Unspent Transaction Output Research Articles

Authenticating Account Balances in the Bitcoin Ecosystem via Merkle Trees

Bitcoin, as the trailblazing cryptocurrency, has profoundly impacted global markets and stands as a formidable contender to traditional financial paradigms. Yet, even within the sophisticated framework of Bitcoin, there remains potential for enhancement. Within the Bitcoin ecosystem, lightweight nodes operate without storing all transaction details. Instead, they retain only the block headers' content and specific transactional data pertinent to their own operations. To authenticate a transaction's presence in the blockchain, these lightweight nodes seek a Merkle proof from the full nodes. However, a challenge arises when lightweight nodes aim to validate the accuracy of their account balances sourced from full nodes. The latter relies on a data structure known as the Unspent Transaction Outputs (UTXO) for streamlined balance computation. In contrast, lightweight nodes grapple with ascertaining the veracity of such balance calculations. A viable solution lies in leveraging the available space in every block's coinbase transaction, which permits arbitrary modifications. By arranging the UTXO within a Merkle tree structure and embedding its root into the coinbase transaction's available space, account balance verification for lightweight nodes can be significantly enhanced using the Merkle proof. While such modifications to the Bitcoin protocol might trigger soft forks, the risk of hard forks remains absent.

Confidential Transaction Balance Verification by the Net Using Non-Interactive Zero-Knowledge Proofs

One of the main trends for the monitoring and control of business processes is to implement these processes via private blockchain systems. These systems must ensure data privacy and verifiability for the entire network here denoted by ‘Net’. In addition, every business activity should be declared to a trusted third party (TTP), such as an Audit Authority (AA), for tax declaration and collection purposes. We present a solution for a confidential and verifiable realization of transactions based on the Unspent Transaction Output (UTxO) paradigm. This means that the total sum of transaction inputs (incomes) $In$ must be equal to the total sum of transaction outputs (expenses) $Ex$, satisfying the balance equation $In=Ex$. Privacy in a private blockchain must be achieved through the encryption of actual transaction values. However, it is crucial that all participants in the network be able to verify the validity of the transaction balance equation. This poses a challenge with probabilistically encrypted data. Moreover, the inputs and outputs are encrypted with different public keys. With the introduction of the AA, the number of different public keys for encryption can be reduced to two. Incomes are encrypted with the Receiver’s public key and expenses with the AA’s public key. The novelty of our realization lies in taking additively-multiplicative, homomorphic ElGamal encryption and integrating it with a proposed paradigm of modified Schnorr identification providing a non-interactive zero-knowledge proof (NIZKP) using a cryptographically secure h-function. Introducing the AA as a structural element in a blockchain system based on the UTxO enables effective verification of encrypted transaction data for the Net. This is possible because the proposed NIZKP is able to prove the equivalency of two ciphertexts encrypted with two different public keys and different actors. This integration allows all users on the Net to check the UTxO-based transaction balance equation on encrypted data. The security considerations of the proposed solution are presented.

A Theory of Secure and Efficient Implementation of Electronic Money

Scalable and secure implementation of central bank digital currencies (CBDC) has been a challenge. Blockchains provide high operator-independent security and enable central banks to outsource CBDC operations while retaining control over the amount of circulating money. Scalability of blockchain depends on the possibility of decomposing the blockchain. We study how the choice of money scheme: accounts, bills, or unspent transaction outputs (UTXOs) influences the existence of secure and decomposable blockchain implementations of CBDC. We give formal definitions to money schemes, their decompositions, atomic decompositions inspired from the properties of blockchain implementations. For our formalism, we use tools from universal algebra and category theory. We present a general decomposition theory and conditions under which money schemes have atomic decompositions. Bill money schemes meet these conditions but account and UTXO schemes do not. Bill schemes enable scalable and secure implementations of CBDC while the more traditional schemes have some issues.

