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Mining for Privacy: How to Bootstrap a Snarky Blockchain

March/2021, Financial Cryptography 2021


Non-interactive zero-knowledge proofs, and more specifically succinct non-interactive zero-knowledge arguments (zk-SNARKS), have been proven to be the “swiss army knife” of the blockchain and distributed ledger space, with a variety of applications in privacy, interoperability and scalability. Many commonly used SNARK systems rely on a structured reference string, the secure generation of which turns out to be their Achilles heel: If the randomness used for the generation is known, the soundness of the proof system can be broken with devastating consequences for the underlying blockchain system that utilises them. In this work we describe and analyze, for the first time, a blockchain mechanism that produces a secure SRS with the characteristic that security is shown for the exact same conditions under which the blockchain protocol is proven to be secure. Our mechanism makes use of the recent discovery of updateable structure reference strings to perform this secure generation in a fully distributed manner. In this way, the SRS emanates from the normal operation of the blockchain protocol itself without the need of additional security assumptions or off-chain computation and/or verification. We provide concrete guidelines for the parameterisation of this system which allows for the completion of a secure setup in a reasonable period of time. We also provide an incentive scheme that, when paired with the update mechanism, properly incentivises participants into contributing to secure reference string generation.