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Cryptography of Blockchain

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 Cryptography of Blockchain

Ying Long1,2,Yinyan Gong1,2*, Weihong Huang1,2, Jiahong Cai1,2, Nengxiang Xu1,2,

Kuan-ching Li1,2

1 School of Computer Science and Engineering, Hunan University of Science and

Technology, Xiangtan 411201, China

2 Hunan Key Laboratory for Service computing and Novel Software Technology,
Xiangtan 411201, China

[email protected],[email protected],[email protected],jiah
[email protected], [email protected], [email protected]

Abstract. With the development of digital currencies and 5G technology, block-

chain has gained widespread attention and is being used in areas such as
healthcare, industry and smart vehicles. Many security issues have also been ex-
posed in the course of blockchain applications. Cryptography can ensure the se-
curity of data on the blockchain, the integrity and validity of data as well as the
ability to authenticate users and anonymize them. This article therefore examines
the cryptography underlying blockchain security issues, providing an overview
of cryptographic homomorphic encryption, zero-knowledge proofs and secure
multi-party computation commonly used in blockchains. At the same time, the
development of quantum computing is bound to affect existing cryptographic
systems, and blockchains applying these cryptographic systems are bound to be
hit hard, so this article discusses four of the most promising post-quantum cryp-
tography techniques available: hash-based public key cryptography, code-based
public key cryptography, multivariate public key cryptography, and lattice-based
public key cryptography.

Keywords: Blockchain, Homomorphic encryption, Post quantum cryptography,

Secure multi-party computation, Zero-knowledge proof.

1 Introduction

In 2008, Satoshi Nakamoto introduced the concept of Bitcoin, a decentralized virtual

currency, in his published paper "Bitcoin: A Peer-to-Peer Electronic Money System"
[1]. Blockchain is a data structure that organizes blocks of data in a chain in chronolog-
ical order and is capable of verifying, tracing, and reliably storing data on the chain
through cryptography to ensure that the data on the blockchain is not tampered with
and cannot be forged. The consistency of data on the blockchain is ensured through
transaction signatures, consensus mechanisms and cross-chain technologies [2]. Block-
chain technology is decentralized, traceable, tamper-proof, complete and open and
transparent [3], which have attracted the attention of academia and industry. Moreover,
2

blockchain technology will be a revolutionary technology to solve the trust crisis in the
future society [4].
As blockchain continues to develop, there is a greater demand for data protection,
anonymity and untraceability [5] in many fields. Blockchain is no longer only used for
virtual currencies [6] but is also being extended to various fields such as healthcare,
copyright protection and finance. For example, blockchain is currently the most effec-
tive solution for personal privacy protection and sharing [7]. As part of the big data
trend [8], the growing scale of the Internet of Things (IoT) [9] and the sharing of its
data requires the use of blockchain. Many insider attacks are caused by trust issues, and
blockchain can solve the problem of trust between untrustworthy users [10]. However,
the rise of blockchain technology in various fields has brought about many security
issues. For example, privacy protection and transaction protection. Also, with the de-
velopment of quantum computing, which may break many cryptographic systems [11],
the cryptography of blockchain will be severely challenged. With the emergence of
various attacks, various cryptography-based blockchain security protection techniques
are gradually developed [12]. Therefore, this paper will study the cryptography tech-
niques in blockchain.

2 Blockchain Overview

2.1 The data structure of Bitcoin

In blockchain technology, a great deal of cryptographic knowledge is used to ensure

the system's security. Cryptography greatly protects the privacy of data on the block-
chain [13]. The blockchain is actually made up of blocks connected one by one, each
block generating a hash value from the previous block [14]. The user can then verify
the correctness of the data on the chain. Furthermore, if an attacker wants to tamper
with the data on the blockchain, he must change all the blocks after that one.

Fig. 1. Bitcoin structure diagram.

A block contains a block header and a block body. The block header holds the pre-
vious block's hash value, version number, random number Nonce, timestamp, Merkle
root and the target hash value. In the block body is a Merkle tree, a typical binary tree.
Its root is formed by the hashes of all the transactions in the block; the leaf nodes of the
Merkle tree are the hashes generated by the transactions packed into the block, and the
values of the non-leaf nodes are generated by concatenating the hashes of their children
into a string and then hashing them, in this way working from the bottom up to generate
the hash of the Merkle root. This structure allows a quick look at whether the
 3

transactions packed in the block have been altered and, if found to have been altered, a
quick way to locate the altered transaction.

