Ring Signatures: Everything to Know
By Beluga Research August 9, 2023
- Cryptocurrency ring signatures are a privacy-enhancing technology that allows a user to sign a transaction on behalf of a group without revealing their identity
- A ring signature is a cryptographic tool that enables a user to sign for a transaction without making their name and other information public
- A ring signature is a way to preserve privacy for users
- It is extremely difficult to verify the identity of the individual that signs a ring signature
Cryptocurrency ring signatures are a privacy-enhancing technology that allows a user to sign a transaction on behalf of a group without revealing their identity. A ring signature is a digital signature that allows a user to establish privacy for a cryptocurrency transaction. A ring signature protects the sender in a transaction. A ring signature typically requires different public keys from a set of users to verify the transaction. This group is known as the ring. One user may sign for the group. It is not easy to tell which user signed for the group.
A Brief History
In 2001, cryptography researchers Adi Shamir, Ron Rivest, and Yael Tauman introduced the ring signature. They originally designed the ring signature so that it would not require the presence of a central authority like a bank or the explicit involvement of the signers. In 2012, platforms began utilizing ring signatures in cryptocurrency transactions. CryptoNote, a platform that offers tokens that focus on privacy, is one of the most well-known platforms to utilize ring signatures.
Ring Signatures: Everything to Know
A ring signature conceals the specific identity of the signer members of the ring. The technology behind the ring signature makes it computationally infeasible to determine which member of the ring was the signer.
The mechanics of the technology works as follows. A user who wants to create a ring signature selects a random subset of users from the ring. The signer then generates a signature using their private key and the message to be signed. The other participants' public keys are also used during the signing process. This makes it virtually impossible to attribute the signature to a specific individual.
The verification of a ring signature is performed by the recipient of the signed message. The verifier checks the validity of the signature using the signer's public key. They also check the public keys of the other participants in the ring. If the verification is successful, the recipient can be confident that the message was signed by someone in the ring. The recipient cannot determine the exact identity of the signer.
The process of creating a ring signature mixes the inputs and outputs of the transaction. This is why it is difficult to trace the flow of funds on the blockchain. The technology behind a ring signature helps make cryptocurrencies that utilize them more fungible.
- Generate a signature on behalf of a group. A ring signature is a tool to generate a signature for a group of users.
- Use the ring signature as proof of authenticity and integrity for a transaction . The ring signature is a way to verify that a transaction was requested and actually occurred.
- Make the cryptocurrency involved easier to exchange. A ring signature makes it harder to determine who sent the amount of cryptocurrency.
- Keep the sender of the cryptocurrency private. A sender of cryptocurrency can keep their identity private by using a ring signature.
- Anonymity set. The anonymity set is the total number of possible signers in a specific ring. The larger the anonymity set, the more difficult it is to identify the actual signer. For example, if a ring signature has an anonymity set of 10, there are ten possible signers.
- Plausible deniability. Plausible deniability is a concept that enhances privacy for a ring signature. If an entity manages to identify one of the possible signers in the ring, that member of the ring can deny being the actual signer. The signature is valid regardless of which key was used. This makes it impossible to prove the identity of the signer.
- Transaction unlinkability. In a blockchain, all transactions are recorded and publicly visible. Ring signatures make it challenging to link multiple transactions to the same user. Each transaction can use a different ring of potential signers. It is not easy to establish a connection between the members of the ring.
- Privacy Protection - Ring signatures help protect the privacy of cryptocurrency users by hiding the source of funds. When a transaction is signed with a ring signature, it becomes computationally challenging to determine which participant in the ring actually produced the signature. This makes it difficult for external observers to link a transaction to a specific user.
- Anonymity - Cryptocurrency transactions that rely on ring signatures offer a higher level of anonymity. The transaction outputs are mixed with multiple possible senders. This feature is valuable in situations where users want to keep their financial activities private and avoid surveillance.
- Decentralization - Ring signatures contribute to the decentralized nature of cryptocurrencies. Ring signatures allow for peer-to-peer verification. Each participant in the ring can independently verify the validity of the transaction without relying on a third party. This decentralized approach aligns with the core principles of cryptocurrencies, to promote transparency and reduce the risk of censorship.
- Fungibility - Ring signatures improve fungibility by making it difficult to distinguish between different units of the same cryptocurrency. Since the sender's identity is obfuscated, all units within a cryptocurrency become indistinguishable from each other. This ensures that no unit of a cryptocurrency carries a history or stigma attached to it.
- Resistance to Transaction Analysis - Ring signatures make it challenging to perform transaction analysis on a blockchain. Transaction analysis is the tracking and mapping of the flow of funds between different addresses. With ring signatures, the linkage between sender and recipient addresses is obscured. This lack of clarity provides additional protection against surveillance and protects users' privacy.
- Computational Overhead - The use of ring signatures requires additional computational overhead for the verification process. Verifying a ring signature requires checking multiple possible signers. Such a task is resource-intensive. The overhead impacts the efficiency and scalability of the cryptocurrency network. The increased overhead slows transaction processing.
- Larger Transaction Sizes - Ring signatures increase the size of cryptocurrency transactions. Each ring signature adds additional data to the transaction. The increase in size impacts the storage requirements of blockchain nodes. The change requires more network bandwidth to transmit transactions.
- Potential for Misuse - Ring signatures provide privacy and anonymity, but can be misused for illicit activities. The enhanced privacy features attract individuals seeking to engage in money laundering, tax evasion, and other illegal activities. Ring signatures' association with illicit use may lead to regulatory scrutiny and potential challenges for cryptocurrencies that rely on them.
- Reduced Auditability - The privacy-enhancing properties of ring signatures make it difficult to audit transactions on the blockchain. The obfuscation of sender identities makes it challenging to track and monitor the flow of funds. This hinders efforts to detect and prevent fraudulent and malicious activities. The reduced auditability raises concerns for regulators and law enforcement agencies.
- Potential for Signer Collusion - In certain scenarios, there is a possibility of collusion among the participants in a ring signature. If a majority of the ring signers conspire to commit a bad act, they could reveal the identity of the sender. Typically, it requires a significant number of participants to act dishonestly for there to be collusion. A platform can mitigate the risk of collusion by enlarging the sizes of the rings.