Welcome to the resource topic for 2023/697
Title:
NFT Trades in Bitcoin with Off-chain Receipts
Authors: Mehmet Sabir Kiraz, Enrique Larraia, Owen Vaughan
Abstract:Abstract. Non-fungible tokens (NFTs) are digital representations of
assets stored on a blockchain. It allows content creators to certify authenticity of their digital assets and transfer ownership in a transparent
and decentralized way. Popular choices of NFT marketplaces infrastructure include blockchains with smart contract functionality or layer-2 solutions. Surprisingly, researchers have largely avoided building NFT schemes over Bitcoin-like blockchains, most likely due to high transaction fees in the BTC network and the belief that Bitcoin lacks enough programmability to implement fair exchanges. In this work we fill this gap. We propose an NFT scheme where trades are settled in a single Bitcoin transaction as opposed to executing complex smart contracts. We
use zero-knowledge proofs (concretely, recursive SNARKs) to prove that
two Bitcoin transactions, the issuance transaction tx_0 and the current
trade transaction tx_n, are linked through a unique chain of transactions.
Indeed, these proofs function as “off-chain receipts” of ownership that
can be transferred from the current owner to the new owner using an
insecure channel. The size of the proof receipt is short, independent of
the total current number of trades n, and can be updated incrementally
by anyone at anytime. Marketplaces typically require some degree of
token ownership delegation, e.g., escrow accounts, to execute the trade
between sellers and buyers that are not online concurrently, and to alleviate transaction fees they resort to off-chain trades. This raises concerns on the transparency and purportedly honest behaviour of marketplaces. We achieve fair and non-custodial trades by leveraging our off-chain receipts and letting the involved parties carefully sign the trade transaction with appropriate combinations of sighash flags.
ePrint: https://eprint.iacr.org/2023/697
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