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articles/ui/ui.bib
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@ -11,6 +11,13 @@
@Book{primitiveacc,
author = {Michael Perlman},
title = {The Invention of Capitalism: Classical Political Economy and the Secret History of Primitive Accumulation},
publisher = {Duke University Press Books},
year = {2000},
}
@Unpublished{talercrypto, @Unpublished{talercrypto,
author = {Florian Dold and Sree Harsha Totakura and Benedikt M\"uller and Jeff Burdges and Christian Grothoff}, author = {Florian Dold and Sree Harsha Totakura and Benedikt M\"uller and Jeff Burdges and Christian Grothoff},
title = {Taler: Taxable Anonymous Libre Electronic Reserves}}, title = {Taler: Taxable Anonymous Libre Electronic Reserves}},

517
articles/ui/ui.tex
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@ -37,19 +37,30 @@ Marcello Stanisci}
\begin{abstract} \begin{abstract}
GNU Taler is a new electronic online payment system which provides GNU Taler is a new electronic online payment system which provides
anonymity for customers and accountability for merchants. This paper privacy for customers and accountability for merchants. It uses an
first describes the interaction processes of online payment systems, exchange service to issue digital coins, and is thus not subject to
and analytically compares the processes involved for both customers the performance issues that plague Byzantine fault-tolerant
and merchants. The focus here is in particular on how to make consensus-based solutions.
electronic payments work nicely with the current Web architecture.
We then focus on the resulting assurances that Taler provides and We first describe the interaction processes of various existing online
consider possible failure modes. Web payment systems must also face payment systems, and analytically compare the processes involved for
the reality of constraints imposed by modern Web browser security both customers and merchants. The focus here is in particular on how
architecture, so the analysis includes considerations of how Web to make electronic payments work nicely with the current Web
payment systems exploit the security infrastructure provided by the architecture.
modern Web. We argue that the resulting system offers a good
combination of accountability, privacy, security and usability. We then focus on the key advantages the Taler payment system offers,
in particular in the context of Web payments. Web payment systems
must face the reality of constraints imposed by modern Web browser
security architecture, so the analysis includes considerations of how
Taler exploits the security infrastructure provided by the modern Web.
Here, we include in particular the perspective of merchants, as
existing systems have often struggled with securing payment information
at the merchant's side.
Finally, we discuss possible failure modes, highlighting how the
various payments systems can fail in practice. We argue that the
Taler payment system offers a good combination of accountability,
privacy, security and usability.
\end{abstract} \end{abstract}
\section{Introduction} \section{Introduction}
@ -62,16 +73,21 @@ has been critical as state institutions can dampen fluctuations in the
value of the currency.~\cite{dominguez1993} Controlling money supply value of the currency.~\cite{dominguez1993} Controlling money supply
is critical to ensure stable prices that facilitate is critical to ensure stable prices that facilitate
trade~\cite{quantitytheory1997volckart} instead of speculation~\cite{lewis_btc_is_junk}. trade~\cite{quantitytheory1997volckart} instead of speculation~\cite{lewis_btc_is_junk}.
As Internet transactions, such as sending an e-mail or reading
a Web site, tend to be of smaller value than traditional transactions Internet transactions, such as sending an e-mail or reading a Web
involving the exchange of physical goods, we are faced with the site, tend to be of smaller commercial value than traditional
challenge of reducing the mental and technical overheads of existing transactions involving the exchange of physical goods. Consequently,
payment systems to handle these micropayments. Addressing this problem is if we want to associate payments with these types of transactions, we
urgent: ad-blocking technology is eroding advertising as a substitute face the challenge of reducing the mental and technical overheads of
for micropayments~\cite{adblockblocks}, and the Big Data business existing payment systems. For example, executing a 3DS payment
model in which citizens pay with their private process (Figure~\ref{fig:cc3ds}) takes too long, is way too complex
information~\cite{ehrenberg2014data} in combination with the deep and way to expensive to be used for payment for typical Web articles.
state hastens our society's regression towards
Addressing this problem is urgent: ad-blocking technology is eroding
advertising as a substitute for micropayments~\cite{adblockblocks},
and the Big Data business model in which citizens pay with their
private information~\cite{ehrenberg2014data} in combination with the
deep state hastens our society's regression towards
post-democracy~\cite{rms2013democracy}. post-democracy~\cite{rms2013democracy}.
