Toward conditionally anonymous Bitcoin transactions: A lightweight-script approach

Bitcoin is being explored for applications in various Internet of Things (IoT) scenarios as a peer-to-peer payment platform. However, security and anonymity problems exist with Bitcoin, which threaten vulnerable IoT facilities. This paper aims to achieve conditional anonymity inside Bitcoin transactions. We first propose an identity-based conditionally anonymous signature (ICAS) algorithm and then design a lightweight Bitcoin script scheme (named pay-to-public-key-hash-with-conditional-anonymity or P2PKHCA), which applies the ICAS algorithm to make conditionally anonymous Bitcoin transactions. P2PKHCA allows the identity manager to trace the real identity of users while preserving users' anonymity. Furthermore, P2PKHCA is backward compatible in terms of being able to work seamlessly with the existing Bitcoin script scheme pay-to-public-key-hash (P2PKH) in the Bitcoin network. We conduct a security analysis to verify the security features of P2PKHCA and employ a performance evaluation in terms of the cryptographic time and space costs by comparison with P2PKH. The simulation results demonstrate the effectiveness of P2PKHCA in reducing both time cost and data size.