Dandelion++

Abstract

Bitcoin and other cryptocurrencies have surged in popularity over the last decade. Although Bitcoin does not claim to provide anonymity for its users, it enjoys a public perception of being a privacy preserving financial system. In reality, cryptocurrencies publish users' entire transaction histories in plaintext, albeit under a pseudonym; this is required for transaction validation. Therefore, if a user's pseudonym can be linked to their human identity, the privacy fallout can be significant. Recently, researchers have demonstrated deanonymization attacks that exploit weaknesses in the Bitcoin network's peer-to-peer (P2P) networking protocols. In particular, the P2P network currently forwards content in a structured way that allows observers to deanonymize users. In this work, we redesign the P2P network from first principles with the goal of providing strong, provable anonymity guarantees. We propose a simple networking policy called Dandelion which provides quasi-optimal, network-wide anonymity, with minimal cost to the network's utility. We also discuss practical implementation challenges and propose heuristic solutions.