2.2 Security challenges facing blockchain

Blockchain is a promising and growing technology but also faces many challenges.
These challenges arise from the existing computer system [15-17] and network archi-
tecture [18-20], the consensus mechanisms used in the blockchain and the need for data
protection [21-23]. With the development of blockchain and the development and pro-
motion of the application of 5G technology, blockchain is gradually applied to various
industries such as healthcare [24], industry [25], and finance [26]. While blockchain is
widely used, it also raises a series of security and privacy issues. The digital currencies
used in blockchain have also suffered many security threats, with attacks on trading
platforms, theft of currencies and crimes committed by hackers and criminals using
blockchain's anonymous transactions occurring frequently. At the same time, privacy
breaches [27-28] in blockchain can also make the skeptical public of blockchain. These
challenges are very detrimental to the development and innovation of blockchain.

3 Typical cryptography

3.1 Homomorphic encryption

The idea of homomorphic encryption was first introduced by Rivest, Adleman and
Detouzos [29] (the R and A in "RSA") in 1978. Homomorphic data encryption allows
direct manipulation of the encrypted data without the need for preliminary decryption
of the operands. The effect of manipulating the encrypted data is the same as manipu-
lating the data before encryption. In a blockchain, FHE ( fully homomorphic encryp-
tion) ensures that the ledger information is not compromised but can be manipulated,
even if the blockchain is attacked. FHE is a good solution to the problem of data being
used on remote devices [30]. In 2009, Gentry [31] proposed a secure and reasonable
FHE system that performs arbitrary addition and multiplication operations on the en-
crypted data while also acting on the pre-encrypted data. However, the performance of
FHE algorithms is so poor that they are difficult to use in practice. In 2011, Brakerski
et al. [32] proposed a new FHE algorithm, BVG, based on Learning With Errors
(LWE), an alternative assumption to lattice encryption. The BGV system uses a some-
what more practical LWE assumption than the system proposed by Gentry in 2009. In
2013, Gentry [33] et al. proposed a simpler, FHE algorithm GSW based on LWE. In
their scheme, they proposed a way to construct FHE of a new technique known as the
approximate eigenvector method.

3.2 Zero-knowledge proofs

Zero-knowledge proof means that the prover does not need to reveal anything about the
verification to the verifier who can also do the verification. With the use of zero-
4

knowledge proofs in blockchain, other nodes can verify the legitimacy and correctness
of a transaction even if both parties do not reveal any information about the transaction.
Zero-knowledge proofs are divided into interactive zero-knowledge proofs and non-
interactive zero-knowledge proofs. Interactive zero-knowledge proofs require multiple
interactions between the verifier and the prover, and the verifier improves the trustwor-
thiness of the prover by performing multiple verifications to the prover. Non-interactive
zero-knowledge proofs, on the other hand, allow the verifier and the prover to interact
once with the aid of a machine. An overview of the development of zero-knowledge
proofs is given next.

Fig. 2. Interactive zero-knowledge proof.

Fig. 3. Non-interactive zero-knowledge proof.

The concept of zero-knowledge proofs was introduced by S. Goldwasser, S. Micali
and C. Rackoff [34] in 1988. After introducing this concept, zero-knowledge proofs
have also been present in the overview of the theory. The emergence of blockchains
and the need for data confidentiality has facilitated scholarly research on zero-
knowledge proofs, which can address the difficulty of aligning blockchain privacy pro-
tection with data transparency [35]. In 2010, Groth proposed the key theory of zero-
knowledge proofs ZK-SNARK [36] (zero-knowledge succinct non-interactive
knowledge proofs). The provers can prove the correctness of their provided proofs
mathematically to the verifiers without providing information about the proofs as the
verifiers do. Subsequent scholars have worked on ZK-SNARK to reduce verification
time and improve efficiency. the Pinocchio [37] protocol, proposed in 2013, is an im-
proved version of ZK-SNARK, and in 2015 the blockchain application Zcash was used
to build ZK-SNARK [38], a widespread application of zero-knowledge proofs. In 2016,
Groth [39] proposed Groth16, which is also based on an improved version of ZK-
SNARK with asymmetric pairing, and the proof will be more efficient.
ZK-SNARKS requires public reference strings for provers and verifiers for trust-
worthy settings when performing zero-knowledge proofs, but these public strings are
again provided by a small group of people, and thus are vulnerable to attack by some
malicious nodes [39]. As a result, research now prefers to discard trusted settings. In
 5

