A user transaction privacy protection protocol supporting regulations on account-based blockchain

Abstract

Financial institutions using blockchain smart contracts need to adhere to real-world regulations. Data on blockchain is easily accessible, so privacy protection is crucial. Our goal is to introduce an efficient protocol that satisfies both user privacy protection and hierarchical regulatory requirements, without the need for zero-knowledge proofs. To achieve this, we have developed two innovative design strategies. Firstly, we envision financial institutions serving as transaction mixers for their users. This approach offers an additional layer of privacy by obfuscating the source of each transaction. Secondly, we depend on regulatory agencies to oversee the compliance of blockchain transactions. This ensures that our protocol aligns with regulatory requirements while maintaining user privacy. The resulting protocol offers superior privacy protection for user transactions, with provable security and computational efficiency.