized) ledger (a blockchain), or any other trustworthy append-only data structure,” the authors write.
The paper was released as part of the Initiative for CryptoCurrencies & Contracts, an ongoing research project that began in 2015 with a $3m grant from the US government.
Read the full paper here.