@ -85,11 +101,12 @@ transactions by the same customer are unlinkable. Naturally, the
specifics of the transaction---such as delivery of goods to a shipping specifics of the transaction---such as delivery of goods to a shipping
address, or the use of non-anonymous IP-based communication---may address, or the use of non-anonymous IP-based communication---may
still leak information about the customer's identity. {\em Taxable} still leak information about the customer's identity. {\em Taxable}
means that the state can obtain the necessary information about the means that for any transaction the state can easily obtain the
contract to levy income, sales, or value-added taxes. Taler uses necessary information about the identity of the merchant and the
blind signatures~\cite{chaum1983blind} to create digital coins, and a respective contract in order to levy income, sales, or value-added
new {\em refresh} protocol~\cite{talercrypto} to allow giving change taxes. Taler uses blind signatures~\cite{chaum1983blind} to create
and refunds while maintaining unlinkability. digital coins, and a new {\em refresh} protocol~\cite{talercrypto} to
allow giving change and refunds while maintaining unlinkability.
This paper will not consider the details of Taler's cryptographic This paper will not consider the details of Taler's cryptographic
protocols\footnote{Details of the protocol are documented protocols\footnote{Details of the protocol are documented
@ -100,6 +117,7 @@ cryptography from the users. We also illustrate how existing {\em
mental models} users have from existing widespread payment systems mental models} users have from existing widespread payment systems
apply naturally to Taler. apply naturally to Taler.
\newpage
Key contributions of this paper are: Key contributions of this paper are:
\begin{itemize} \begin{itemize}
\item A description of different payment systems using \item A description of different payment systems using
@ -123,7 +141,7 @@ Before we look at the payment workflow for Taler, we sketch the
workflow of existing payment systems. This establishes a common workflow of existing payment systems. This establishes a common
terminology which we will use to compare different payment processes. terminology which we will use to compare different payment processes.
We include interaction diagrams for some of the payment systems We include interaction diagrams for some of the payment systems
based on resources from the W3c Web Payments Interest Group. based on resources from the W3c payment interest group.
\subsection{Cash} \subsection{Cash}
@ -149,8 +167,9 @@ bills~\cite{ezb2016ourmoney}, and are typically the final trusted
authority on the authenticity of coins and bills. authority on the authenticity of coins and bills.
As customers need not authenticate, purchases remain {\em As customers need not authenticate, purchases remain {\em
anonymous}, modulo the limited tracking enabled by serial numbers anonymous}, modulo the limited tracking enabled in theory
printed on bills~\cite{pets2004kuegler}. by serial numbers printed on bills~\cite{pets2004kuegler},
which make each bill {\em unique}.
% NOTE : Internet claims this does not happen, but no references. % NOTE : Internet claims this does not happen, but no references.
% https://rocketatm.com/notice-_recorded_serial_numbers_atm_decal % https://rocketatm.com/notice-_recorded_serial_numbers_atm_decal
@ -159,14 +178,14 @@ for the customer. Instead, the merchant provides paper
{\em receipts}, which are generated independently and do not receive {\em receipts}, which are generated independently and do not receive
the same anti-forgery protections that are in place for cash. the same anti-forgery protections that are in place for cash.
Against most attacks, customers and merchants limit their risks to the Against most attacks, customers and merchants {\em limit} their risks
amount of cash that they carry or accept at a given time~\cite{Bankrate}. to the amount of cash that they carry or accept at a given
Additionally, customers are advised to choose the ATMs they use time~\cite{Bankrate}. Additionally, customers are advised to choose
carefully, as malicious ATMs may attempt to steal their customer's the ATMs they use carefully, as malicious ATMs may attempt to {\em
credentials. Authentication with an ATM can involve a special ATM steal} their customer's credentials. Authentication with an ATM can
card, or, more commonly, the use of credit or debit cards. In all these involve a special ATM card, or, more commonly, the use of credit or
cases, these physical security tokens are issued by the customer's debit cards. In all these cases, these physical security tokens are
bank. issued by the customer's bank.
% \smallskip % \smallskip
@ -181,23 +200,22 @@ bank.
