DAPUR: A Decentralized Anonymous Payment Under Regulation from Bitcoin

Abstract

This paper proposes DAPUR, a decentralized anonymous payment protocol that simultaneously achieves strong transaction privacy and regulatory compliance. Addressing the fundamental tension between confidentiality and oversight in cryptocurrency systems, we develop a novel cryptographic framework combining zero-knowledge proof with access-controlled encryption. The protocol enables end-to-end transaction privacy while permitting authorized regulators to audit transaction details through selective disclosure mechanisms. The system’s security is formally proven through a model establishing ledger indistinguishability, transaction non-malleability, and balance preservation. Experimental results demonstrate practical viability with sub-second verification times. DAPUR represents a significant advance in privacy-preserving payment systems, showing that regulatory compatibility can be achieved without compromising decentralization principles.