Secure multiparty computations on Bitcoin

Abstract

Is it possible to design an online protocol for playing a lottery, in a completely decentralized way, that is, without relying on a trusted third party? Or can one construct a fully decentralized protocol for selling secret information, so that neither the seller nor the buyer can cheat in it? Until recently, it seemed that every online protocol that has financial consequences for the participants needs to rely on some sort of a trusted server that ensures that the money is transferred between them. In this work, we propose to use Bitcoin (a digital currency, introduced in 2008) to design such fully decentralized protocols that are secure even if no trusted third party is available. As an instantiation of this idea, we construct protocols for secure multiparty lotteries using the Bitcoin currency, without relying on a trusted authority. Our protocols guarantee fairness for the honest parties no matter how the loser behaves. For example, if one party interrupts the protocol, then her money is transferred to the honest participants. Our protocols are practical (to demonstrate it, we performed their transactions in the actual Bitcoin system) and in principle could be used in real life as a replacement for the online gambling sites.