BSIP-1203: Moved Motivation section to Rationale section and wrote a brief Motivation section.

Christopher Sanborn 2018-09-30 14:42:36 -04:00
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@ -13,6 +13,14 @@ The existing Stealth implementation ([BSIP-0008]( requires the sen
## Motivation
"Stealth addresses" are a method of providing _unlinkability_ to blockchain transactions. Unlinkability is a major component of the "Privacy Triad": _unlinkability_, _confidentiality_, and _untraceability_. Using a stealth address, a sending wallet is able to compute a "child" public key that derives from the public key specified in the address, but which cannot be correlated, or "linked", to the address public key except by the sender and the receiver. This child key is what is used for the transaction outputs (TXOs). As such, third party observers cannot link TXOs to addresses, nor even link together TXOs which are "controlled" by the same address.
Although this is a great benefit to privacy, it complicates the matter of detecting inbound transactions, since a wallet cannot simply scan for transactions which explicitly identify the destination address.
Existing [Stealth Phase I]( functionality already includes the use of stealth addresses, but does not include a solution for detection of inbound transactions. As a result of which, user adoption of the Stealth feature has been very minimal. We propose below a solution to inbound transaction detection as well as some additional enhancements to the stealth addressing scheme.
## Rationale
A confidential transaction (cTX) does not identify the recipient. As such, there is no direct way for a wallet to use only its Stealth address to query the p2p network for inbound transactions. In the current "phase one" implementation of Stealth ([BSIP-0008](, inbound discovery is a manual process requiring the sender to communicate "transaction receipts" to the intended recipients of each transaction output in order to alert each recipient of their incoming balance. Transaction receipts are encrypted data structures that embed the Pedersen commitment of the transaction output and the value and blinding factor that the recipient needs to "open" the commitment. Additionally, the receipt records the one-time public key which the recipient uses to derive the private key offset needed to spend the incoming coin, via a shared-secret procedure between the one-time key and the recipient's address key. The need to communicate transaction receipts is burdensome and introduces substantial risk of lost funds due to failure to communicate or retain receipts.
_Keys involved in a cTX output (cTXO):_
@ -38,7 +46,6 @@ A very simple solution would be to change the behavior of using the APK as the m
To support this strategy, a wallet will need to inspect all cTX activity on the network and test the challenge conditions on each transaction. This could be achieved if API nodes are extended to provide an API call to retrieve `stealth_memo` fields from all cTXOs appearing in a specified block range. The wallet could simply download the memos, test the challenge on each one, and identify and decrypt the ones that are destined to the wallet. No need would remain to manually transmit transaction receipts. The receipts would be embedded, compactly and unlinkably, in the Tx outputs.
## Rationale
## Specifications
We specify two protocols. In the first subsection, [_Wallet procedure..._](#wallet-procedure-for-recognizing-own-commitments), we specify the recognition protocol by detailing wallet behaviors for: