Justin Ehrenhofer, the Monero community workgroup organizer recently conducted an informal interview with Dr. Sarang Noether, a full-time researcher in the Monero Research Lab and the individual responsible for the organization of audits of the bulletproof implementation.
In the interview, they covered a wide range of topics, which included the idea of confidential transactions and the reasons behind its implementation. Sarang stated:
“So the idea of confidential transactions originally came out as a proposal for things that could exist in Bitcoin and was introduced by some of the developers who worked with that.”
Sarang further added that by obscuring the amount in each transaction, they could solve the problem of denomination and hide the information. This would presumably make it easier to select “fakes” that are put into the ring signature.
The Monero transactions were divided into denominations and added to the ring signatures in order to hide or fake the outputs and keep the individual’s identity anonymous. He added:
“After all, if you don’t have to worry about these denominations that you gotta hunt around for, it means you can just pull in any old fake outputs from previous transactions that you want and mix those in with your own to form the ring signature.”
According to him, it was more difficult to do this with Monero than with Bitcoin as it was important for them “to play nicely” with the ring signature. He further added that there were technical reasons behind it and that he would be glad to share the resources on how it exactly worked. Sarang stated:
“So the moral of the story is whatever we do with hiding the amount, it has to play nicely with ring signatures because that’s how we operate and the way that we do it is what’s called a cryptographic commitment.”
He stated that when a user sends Monero to another person, the transaction amount is hidden instead of associating that with the plain amount earlier sent by the user. This process is called the cryptographic commitment where the amount of Monero sent is multiplied by another larger number in order to obscure or hide the transaction amount with an additional blinding factor.
Instead of having the amount in a transaction there will be an epileptic curve or a random “blob” of data which alone cannot give out any information to an observer. He added:
“It’s just like there’s some blob that came in from this ring signature is now going out to somebody else.”
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