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reserves

reserves is a tool for generating and verifying proof-of-reserves for funds in the Bitcoin network.

Features

It currently has the following features:

  • use of a single "proof file" that can include several seperate proofs to ease the use of distinct wallets

  • add a proof challenge to prevent proofs to be reused or exchanged

  • two-step procedure to ease use with hardware wallet or HSMs: first collecting UTXOs to be bundled, then signing the proof

  • proofs are made at a specific block number and can be verified even if the funds moved after the point of proving

  • relying on existing standards: Final proofs are unspendable but valid Bitcoin transactions and in-progress proofs are kept in PSBT format to ease integration with hardware wallets.

How it works

For every proof-of-reserves, a Bitcoin transaction will be generated. This transaction will be invalidated so that it cannot be broadcast to the Bitcoin network. This is done by adding an input that refers to a non-existing UTXO.

The remainder of the transaction consists of UTXOs owned by the proving party and a single output with the sum of the values of all the UTXOs in the inputs. The prover signs this transaction to prove that it can spend the UTXOs.

Since the transaction contains a non-existing input, the provers inputs cannot actually be spent, but the signatures on the inputs can be verified as if the transaction did not contain the non-existing input to verify the proof.

Usage

The proof file if formatted with protobuf using the spec in the protos/ folder. The file format can be reused by in-house applications if preferred.

Some example usage

init: initialize a proof file

$ reserves init -f reserves.proof --challenge "Blockstream August 2018" \
	--block-number 12345

Creates a proof file reserves.proof (this is also the default if -f is ommitted) with the given challenge and block number.

inspect: inspect the contents of a proof file

$ reserves inspect -f reserves.proof

fetch-utxos: add UTXOs to a proof

Fetch UTXOs from a wallet source and add them to a proof. Currently the only available source is the Bitcoin Core wallet.

$ reserves add-utxos --bitcoind http://localhost:8332 \
	--bitcoind-user rpcuser --bitcoind-pass rpcpass

add-utxo: manually add a UTXO to a proof

$ reserves add-utxo c5bdb27907b78ce03f94e4bf2e94f7a39697b9074b79470019e3dbc76a10ecb6:0 \
	--hd-keypath "m/0'/0'/0'" \
	--previous-tx 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

sign: sign a proof

Once all desired UTXOs for a proof are collected, the prover can sign the proof transaction. Currently the only supported wallet for signing is Bitcoin Core.

$ reserves sign --bitcoind http://localhost:8332 \
	--bitcoind-user rpcuser --bitcoind-pass rpcpass
$ reserves sign --trezor --id cold-storage

verify: verify a proof

This will also verify the validity of the UTXOs, thus a bitcoind reference is required for this call.

$ reserves verify -f reserves.proof --bitcoind http://localhost:8332 \
	--bitcoind-user rpcuser --bitcoind-pass rpcpass

Future Work

  • Support more UTXO sources (Elecrum, manual entry, ...).

  • Support more wallets for signing: Ledger, Trezor, ...

  • Support Liquid. If possible BTC-only first and then general CA support.

  • Add privacy using the Provisions scheme by Benedikt Bunz. This gets especially interesting once Schnorr usage is more common. Potentially also add proof-of-liabilities support.

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Proof-of-Reserves tool for Bitcoin

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