Fair-Anonymity: A Novel Fairness Notion for Cryptocurrency

In recent years, there has been a growing demand for using tokens of public blockchains like Bitcoin for legitimate transactions. However, the lack of authoritative guarantees on these tokens raises concerns about their potential misuse in criminal activities. Conversely, the introduction of full transparency regulation may stifle the highly innovative cryptocurrency community. This paper introduces a novel concept of fairness, termed Fair-Anonymity, which allows regulatory authorities to probabilistically trace the payer’s ID with the pre-agreed probability based solely on the total amount of the transaction, even when divided into smaller transactions. The Fair-Anonymity protocol can be applied to many blockchains by adding proof to the transaction, in which public verifiers can verify the result. Our scheme cryptographically enforces the revealing probability using k-out-of-n Committed Oblivious Transfer, ensuring that neither the sender nor the receiver can manipulate the probability or alter the committed values, thus disincentivizing illegal high-value transactions. Conversely, enterprises accepting only tokens with Fair-Anonymity proofs can externally demonstrate their commitment to lawful operations.