Reality-based UTXO Ledger

The Unspent Transaction Output (UTXO) model is commonly used in the field of Distributed Ledger Technology (DLT) to transfer value between participants. One of its advantages is that it allows parallel processing of transactions, as independent transactions can be added in any order. This property of order invariance and parallelisability has potential benefits in terms of scalability. However, since the UTXO Ledger is an append-only data structure, this advantage is compromised through the presence of conflicting transactions. We propose an extended UTXO Ledger model that optimistically updates the ledger and keeps track of the dependencies of the possible conflicts. In the presence of a conflict resolution mechanism, we propose a method to reduce the extended ledger back to a consistent UTXO Ledger.

A Privacy-Preserving Transparent Central Bank Digital Currency System Based on Consortium Blockchain and Unspent Transaction Outputs

There is rising global demand for the deployment of a central bank digital currency (CBDC) system to achieve financial stability. However, striking a balance between privacy, transparency, and auditability in such a system is technically difficult. We propose a CBDC system based on a consortium blockchain that adopts a privacy-preserving, transparent unspent transaction output (UTXO) model. The proposed system satisfies the travel rule of payment, unlike existing cryptocurrencies. Unlike the conventional UTXO approach, users use wallet-linked addresses for transactions rather than their actual wallet addresses. Each transacting address is generated using two keys: a random private key computed by the sender and the recipient's public key. The final private key is known only to the recipient, and it is required to spend the UTXO received using the address. Thus, each user holds only a single authorized public key and address, which eases regulatory compliance in the network without compromising anonymity and privacy. To manage the blockchain, the central bank and several certificate authorities execute the energy-efficient Clique consensus algorithm. Only the central bank supplies money to the network. A prototype of the system was implemented using Python-Flask, and it outperformed the state-of-the-art systems by providing a smaller transaction size (665 B) and lower verification time (9 ms).

A SURVEY A HYBRID MODEL FOR CENTRAL BANK DIGITAL CURRENCY BASED ON BLOCKCHAIN

With the development of blockchain technology, research on digital currency is gaining popularity, especially Central Bank Digital Currency (CBDC), which is essential to the growth of a nation's economy. However, CBDC requires a more complicated system than other crypto currencies do. a stronger focus on supervision and controllable decentralization Therefore, the technical foundation that is in accordance with economic ecology, efficient consensus methods, and network architecture that conserves computer resources are essential elements of CBDC. In this study, we propose a modularity network-enabled hybrid blockchain system for CBDC. Common digital currencies are recorded using the account system, especially for numerous small payment transactions, whereas digital assets and smart contracts with major value fluctuations and low liquidity are recorded using the Unspent Transaction Output (UTXO) scheme. To boost the concurrency of this structured network, a sliced data storage solution is developed, and a modular blockchain design is recommended. The DPOS-BFT technique is enhanced based on the block chain’s CBDC supervision mode, which condenses the original algorithm's two rounds of consensus into a single round. The effectiveness of this approach in speeding up consensus and transaction processing is shown in three simulated studies on scheme, network, and consensus.

An Optimal Algorithm for Secure Transactions in Bitcoin Based on Blockchain

Technological advancement has made a significant contribution to the change of the economy and the advancement of humanity. Because it is changing how economic transactions are carried out, the blockchain is one of the technical developments that has a lot of promise for this progress. The public record of the Bitcoin blockchain provides dispersed users with evidence of transaction ownership by publishing all transaction data from block reward transactions to unspent transaction outputs. Attacks on the public ledger, on the other hand, are a result of the fact that all transaction information are exposed. De-anonymization attacks allow users to link transaction entities and acquire user privacy through specified transaction amounts. As a result, in light of the Bitcoin blockchain system’s privacy issues, this scheme combines the concept of coin mixing with encrypted transaction technology to create a truly anonymous blockchain system that preserves the payer identity and transaction amount privacy. The one-way aggregated signature technique of Boneh, Gentry, and Lynn systematically embeds the notion of mixing into the whole block. The homomorphic encryption approach of Boneh, Goh, and Nissim allows miners to check the legality of encrypted transactions. Miners will validate transactions, conceal transactions, and package transactions as entities in the scheme. Finally, this technique was chosen after a comparison of several privacy-preserving blockchain schemes. It not only ensures complete anonymity, but also keeps transaction storage overhead to a minimum.

Privacy-Oriented Transaction for Public Blockchain via Secret Sharing

Immutability and traceability are the main reasons for the popularity of blockchain. Nevertheless, its transparency also makes the transactions visible to all participants, which seriously violates the privacy of some dealers. In order to transfer accounts over blockchain, all verifiers should be empowered with the ability to confirm the transactions, leading to the conflict between extensive consensus and individual privacy. Orienting to privacy issues of UTXO (Unspent Transaction Output), this paper exploited the unconditional security of Shamir’s secret sharing to construct a logic-physical map for public chain, which enabled noninteractive transaction verification without privacy infringement. A comprehensive analysis indicated that the proposed scheme is secure under UC (Universal Composability) framework with practical computation and communication overheads.

A coin selection strategy based on the greedy and genetic algorithm

Coin selection method refers to the process undergone when selecting a set of unspent transaction outputs (UTXOs) from a cryptocurrency wallet or account to use as inputs in each transaction. The most applied coin selection method that UTXO-based cryptocurrencies currently employ is an algorithm that decides on a certain set of UTXOs that matches the target amount and limits the transaction fee. However this approach trades off favourable maintenance overhead of the entire network for low transaction fees, as many low-value UTXOs known as “dust” is produced. Over time, this will impact the scalability and management of the cryptocurrency network as the global set of UTXOs become larger. Therefore, there is an urgency to find a higher-performing coin selection method suitable for UTXO-based cryptocurrencies. This paper proposes a method based on the greedy and genetic algorithm for effectively choosing sets of UTXOs in Bitcoin. The main objective of this coin selection strategy is to get as close as possible to the target while also maintaining and possibly reducing the number of UTXO inputs.

EBAS: An Efficient Blockchain-Based Authentication Scheme for Secure Communication in Vehicular Ad Hoc Network

A vehicular ad hoc network (VANET) is essential in building an intelligent transportation system that optimizes traffic conditions and makes traffic information conveniently accessible. However, malicious vehicles may disrupt the traffic order via propagating forged traffic/road information. Therefore, using digital certificates based on cryptography, some existing authentication schemes were proposed to manage vehicles’ identities. At first glance, these schemes can effectively identify malicious vehicles. However, these schemes require more computation and storage resources to maintain certificates. This is because the data storage of the database increases in a near-linear trend as the number of certificates grows. In this paper, we propose an efficient blockchain-based authentication scheme for secure communication in VANET (EBAS) to address the aforementioned issues. In EBAS, the regional trusted authority (RTA) receives traffic messages uploaded by the vehicle, together with transactions constructed via the unspent transaction output (UTXO) model. The verifier checks the legitimacy of the single input contained in the uploaded transaction to verify the legitimacy of the message sender’s identity. In terms of privacy preservation, a asymmetric key encryption technique, elliptic curve cryptography (ECC), is applied for constructing the transaction pseudonym, and users participate in the authentication process anonymously. In addition, our scheme guarantees the scalability of EBAS by proposing a transaction update mechanism, which can keep data storage at a stable level rather than near-linear growth. Under the simulation, the retrieving overhead remains at approximately 0.32 ms while the storage cost is stable at around 32.7 M for the blockchain state database. In terms of authentication efficiency, the average overhead of the proposed scheme is around 0.942 ms, which outperforms the existing schemes.

