PGC: Decentralized Confidential Payment System with Auditability

Many existing cryptocurrencies fail to provide transaction anonymity and confidentiality. As the privacy concerns grow, a number of works have sought to enhance privacy by leveraging cryptographic tools. Though strong privacy is appealing, it might be abused in some cases. In decentralized payment systems, anonymity poses great challenges to system's auditability, which is a crucial property for scenarios that require regulatory compliance and dispute arbitration guarantee. Aiming for a middle ground between privacy and auditability, we introduce the notion of decentralized confidential payment (DCP) system with auditability. In addition to offering confidentiality, DCP supports privacy-preserving audit in which an external party can specify a set of transactions and then request the participant to prove their compliance with a large class of policies. We present a generic construction of auditable DCP system from integrated signature and encryption scheme and non-interactive zero-knowledge proof systems. We then instantiate our generic construction by carefully designing the underlying building blocks, yielding a standalone cryptocurrency called PGC. In PGC, the setup is transparent, transactions are less than 1.3KB and take under 38ms to generate and 15 ms to verify. At the core of PGC is an additively homomorphic public-key encryption scheme that we newly introduce, twisted ElGamal, which is not only as secure as standard exponential ElGamal, but also friendly to Sigma protocols and Bulletproofs. This enables us to easily devise zero-knowledge proofs for basic correctness of transactions as well as various application-dependent policies in a modular fashion.