\end{figure*} \end{figure*}
Credit and debit card payments operate by the customer providing their Credit and debit card payments operate by the customer providing their
credentials to the merchant. Many different credentials to the merchant. Many different authentication and
authentication and authorization schemes are in use in various authorization schemes are in use in various combinations including
combinations including both secret information, which are usually PINs, and both secret information, which are usually PINs, and physical security
physical security devices such as TANs~\cite{kobil2016tan}, cards with an EMV chip~\cite{emv}, and devices such as TANs~\cite{kobil2016tan}, cards with an EMV
the customer's mobile phone~\cite{mtan}. chip~\cite{emv}, and the customer's mobile phone~\cite{mtan}. A
A typical modern Web payment process involves: typical modern Web payment process involves: {(1.)} the merchant
{(1.)} the merchant offering a secure communication channel offering a secure communication channel using TLS based on the X.509
using TLS based on the X.509 public key infrastructure;\footnote{Given public key infrastructure;\footnote{Given numerous TLS protocol and
numerous TLS protocol and implementation flaws as well as X.509 key implementation flaws as well as X.509 key management incidents in
management incidents in recent years~\cite{holz2014}, the security recent years~\cite{holz2014}, one cannot generally assume that the
provided by TLS is at best questionable.} security provided by TLS is adequate under all circumstances.}
{(2.)} selecting a {\em payment method}; {(2.)} selecting a {\em payment method}; {(3.)} entering the credit
{(3.)} entering the credit card details like owner's name, card details like the owner's name, card number, expiration time, CVV
card number, expiration time, CVV code, and billing address; and code, and billing address; and {(4.)} (optionally) authorizing the
{(4.)} (optionally) authorizing the transaction via mobile TAN, or transaction via mobile TAN, or by authenticating against the
by authenticating against the customer's bank, customer's bank, often on a Web site that is operated by the payment
often on a Web site that is operated by the payment
processor and {\em not} the customer's bank. Figure~\ref{fig:cc3ds} processor and {\em not} the customer's bank. Figure~\ref{fig:cc3ds}
% FIXME why "..on the Web today using.." and not just "..on the Web using.." % FIXME why "..on the Web today using.." and not just "..on the Web using.."
shows a typical card-based payment process on the Web today using the shows a typical card-based payment process on the Web today using the
@ -206,8 +224,8 @@ are not relevant to this paper, but the diagram nicely illustrates the
complexity of the common 3-D secure (3DS) process. complexity of the common 3-D secure (3DS) process.
Given this process, there is an inherent risk of information leakage Given this process, there is an inherent risk of information leakage
of customers' credentials. Fraud detection systems attempt to detect of customers' credentials. {\em Fraud detection} systems attempt to detect
misuse of leaked credentials, and payment system providers handle misuse of stolen credentials, and payment system providers handle
disputes between customers and merchants. As a result, Web payment disputes between customers and merchants. As a result, Web payment
processes may finish with {(5.)} the payment being rejected for a processes may finish with {(5.)} the payment being rejected for a
variety of reasons, such as false positives in fraud detection or variety of reasons, such as false positives in fraud detection or
@ -215,28 +233,31 @@ the merchant not accepting the particular card issuer.
Traditionally, merchants bear most of the financial risk, and a key Traditionally, merchants bear most of the financial risk, and a key
``feature'' of the 3DS process compared to traditional card payments ``feature'' of the 3DS process compared to traditional card payments
is to shift dispute liability to the issuer of the card who is to shift dispute {\em liability} to the issuer of the card---who
may then shift it to the customer. may then try to shift it to the customer.
% %
% online vs offline vs swipe vs chip vs NFC ??? % online vs offline vs swipe vs chip vs NFC ???
% extended verification % extended verification
% %
Even in cases where the issuer or the merchant remains legally first in Even in cases where the issuer or the merchant remain legally first in
line, there are still risks customers incur from the card dispute line for liabilities, there are still risks customers incur from the
procedures, such as neither them nor the payment processor noticing card dispute procedures, such as neither them nor the payment
fraudulent transactions, or them noticing fraudulent transactions past processor noticing fraudulent transactions, or them noticing
the date at which their bank will refund them. The customer also fraudulent transactions past the {\em deadline} until which their bank
typically only has a merchant-generated comment and the amount paid in would refund them. The customer also typically only has a
his credit card statement as a proof for the transaction. Thus, the use of merchant-generated comment and the amount paid in his credit card
credit cards online does not generate any verifiable electronic statement as a proof for the transaction. Thus, the use of credit
receipts for the customers, which enables malicious merchants to later cards online does not generate any cryptographically {\em verifiable}
change the terms of the contract. Beyond these issues, customers face electronic receipts for the customer, which theoretically enables
secondary risks of identity theft from the personal details exposed by malicious merchants to later change the terms of the contract.