ESS: An Efficient Storage Scheme for Improving the Scalability of Bitcoin Network

With the continuous development of blockchain technology, Bitcoin as the first cryptocurrency has drawn massive attention from various sectors. Bitcoin on-chain data storage is over 338GB as of September 1, 2021. According to the exponential growth trend of block data, the size of a Bitcoin full node will exceed 500GB in two years. The huge storage problem makes it difficult for general users to store complete Bitcoin data conveniently, which weakens the decentralization capability of Bitcoin network. In this work, we propose an efficient storage scheme (ESS) based on the distribution characteristics of the unspent transaction outputs in Bitcoin network. ESS sets a UTXO-weight for each block. According to UTXO-weight, it dynamically prunes the blocks which have lower query frequency, improving the scalability of the Bitcoin network. When a new block is generated, ESS enables joining nodes to verify most of the transaction inputs instantly. Only a small amount of transaction outputs of older blocks need to be retrieved from the full node for payment verification. Experimental results demonstrated that ESS can reduce the size of a normal node in current Bitcoin network by about 82.14% at a low communication cost.

Deciphering Bitcoin Blockchain Data by Cohort Analysis

Bitcoin is a peer-to-peer electronic payment system that has rapidly grown in popularity in recent years. Usually, the complete history of Bitcoin blockchain data must be queried to acquire variables with economic meaning. This task has recently become increasingly difficult, as there are over 1.6 billion historical transactions on the Bitcoin blockchain. It is thus important to query Bitcoin transaction data in a way that is more efficient and provides economic insights. We apply cohort analysis that interprets Bitcoin blockchain data using methods developed for population data in the social sciences. Specifically, we query and process the Bitcoin transaction input and output data within each daily cohort. This enables us to create datasets and visualizations for some key Bitcoin transaction indicators, including the daily lifespan distributions of spent transaction output (STXO) and the daily age distributions of the cumulative unspent transaction output (UTXO). We provide a computationally feasible approach for characterizing Bitcoin transactions that paves the way for future economic studies of Bitcoin.

Hierarchical Multi-Blockchain System for Parallel Computation in Cryptocurrency Transfers and Smart Contracts

Most of the existing smart-contract-based cryptocurrencies, such as Ethereum, use an account-based ledger. However, while the account-based model is advantageous for the efficient use of smart contracts and the increased exchangeability of cryptocurrencies, it is not well-suited to the parallel execution of smart contracts. However, unspent transaction output (UTXO)-based cryptocurrencies such as Bitcoin are advantageous for parallel cryptocurrency transfers but not well-suited to smart contracts. In this paper, we propose a hierarchical multi-blockchain system that uses multiple pairs of sidechain and dual-sidechains extended by independent block mining in their blockchain networks and a mainchain to control the branching and connection process of sidechains and dual sidechains. In the proposed method, one pair of a sidechain and dual sidechain forms one shard. The proposed method uses multiple shards to execute cryptocurrency transfers and smart contracts in parallel. In addition, the proposed model uses an accoutchain to record the resulting state changes generated by smart contract executions in each shard and securely share them with all other nodes. The proposed method uses a modifiable blockchain structure for the accountchain to obtain the database to record the smart contract execution results in each shard in as small and secure a manner as possible to ensure that all nodes trust the recorded results without executing smart contracts themselves. To examine the validity of the proposed method, we conducted a threat analysis of the proposed method by examining possible attacks in various scenarios as a thought experiment. This threat analysis concludes that the proposed blockchain system can execute smart contracts in parallel while keeping the concurrency in resulting state changes secure.

