New Publication goes viral: Blockchain Privacy and Regulatory Compliance: Towards a Practical Equilibrium
by Vitalik Buterin, Jacob Illum, Matthias Nadler, Fabian Schär, Ameen Soleimani
The paper has gone viral on SSRN. In the first few days, it recorded over a quarter of a million abstract views and nearly 8,000 downloads. The paper is already ranked 3rd most downloaded FinTech paper of all time on SSRN.
«Abstract: In this paper we study Privacy Pools, a novel smart contract-based privacy-enhancing protocol. We discuss the pros and cons of this protocol, and show how it could be employed to create a separating equilibrium between honest and dishonest users. The core idea of the proposal is to allow users to publish a zero-knowledge proof, demonstrating that their funds (do not) originate from known (un-)lawful sources, without publicly revealing their entire transaction graph. This is achieved by proving membership in custom association sets that satisfy certain properties, required by regulation or social consensus. The proposal may be a first step towards a future where people could prove regulatory compliance without having to reveal their entire transaction history.»