the authentication procedures. In this case, even if the financial
damages are ultimately covered by the bank, the customer always has to Beyond these primary issues, customers face secondary risks of
deal with the hassle of notifying the bank in the first place. As a identity theft from the personal details exposed by the authentication
result, customers must remain wary about using their card, which limits procedures. In this case, even if the financial damages are ultimately
their online shopping~\cite[p. 50]{ibi2014}. covered by the bank, the customer always has to deal with the hassle
of {\em notifying} the bank in the first place. As a result,
customers must remain wary about using their card, which limits their
online shopping~\cite[p. 50]{ibi2014}.
% There is nevertheless a trend towards customers preferring cards % There is nevertheless a trend towards customers preferring cards
% over cash even in face-to-face purchases \cite{} in part because % over cash even in face-to-face purchases \cite{} in part because
% cash theft can be violent even if the amounts as stake are smaller % cash theft can be violent even if the amounts as stake are smaller
@ -267,49 +288,50 @@ their online shopping~\cite[p. 50]{ibi2014}.
Bitcoin operates by recording all transactions in a pseu\-do\-ny\-mous Bitcoin operates by recording all transactions in a pseu\-do\-ny\-mous
public {\em ledger}. A Bitcoin account is identified by its public public {\em ledger}. A Bitcoin account is identified by its public
key, and the owner must know the corresponding private key to authorize key, and the owner must know the corresponding private key to
the transfer of Bitcoins from the account to authorize the transfer of Bitcoins from the account to other accounts.
other accounts. The information in the global public ledger allows The information in the global public ledger allows everybody to
everybody to compute the balances in all accounts and to see all compute the balances in all accounts and to see all transactions.
transactions. Transactions are denominated in a new currency labeled Transactions are denominated in a new currency labeled BTC, whose
BTC, whose valuation depends upon speculation. Adding transactions to valuation depends upon {\em speculation}, as there is no authority
that could act to stabilize exchange rates. Adding transactions to
the global public ledger involves broadcasting the transaction data, the global public ledger involves broadcasting the transaction data,
peers verifying and appending it to the public ledger, and some peer peers verifying and appending it to the public ledger, and some peer
in the network solving a moderately hard computational proof-of-work in the network solving a moderately hard computational proof-of-work
puzzle, which is called {\em mining}. puzzle, which is called {\em mining}.
The mining process is incentivised by transaction fees and mining The mining process is incentivised by a combination of transaction
rewards. The latter process is also what provides initial accumulation fees and mining rewards. The latter process also provides primitive
for BTC.~\cite{nakamoto2008bitcoin} Conversion to BTC from accumulation~\cite{primitiveacc} for BTC.~\cite{nakamoto2008bitcoin}
other currencies and vice versa incurs substantial fees~\cite{BTCfees}. Conversion to BTC from other currencies and vice versa incurs
There is now an extreme diversity of Bitcoin-related payment substantial fees~\cite{BTCfees}. There is now an extreme diversity of
technologies, but usability improvements are usually achieved by Bitcoin-related payment technologies, but usability improvements are
adding a trusted third party, and there have been many incidents usually achieved by adding a trusted third party, and there have been
where such parties then embezzled funds from their customers~\cite{BTC:demise}. many incidents where such parties then embezzled funds from their
customers~\cite{BTC:demise}.