2018, the Bulletproofs algorithm was introduced to eliminate the need for trusted set-
tings. It is a more efficient algorithm that produces proofs of logarithmically trans-
formed size, which would be very beneficial for storing proofs in the blockchain. More-
over, Bulletproofs can also merge and compress proofs of the same scope, reducing the
size of the space occupied by the blockchain. In 2018, a new zero-knowledge proof
scheme ZK-STARKS was also proposed [40], a zero-knowledge proof scheme that
does not require trustworthy settings. ZK-STARKS has better scalability, and its proof
and verification times are linearly and logarithmically related to the initial computation
time, respectively. As the initial size increases, its proof and verification times do not
increase significantly. The more widely used non-interactive zero-knowledge proofs
for blockchain applications are ZK-SNARKS, Bulletproofs and ZK-STARKS.

3.3 Secure Muti-party Computation

Secure Muti-party Computation (SMPC) is derived from the "millionaire problem" pro-
posed by Professor Yao in 1982, i.e.. Collaborative multi-party computing with third-
party guarantees may carry the risk of information leakage from third-party organiza-
tions. SMPC enables distributed parties to jointly compute arbitrary functions without
revealing their own private inputs and outputs. In the SMPC scenario, there are
n(n ≥ 2) participants performing multi-party collaboration to compute an objective
function f ( x1 , x2 ,..., xn ) = ( y1 , y2 ,..., yn ) , where x1 , x2 ,..., xn are the input infor-
mation of each party. When the computation is finished, each participant does not get
any other information except its own corresponding output yi , Also no input infor-
mation can be deduced from the input results.

Fig. 4. Secure multi-party calculation.

SMPC provides input correctness, computational correctness and output independ-
ence to analyze and capture the value in the data while protecting the privacy of the
data. Similar to blockchain, secure multi-party computing supports collaborative com-
puting by uniting untrusted users without a trusted third party. SMPC can collaborate
with untrusted users in the blockchain without compromising their privacy to perform
analytical calculations, analytical modelling, etc., on some sensitive data. It is also ben-
eficial for blockchain applications to industries that require data analysis and storage,
such as healthcare and industry. SMPC can be used in multi-signature, secret sharing,
and random number generation, and the wallet ZenGo [41], a wallet released by Kzen,
6

does not require the use of mnemonic word and keys, but rather uses a gated signature
method that combines the advantages of multi-signature and secret sharing. However,
there are still difficulties that need to be addressed in the application of SMPC in block-
chain, such as the fact that SMPC requires the participation of multiple honest nodes,
malicious nodes may collude in the computation [42], and the efficiency of SMPC is
low when the network transmission rate is low.

4 Post-Quantum Cryptography

If quantum computing develops as expected, it will inevitably disrupt existing crypto-

graphic systems. For example, Bernstein and Daniel J. [43] point out that quantum
computing's well-known Shor [44] algorithm and Grover [45] algorithm will have an
impact on existing cryptographic systems. The Shor algorithm can theoretically solve
the underlying mathematical problems on which the security of public key crypto-
graphic algorithms depends, such as discrete logarithms and large integer decomposi-
tion problems. So these public-key algorithms, such as RSA and DSA, should not be
secure. And Grover's algorithm will halve the security effect of some symmetric cryp-
tographic algorithms and hash algorithms, requiring an increase in key length. Although
it is only for theoretical threats, to take a long-term view, it is necessary to research
early cryptography that can resist quantum attacks.
Post-Quantum Cryptography (PQC) resists an attacker even if the attacker has a
quantum computer, also known as anti-quantum cryptography. The current mainstream
schemes for PQC are hash-based public key cryptography, code-based public key cryp-
tography, multivariate public key cryptography and lattice-based public key cryptog-
raphy.

4.1 Lattice based cryptography

A lattice is a set of points in a high-dimensional space. Let b1 , b2 ,..., bn be a linearly

m
independent set of bases ( n ≤ m ) in R and the lattice be the set of all linear combi-
nations of integer coefficients of this set of bases. That is.

 n 
L( B) ∑ xi bi , xi ∈
= = Z , i 1, 2,..., n  (1)
 i =1 
The security of cryptographic algorithms relies on the underlying mathematical
problem. Furthermore, the two main difficulties in lattice problems: are the difficulty
of solving the shortest vector and the difficulty of solving the nearest vector. These
problems have worst-case difficulty [46]. Many scholars have conducted many studies
on lattice problems. The most famous algorithm is the LLL proposed by H. Lenstra, A.
Lenstra and Lovasz in 1982 [47], however it can only solve the shortest vector in pol-
( n −1)/2
ynomial time with an approximation factor (1 + ε ) 4 / 3 of (where it is a con-
stant). Thus lattice-based cryptography is quantum resistant.
 7

