Switch Commitments: A Safety Switch for Confidential Transactions

Cryptographic agility is the ability to switch to larger cryptographic parameters or different algorithms in the case of security doubts. This very desirable property of cryptographic systems is inherently difficult to achieve in cryptocurrencies due to their permanent state in the blockchain: for example, if it turns out that the employed signature scheme is insecure, a switch to a different scheme can only protect the outputs of future transactions but cannot fix transaction outputs already recorded in the blockchain, exposing owners of the corresponding money to risk of theft. This situation is even worse with Confidential Transactions, a recent privacy-enhancing proposal to hide transacted monetary amounts in homomorphic commitments. If an attacker manages to break the computational binding property of a commitment, he can create money out of thin air, jeopardizing the security of the entire currency. The obvious solution is to use statistically or perfectly binding commitment schemes but they come with performance drawbacks due to the need for less efficient range proofs.