The The classical Bitcoin payment workflow consisted of entering payment
classical Bitcoin payment workflow consisted of entering payment
details into a peer-to-peer application. The user would access their details into a peer-to-peer application. The user would access their
Bitcoin {\em wallet} and instruct it to transfer a particular amount Bitcoin {\em wallet} and instruct it to transfer a particular amount
from one of his accounts to the account of the merchant. He could possibly from one of his accounts to the account of the merchant. He could
include additional metadata to be associated with the transfer and possibly include additional metadata to be associated with the
embedded into the global public ledger. transfer and embedded into the global public ledger. The wallet
% Technically the following is not true, there are application would then transmit the request to the Bitcoin
% wallets that run purely in the browser and store peer-to-peer overlay network. The use of an external payment
% the keys locally: https://github.com/frozeman/bitcoin-browser-wallet application makes wallet-based payments significantly less
The wallet application would browser-friendly than ordinary card payments, as illustrated in
then transmit the request to the Bitcoin peer-to-peer overlay network. Figure~\ref{fig:bitcoin}. This has led to the development of
The use of an external payment application makes wallet-based payments browser-based
significantly less browser-friendly than ordinary card payments, as wallets.\footnote{\url{https://github.com/frozeman/bitcoin-browser-wallet}}
illustrated in Figure~\ref{fig:bitcoin}.
Bitcoin payments are only confirmed when they appear in the public Bitcoin payments are only confirmed when they appear in the public
ledger, which is updated at an average frequency of once every 10 ledger, which is updated at an average frequency of once every 10
minutes. Even then, it is possible that a fork in the so-called block minutes. Even then, it is possible that a fork in the so-called block
chain may void durability of the chain may void durability of the transaction; as a result, it is
transaction~\cite{nakamoto2008bitcoin}. As a result, customers and recommended to wait for 6 blocks (on average one hour) before
merchants must either accommodate this delay, or incur fraud risks considering a transaction committed~\cite{nakamoto2008bitcoin}. In
during this indeterminate period. cases where merchants are unable to accommodate this delay, they incur
significant fraud risks.
Bitcoin is considered to be secure against an adversary who cannot Bitcoin is considered to be secure against an adversary who cannot
control around a fifth of the Bitcoin miner's computational control around a fifth of the Bitcoin miner's computational
@ -325,45 +347,42 @@ unstable.~\cite{jeffries_economists_v_btc,lehmann_btc_fools_gold,lewis_btc_is_ju
% fees hit you 2-3 times with currency conversions % fees hit you 2-3 times with currency conversions
% more on massive transaction fees from blockchain.info % more on massive transaction fees from blockchain.info
There are several examples of Bitcoin's pseudononymity being broken Bitcoin's pseudononymity applies equally to both customers and
by investigators~\cite{BTC:Anonymity}. This has resulted in the merchants, which makes Bitcoin amen\-able to tax evasion, money
development of new protocols with better privacy protections. laundering, and sales of contraband. As a result, anonymity tools
like mixnets do not enjoy particularly widespread support in the
Bitcoin community where many participants seek to make the currency
appear more legitimate. While Bitcoin's transactions are difficult to
track, there are several examples of Bitcoin's pseudononymity being
broken by investigators~\cite{BTC:Anonymity}. This has resulted in
the development of new protocols with better privacy protections.
\begin{figure*}[t!]
\begin{figure*}[b!]
\includegraphics[width=\textwidth]{figs/paypal.pdf} \includegraphics[width=\textwidth]{figs/paypal.pdf}
\caption{Payment processing with Paypal. (From: W3c Web Payments IG.)} \caption{Payment processing with Paypal. (From: W3c Web Payments IG.)}
\label{fig:paypal} \label{fig:paypal}
\end{figure*} \end{figure*}
Zerocoin \cite{miers2013zerocoin} is such an extension of Bitcoin: Zerocoin \cite{miers2013zerocoin} is such an extension of Bitcoin:
It affords protection against linkability of transactions, It affords protection against linkability of transactions,
but at non-trivial additional computational costs even for but at non-trivial additional computational costs even for
spending coins. This currently makes using Zerocoin unattractive spending coins. This currently makes using Zerocoin unattractive
for payments, espcially with mobile devices. for payments, espcially with mobile devices.