In the "Third Status Report on the Post-NIST Quantum Cryptographic Standardiza-

tion Process" - NISTIR 8413 published in July 2022, four algorithms to be standardized
were announced. And three of these are all lattice-based cryptographic schemes. The
lattice-based cryptography algorithms have a better balance of security, public and pri-
vate key size, and computational speed and are considered one of the most promising
post-quantum cryptographic algorithms [48].

4.2 Hash-based signature algorithm

The hash-based signature algorithm was proposed by Leslie Lamport in 1979, but com-
pared to other signature schemes, it did not to be widely used because it could produce
relatively long signatures. With the arrival of the threat of quantum computing, it is
gradually gaining attention again because hash-based signature counting has quantum-
resistant properties, such as being resistant to attacks by Shor algorithms. It is one of
the algorithms that have the potential to replace the traditional signature algorithm [49].
The one proposed by Leslie Lamport is a single hash signature, which cannot sign mul-
tiple messages, and was later improved by Ralph Merkle to form a multiple signature
algorithm based on the Merkle tree. The public key is the root of the Merkle, and the
key is each leaf node in the Merkle tree. The quantum resistance of Hash-based signa-
ture algorithm is based on the collision resistance of the Hash function because the
current quantum algorithms cannot find the collision of the Hash. Swati Kumari [50]
proposed an enhanced hash-based post-quantum cipher (PQC) architecture called sig-
nature-based Merkle hash multiplication (SMHM) algorithm. The hash Merkle signa-
ture-based algorithm is enhanced by using the Bernoulli-Karatsuba multiplication al-
gorithm. Konstantinos Chalkias [51] proposed a scalable post-quantum cryptography
scheme based on Merkle tree signatures suitable for blockchains and distributed ledg-
ers, which can utilize dedicated chains or image structures to reduce the cost of key
generation, signing, verification, and the size of signatures.
4.3 Code based cryptography

The code-based cryptosystem is derived from McEliece [52]. The algorithm is based
on the integrable binary Goppa code called classical McEliece. The encryption and de-
cryption of the McEliece cryptosystem are fast and secure. However, it is rarely used
in practice because of the large size of the key, so one of the subsequent directions of
research on code-based cryptography is to reduce the size of its key. The general linear
decoding hard problem on which McEliece cryptographic algorithm is based is the NP-
hard problem [53], so coding-based cryptography is very promising in quantum-re-
sistant cryptography. Moreover, the NIST post-quantum cryptographic algorithm
standard collection has coding-based cryptography second only to lattice-based cryp-
tography. It is mainly used in public key encryption algorithms and only two for signa-
ture algorithms.
8

4.4 Multivariate-based Cryptography Regime

The security of the multivariate-based cryptography regime relies on solving the math-
ematical problem of solving a system of random multivariate quadratic polynomial
equations over a finite field, which is nondeterministic polynomial time-hard. There is
no finite algorithm for solving this problem. The multivariate quadratic polynomial
problem is to find a solution in a system of quadratic polynomial equations in a given
finite field. Since multivariate based cryptographic systems emerged late, they still need
a lot of research and experiments to prove their security [54]. Although earlier multi-
variable-based signature systems have been breached and are no longer secure, multi-
variable-based signature algorithms are small in signature size and fast in inflammation.
Therefore, multivariate based signature schemes are still very promising, and multivar-
iate based signature algorithms are the most numerous in the NIST post-quantum cryp-
tographic algorithm standards collection.

5 Conclusion

With the application of the blockchain, the blockchain needs to meet various different
needs for data protection, multi-party participation and collaboration, and identity au-
thentication in the face of different scenarios, and cryptography is crucial to the devel-
opment of blockchain applications. In this paper, some classical cryptography and post-
quantum cryptography in blockchain were studied. First, the origin of blockchain and
its concepts were introduced, and the structure of Bitcoin and the security challenges it
faces were presented. Subsequently, some classical cryptographic homomorphic en-
cryption, zero-knowledge proofs and secure multi-party computation used in block-
chains were investigated. Finally, four more promising post-quantum cryptograms were
introduced for quantum computing attacks.

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