Mixing Strategies in Cryptocurrencies and An Alternative Implementation

TL;DR

This paper reviews various mixing strategies in cryptocurrencies, introduces Eth-Tumbler as an alternative implementation, and discusses how it enhances user anonymity through layered encryption and multiple signatures.

Contribution

It presents Eth-Tumbler, a novel mixing scheme that improves user anonymity in cryptocurrencies by employing layered encryption and multiple signatures.

Findings

Eth-Tumbler effectively achieves k-anonymity.

It enhances privacy compared to traditional mixing methods.

The scheme is efficient and practical for real-world use.

Abstract

Since the initial launch of Bitcoin by Satoshi Nakamoto in 2009, decentralized digital currencies have long been of major interest in both the academia and the industry. Till today, there are more than 3000 different cryptocurrencies over the internet. Each one relies on mathematical soundness and cryptographic wit to provide unique properties in addition to securing basic correctness. A common misbelief for cryptocurrencies is that they provide complete anonymity by replacing people's real-life identity with a randomly generated wallet address in payments. However, this "pseudonymity" is easily breakable under the public ledger. Many attacks demonstrate ways to deanonymize people through observing the transaction patterns or network interactions. Thus, cryptocurrency fungibility has become a popular topic in the research community. This report reviews a partial list of existing schemes and describes an alternative implementation, Eth-Tumbler. Eth-Tumbler utilizes layered encryption and multiple signatures and thus efficiently hides a user under k-anonymity.