Bitcoin also faces serious scalability limitations, with the classic
implementation being limited to at most 7 transactions per second
globally on
average.\footnote{\url{http://hackingdistributed.com/2016/08/04/byzcoin/}}
There are a variety of efforts to confront Bitcoin's scaling problems There are a variety of efforts to confront Bitcoin's scaling problems
with off-blockchain techniques, like side-chains. % \cite{???} with off-blockchain techniques, like side-chains. % \cite{???}
Amongst these, the Blind Off-chain Lightweight Transactions (BOLT) Amongst these, the Blind Off-chain Lightweight Transactions (BOLT)
proposal \cite{BOLT} provides anonymity by routing off-blockchain proposal~\cite{BOLT} provides anonymity by routing off-blockchain
transfers through bank-like intermetdiaries. Although interesting, transfers through bank-like intermediaries. Although interesting,
there are numerous fragile seemingly aspects of the BOLT protocol, there are numerous seemingly fragile aspects of the BOLT protocol,
including aborts deanonymizing customers, intermetdiaries risking including aborts deanonymizing customers, intermetdiaries risking
unlimited losses, and theft if a party fails to post a refute message. unlimited losses, and theft if a party fails to post a refute message
As BOLT requires semi-centralized intermetdiaries anyways, in a timely fashion.
we expect a Taler exchange operating in BTC to offer stronger
security to all parties and stronger anonymity to customers,
as well as being vastly cheaper to operate and much more compatable
with existing financial regulations.
Bitcoin's pseudononymity applies equally to both customers and
merchants, which makes Bitcoin amen\-able to tax evasion, money
laundering, and sales of contraband. As a result, anonymity tools
like mixnets do not enjoy particularly widespread support in the
Bitcoin community where many participants seek to make the currency
appear more legitimate.
% In addition, the Bitcoin protocol does not interact well with % In addition, the Bitcoin protocol does not interact well with
% conventional anonymity networks like Tor \cite{BTC:vsTor} % conventional anonymity networks like Tor \cite{BTC:vsTor}
@ -390,16 +409,17 @@ with a service provider to create an account. Merchants and customers
obtain the best interoperability in return for their account creation obtain the best interoperability in return for their account creation
efforts if they start with the biggest providers. As a result, there efforts if they start with the biggest providers. As a result, there
are a few dominating walled garden providers, with AliPay, ApplePay, are a few dominating walled garden providers, with AliPay, ApplePay,
GooglePay, SamsungPay and PayPal being the current oligopoly. In this GooglePay, SamsungPay and PayPal being the current {\em oligopoly}. In this
paper, we will use PayPal as a representative example for our discussion paper, we will use PayPal as a representative example for our discussion
of these payment systems. of these payment systems.
As with card payment systems, these oligopolies are politically As with card payment systems, these oligopolies are politically
dangerous~\cite{crinkey2011rundle}, and the lack of competition can dangerous~\cite{crinkey2011rundle}, and the lack of {\em competition}
result in excessive profit taking that may require political can result in excessive profit taking that may require political
solutions~\cite{guardian2015cap} to the resulting market failure. The solutions~\cite{guardian2015cap} to the resulting {\em market
use of non-standard proprietary interfaces to the payment processing failure}. The use of non-standard {\em proprietary} interfaces to
service of these providers serves to reinforce the customer lock-in. the payment processing service of these providers serves to reinforce
the customer {\em lock-in}.
\section{Taler} \section{Taler}
@ -423,7 +443,7 @@ cryptography and real-world deployment.
%\subsection{Design overview} %\subsection{Design overview}
\begin{figure}[b!] \begin{figure}[t!]
\centering \centering
\begin{tikzpicture} \begin{tikzpicture}
\tikzstyle{def} = [node distance=3em and 5em, inner sep=1em, outer sep=.3em]; \tikzstyle{def} = [node distance=3em and 5em, inner sep=1em, outer sep=.3em];
@ -464,19 +484,19 @@ hold, and spend coins. Wallets also manage the customer's accounts
at the exchange, and keep receipts in a transaction history. Wallets can be at the exchange, and keep receipts in a transaction history. Wallets can be
realized as browser extensions, mobile Apps or even in custom realized as browser extensions, mobile Apps or even in custom
hardware. If a user's digital wallet is compromised, the current hardware. If a user's digital wallet is compromised, the current
balance may be lost just like with an ordinary wallet for cash. balance may be lost, just like with an ordinary wallet with cash.