CoinPrune: Shrinking Bitcoin’s Blockchain Retrospectively

Popular cryptocurrencies continue to face serious scalability issues due to their ever-growing blockchains. Thus, modern blockchain designs began to prune old blocks and rely on recent snapshots for their bootstrapping processes instead. Unfortunately, established systems are often considered incapable of adopting these improvements. In this work, we present CoinPrune, our block-pruning scheme with full Bitcoin compatibility, to revise this popular belief. CoinPrune bootstraps joining nodes via snapshots that are periodically created from Bitcoin's set of unspent transaction outputs (UTXO set). Our scheme establishes trust in these snapshots by relying on CoinPrune-supporting miners to mutually reaffirm a snapshot's correctness on the blockchain. This way, snapshots remain trustworthy even if adversaries attempt to tamper with them. Our scheme maintains its retrospective deployability by relying on positive feedback only, i.e., blocks containing invalid reaffirmations are not rejected, but invalid reaffirmations are outpaced by the benign ones created by an honest majority among CoinPrune-supporting miners. Already today, CoinPrune reduces the storage requirements for Bitcoin nodes by two orders of magnitude, as joining nodes need to fetch and process only 6 GiB instead of 271 GiB of data in our evaluation, reducing the synchronization time of powerful devices from currently 7 h to 51 min, with even larger potential drops for less powerful devices. CoinPrune is further aware of higher-level application data, i.e., it conserves otherwise pruned application data and allows nodes to obfuscate objectionable and potentially illegal blockchain content from their UTXO set and the snapshots they distribute.

A Hybrid Model for Central Bank Digital Currency Based on Blockchain

With the development of blockchain technology, the research on digital currency is attracting more and more attention, especially Central Bank Digital Currency (CBDC), which plays an important role in national economic construction. However, compared with existing cryptocurrencies, CBDC needs a more controllable decentralization and more emphasized supervision. Therefore, the critical part of CBDC is the network architecture that saves computing resources, the technical scheme that is in line with economic ecology, and efficient consensus algorithms. In this paper, we propose a hybrid blockchain system with a modularity network for CBDC. The account scheme is used to record frequently circulated digital currencies, especially for massive small payment transactions when the digital assets and smart contracts with large value fluctuations and weak liquidity are recorded using the Unspent Transaction Output (UTXO) scheme. In terms of network architecture, a modular blockchain architecture is proposed, and a sliced data storage solution is designed to enhance the concurrency of this structured network. We also proposed a CBDC supervision mode for blockchain, and on this basis, the DPOS-BFT algorithm is optimized, which reduces the two rounds of consensus of the original algorithm to one round. Finally, three simulation experiments on scheme, network, and consensus are carried out, which show this system can comprehensively improve the transaction processing and the consensus speed.

A Storage Optimization Scheme for Blockchain Transaction Databases

As the typical peer-to-peer distributed networks, blockchain systems require each node to copy a complete transaction database, so as to ensure new transactions can by verified independently. In a blockchain system (e.g., bitcoin system), the node does not rely on any central organization, and every node keeps an entire copy of the transaction database. However, this feature determines that the size of blockchain transaction database is growing rapidly. Therefore, with the continuous system operations, the node memory also needs to be expanded to support the system running. Especially in the big data era, the increasing network traffic will lead to faster transaction growth rate. This paper analyzes blockchain transaction databases and proposes a storage optimization scheme. The proposed scheme divides blockchain transaction database into cold zone and hot zone using expiration recognition method based on Least Recently Used (LRU) algorithm. It can achieve storage optimization by moving unspent transaction outputs outside the in-memory transaction databases. We present the theoretical analysis on the optimization method to validate the effectiveness. Extensive experiments show our proposed method outperforms the current mechanism for the blockchain transaction databases.

Trustzone-based secure lightweight wallet for hyperledger fabric

With the development of blockchain-based digital currencies, the security of digital wallets becomes more and more important. As far as we know, there is no safe lightweight wallet in hyperledger fabric. To solve the problem, we proposed a Trustzone-based Secure Lightweight Wallet for Hyperledger Fabric (hereafter referred to as TSLWHF). Firstly, we designed an Unspent Transaction Output (UTXO) set of transactions under blockchain and a signature verification mechanism for transactions, which made it possible to implement the lightweight wallet in hyperledger fabric. Then, we implemented a reliable protection mechanism for private keys and wallet’s address, which solved the problem that users’ information might be stolen or replaced. Meanwhile, the transaction verification results are guaranteed not to be tampered by hackers through verifying transactions in Trusted Execution Environment (TEE) and encrypting local block headers. Finally, to demonstrate utility, we deployed the system in hyperledger fabric and trustzone. Experiments showed that the wallet reduces the size of locally stored data while protecting the security of user’s assets. The time spent on TSLWHF to execute a transaction is 0.589s, which improves transaction’s performance compared to Bitcoin wallet.

