Footprints on the Blockchain: Information Leakage in Distributed Ledgers
19 Pages Posted: 12 Jan 2017
Date Written: January 10, 2017
This paper examines information leakage in distributed ledgers. We show how the lack of time priority in the period between the publication of a transaction and its validation by miners or designated participants can expose a transaction’s “footprint” to the market, resulting in potential front-running and manipulation. We propose a cryptology-based approach for solving information leakage problems in distributed ledgers that relies on using a “hash” (or mathematical identifier) to secure time-priority followed by a second communication revealing more features of the underlying market transaction. Solving the information leakage problem greatly expands the potential applications of private distributed ledger technology.
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