\begin{figure}[t!]%[36]{R}{0.5\linewidth} \begin{figure}[t!]%[36]{R}{0.5\linewidth}
\subfloat[Bank login. (Simplified for demonstration.)]{ \subfloat[Bank login. (Simplified for demonstration.)]{
\includegraphics[width=0.45\linewidth]{figs/bank0a.png} \includegraphics[width=0.45\linewidth]{figs/bank0a.png}
\label{subfig:login}} \hfill \label{subfig:login}} \hfill
\subfloat[Select exchange provider. (Generated by wallet.)]{
\includegraphics[width=0.45\linewidth]{figs/bank2a.png}
\label{subfig:exchange}} \\
\subfloat[Specify amount to withdraw. (Integrated bank support.)]{ \subfloat[Specify amount to withdraw. (Integrated bank support.)]{
\includegraphics[width=0.45\linewidth]{figs/bank1a.png} \includegraphics[width=0.45\linewidth]{figs/bank1a.png}
\label{subfig:withdraw}} \hfill \label{subfig:withdraw}} \\
\subfloat[Select exchange provider. (Generated by wallet.)]{
\includegraphics[width=0.45\linewidth]{figs/bank2a.png}
\label{subfig:exchange}} \hfill
\subfloat[Confirm transaction with a PIN. (Generated by bank.)]{ \subfloat[Confirm transaction with a PIN. (Generated by bank.)]{
\includegraphics[width=0.45\linewidth]{figs/bank3a.png} \includegraphics[width=0.45\linewidth]{figs/bank3a.png}
\label{subfig:pin}} \label{subfig:pin}}
@ -492,7 +512,7 @@ customers to withdraw anonymous digital coins,
and merchants to deposit digital coins, in exchange for and merchants to deposit digital coins, in exchange for
bank money. Coins are signed by the exchange using bank money. Coins are signed by the exchange using
a blind signing scheme~\cite{chaum1983blind}. Thus, only a blind signing scheme~\cite{chaum1983blind}. Thus, only
the exchange can issue new coins, but coins can't be traced back the exchange can issue new coins, but coins cannot be traced back
to the customer that withdrew them. to the customer that withdrew them.
Furthermore, exchanges learn the amounts withdrawn by customers Furthermore, exchanges learn the amounts withdrawn by customers
and deposited by merchants, but they do not learn the relationship and deposited by merchants, but they do not learn the relationship
@ -511,7 +531,7 @@ Web shops and point-of-sale systems.
\item \item
{\em Auditors} verify that exchanges operate correctly to limit the risk {\em Auditors} verify that exchanges operate correctly to limit the risk
that customers and merchants incur by using a particular exchange. that customers and merchants incur by using a particular exchange.
Auditors are typically operated by financial regulatory authorities. Auditors are typically operated by or on behalf of financial regulatory authorities.
Depending on local legislation, auditors mandate that exchanges Depending on local legislation, auditors mandate that exchanges
have enough financial reserves before authorizing them to create a given have enough financial reserves before authorizing them to create a given
volume of signed digital coins in order to compensate for potential risks due to volume of signed digital coins in order to compensate for potential risks due to
@ -520,33 +540,28 @@ operational failures (such as data loss or theft of private keys) of the exchang
The specific protocol between wallet and merchant depends on the The specific protocol between wallet and merchant depends on the
setting. For a traditional store, a near field communication (NFC) protocol might be used setting. For a traditional store, a near field communication (NFC)
between a point-of-sale system and a mobile application. In this protocol might be used between a point-of-sale system and a mobile
paper, we focus on Web payments for an online shop. application. In this paper, we focus on Web payments for an online
shop and explain how the actors in the Taler system interact by way of
a typical payment.
Initially, the customer installs the Taler wallet extension for
% \smallskip their browser. This only needs to be done once per
\subsection{Web payment workflow} browser. Naturally, this step may become superfluous if Taler is
integrated tightly with browsers in the future. Regardless,
In this section, we explain how the actors in the Taler system
interact by way of a typical payment.
Initially, the customer installs the Taler wallet extension
for their browser. This only needs to be done once
per browser. Naturally, this step may become superfluous if
Taler is integrated tightly with browsers in the future. Regardless,
installing the extension involves one or two clicks to confirm the installing the extension involves one or two clicks to confirm the
operation. Restarting the browser is not required. operation. Restarting the browser is not required.
\begin{figure*}[b!] \begin{figure*}[t!]
