Formal Modelling and Security Analysis of Bitcoin's Payment Protocol

TL;DR

This paper provides a formal security analysis of Bitcoin's Payment Protocol (BIP70), identifies vulnerabilities related to refund address authentication, and proposes a protocol revision to mitigate these security issues.

Contribution

It introduces the first formal model of the protocol, formalizes refund address security goals, and proposes a verified protocol revision to enhance security.

Findings

The original protocol is vulnerable to refund address authentication attacks.

The proposed revision supports verifiable evidence for merchants.

The revised protocol satisfies formal security goals against known and potential attacks.

Abstract

The Payment Protocol standard BIP70, specifying how payments in Bitcoin are performed by merchants and customers, is supported by the largest payment processors and most widely-used wallets. The protocol has been shown to be vulnerable to refund attacks due to lack of authentication of the refund addresses. In this paper, we give the first formal model of the protocol and formalise the refund address security goals for the protocol, namely refund address authentication and secrecy. The formal model utilises communication channels as abstractions conveying security goals on which the protocol modeller and verifier can rely. We analyse the Payment Protocol confirming that it is vulnerable to an attack violating the refund address authentication security goal. Moreover, we present a concrete protocol revision proposal supporting the merchant with publicly verifiable evidence that can mitigate the attack. We verify that the revised protocol meets the security goals defined for the refund address. Hence, we demonstrate that the revised protocol is secure, not only against the existing attacks, but also against any further attacks violating the formalised security goals.