Section: Research Program

Electronic Currencies and the Blockchain

Electronic cash (e-cash) was first proposed in the 1980s but despite extensive research it has never been deployed on a large scale. Other means of digital payments have instead largely replaced physical cash. Common to all digital payments offered by banks and other payment providers is that they do not respect the citizens' right to privacy, which for legitimate purchases and moderate sums also includes their right of anonymous payments.

The rise of so-called decentralized currencies, such as Bitcoin and the numerous “alt-coins” inspired by it, have established a third way of payments in addition to physical cash, which offers privacy, and card and other electronic payments, which are traceable by its providers. The continuous growth of popularity and usage of this new kind of currencies, also called “cryptocurrencies” as their security and stability crucially relies on the use of cryptography, have triggered a renewed interest in cryptographic e-cash.

On the one hand, our group investigates “centralized” e-cash, in keeping with the current economic model that has money be issued by (central) banks. In contrast, cryptocurrencies use money distribution as an incentive for widespread participation in the system, on which its stability hinges. Of particular interest among centralized e-cash schemes is transferable e-cash, which allows users to transfer coins between each other without interacting with a third party (or the blockchain). Currently all efficient e-cash schemes require coins to be deposited at the bank once received; they are thus not transferable. Our goal is to propose efficient transferable e-cash schemes.

Another direction concerns (decentralized) cryptocurrencies whose adoption is continuously growing so that now even central banks, like the Swedish Riksbank, are considering issuing their own currency as a cryptocurrency. While systems like Bitcoin are perceived as offering anonymous payments, a line of research has shown that this is not the case. One of the major research challenges in this area is to devise schemes with an anonymity level comparable to that of physical cash. The currently proposed schemes either lack formal security analyses or they are inefficient due to the heavy-duty cryptography used. Our group works towards practical cryptocurrencies with formally analyzed privacy guarantees.

Cryptocurrencies rely on a decentralized data structure called the “blockchain”, which has meanwhile found many other applications apart from electronic money. Together with Microsoft Research, our group investigates decentralized means of authentication that uses cryptography to guarantee privacy.