Computationally sound Bitcoin tokens

TL;DR

This paper introduces a secure, efficient method for implementing fungible tokens on Bitcoin using a minimal extension of its scripting language, ensuring computational soundness against adversaries.

Contribution

It presents a novel Bitcoin token implementation leveraging script extensions that guarantees computational soundness, a significant advancement over prior approaches.

Findings

Implementation is computationally sound against adversaries.

Requires only a small extension to Bitcoin's script language.

Ensures tokens cannot diverge from their ideal functionality with high probability.

Abstract

We propose a secure and efficient implementation of fungible tokens on Bitcoin. Our technique is based on a small extension of the Bitcoin script language, which allows the spending conditions in a transaction to depend on the neighbour transactions. We show that our implementation is computationally sound: that is, adversaries can make tokens diverge from their ideal functionality only with negligible probability.