Incentivizing cooperative relay in UTXO-based blockchain network

Today’s blockchain system provides two incentives for participants: block reward and transaction fee. However, these incentives benefit block miners more than ordinary participants. Besides, the message propagation relies on the volunteer work of these participants. We consider that there could be a third incentive to reward the relay process in the blockchain network. Nodes should be paid for corresponding relay work and incentives to expedite message propagation. We take advantage of the payment nature of blockchain and the characteristics of the UTXO Model, and propose a relay payment scheme to tackle the relay incentive issue. UTXO (unspent transaction output) is an abstract ownership of cryptocurrency and it represents a chain of payment relations between transactions. Any legal transaction should have valid UTXO(s) and generate new UTXO(s) to accomplish payment process. Native token in blockchain provides a straight and favorable payment method, and the UTXO model binds the interest of relay nodes and message originator. Then we model a cooperative, competitive relay game based on our scheme. We analyze the equilibrium results and run massive simulations on different datasets. This incentive scheme is free-rider resilient and could further expand to meet diverse relay requirement via transaction scripts in UTXO model. Our discussion and results help explore the relay incentives in the blockchain network and draw an example for the design of new blockchain systems.

BZIP: A compact data memory system for UTXO-based blockchains

Unspent Transaction Output (UTXO) set is the foundational model used in many blockchain systems to represent assets. The benefits of UTXO representation include parallel processing, privacy, etc. However, the increasing size of UTXO set is degrading the access performance and severely brings down the validation speed of blockchain further, especially in resource-constrained scenerios, such as IoT. In this paper, we present a memory-economical storage system for UTXO-based blockchain. Based on the inherent properties of UTXO set, we propose two lossless compression techniques to reduce the memory space occupied by UTXO set. Besides, the database related operations are adapted to make the proposed mechanism easily applied in current blockchain system. Taking Bitcoin as the object of study, our mechanism can deliver 2.9-4.5x memory reduction and orders of magnitude validation speed improvement in resource-constrained situations. This compact system will improve validation performance and extend applied scope of blockchains.

A Tale of Two Trees: One Writes, and Other Reads

Abstract The Bitcoin network has offered a new way of securely performing financial transactions over the insecure network. Nevertheless, this ability comes with the cost of storing a large (distributed) ledger, which has become unsuitable for personal devices of any kind. Although the simplified payment verification (SPV) clients can address this storage issue, a Bitcoin SPV client has to rely on other Bitcoin nodes to obtain its transaction history and the current approaches offer no privacy guarantees to the SPV clients. This work presents T 3, a trusted hardware-secured Bitcoin full client that supports efficient oblivious search/update for Bitcoin SPV clients without sacrificing the privacy of the clients. In this design, we leverage the trusted execution and attestation capabilities of a trusted execution environment (TEE) and the ability to hide access patterns of oblivious random access machine (ORAM) to protect SPV clients’ requests from potentially malicious nodes. The key novelty of T 3 lies in the optimizations introduced to conventional ORAM, tailored for expected SPV client usages. In particular, by making a natural assumption about the access patterns of SPV clients, we are able to propose a two-tree ORAM construction that overcomes the concurrency limitation associated with traditional ORAMs. We have implemented and tested our system using the current Bitcoin Unspent Transaction Output (UTXO) Set. Our experiment shows that T 3 is feasible to be deployed in practice while providing strong privacy and security guarantees to Bitcoin SPV clients.