\includegraphics[width=0.9\textwidth]{figs/taler-pay.pdf} \includegraphics[width=0.9\textwidth]{figs/taler-pay.pdf}
\caption{Payment processing with Taler.} \caption{Payment processing with Taler.}
\label{fig:taler-pay} \label{fig:taler-pay}
\end{figure*} \end{figure*}
\paragraph{Withdrawing coins} \subsection{Withdrawing coins}
As with cash, the customer must first withdraw digital coins As with cash, the customer must first withdraw digital coins
(Figure~\ref{fig:taler-withdraw}). For this, the customer must first (Figure~\ref{fig:taler-withdraw}). For this, the customer must first
@ -592,10 +607,10 @@ skipped by default. However, we generally assume that the exchange is
a separate entity, as this yields the largest anonymity set for a separate entity, as this yields the largest anonymity set for
customers, and may help create a competitive market. customers, and may help create a competitive market.
\paragraph{Spending coins} \subsection{Spending coins}
% \tinyskip % \tinyskip
\begin{figure}[b!] \begin{figure}[t!]
\subfloat[Select article. (Generated by Web shop.)]{ \subfloat[Select article. (Generated by Web shop.)]{
\includegraphics[width=0.30\textwidth]{figs/cart.png} \includegraphics[width=0.30\textwidth]{figs/cart.png}
\label{subfig:cart}} \hfill \label{subfig:cart}} \hfill
@ -676,7 +691,7 @@ signed {\em contract proposal} to the wallet extension
contract to the user. The format of the contract is in an extensible contract to the user. The format of the contract is in an extensible
JSON-based format defined by Taler and not HTML, as the JSON-based format defined by Taler and not HTML, as the
rendering of the contract is done by the wallet to ensure correct rendering of the contract is done by the wallet to ensure correct
visual representation. In case the transaction fees need to be visual representation. In case that transaction fees need to be
covered by the customer, these are shown together with the rest of the covered by the customer, these are shown together with the rest of the
proposed contract. proposed contract.
@ -689,11 +704,18 @@ the information in its local database, and redirects the browser to a
% FIXME: technically this is not entirely true, if you % FIXME: technically this is not entirely true, if you
% allow CORS ... % allow CORS ...
The wallet cannot directly send \subsection{Managing browser context}
the payment to the merchant, as the page showing the contract is
provided as a background page controlled by the Web Extension\footnote{\url{https://developer.chrome.com/extensions}} and thus % FIXME: this is where we probably want to revise quite a bit,
submitting coins from the background would not use the HTTP-context % including improving the description AND addressing the JS-less
that the Web shop's page requires for session management. % implementation.
The wallet cannot directly send the payment to the merchant, as the
page showing the contract is provided as a background page controlled
by the Web
Extension\footnote{\url{https://developer.chrome.com/extensions}} and
thus submitting coins from the background would not use the
HTTP-context that the Web shop's page requires for session management.
% %
% FIXME: can we do better with the description? % FIXME: can we do better with the description?
Instead, the server-side of the fulfillment page usually first detects Instead, the server-side of the fulfillment page usually first detects
@ -829,18 +851,18 @@ the exchange providers and fee structure, but not the cryptographic
coins. Consequently, the major cryptographic advances of Taler are coins. Consequently, the major cryptographic advances of Taler are
invisible to the user. invisible to the user.
Taler's technology also allows merchants to give refunds to Taler's refresh protocol~\cite{talercrypto} also allows merchants to
customers. For this, the merchant merely has to send a signed give refunds to customers. For this, the merchant merely has to send a
message to the exchange confirming the refund, and notify the signed message to the exchange confirming the refund, and notify the
customer's wallet that the respective transaction was refunded. customer's wallet that the respective transaction was refunded. This
This can even be done with anonymous customers, as refunds are can even be done with anonymous customers, as refunds are given as
given as additional change to the owner of the coins that were additional change to the owner of the coins that were originally spent
originally spent to pay for the refunded transaction. to pay for the refunded transaction.
Taler's protocol ensures unlinkability for both change and refunds, Taler's refresh protocol ensures unlinkability for both change and
thereby assuring that the user has key conveniences of other payment refunds, thereby assuring that the user has key conveniences of other
systems while maintaining the security standard of an anonymous payment systems while maintaining the security standard of an
payment system. anonymous payment system.
% Alternative version: % Alternative version:
%An important technical difference between Taler and previous %An important technical difference between Taler and previous
@ -883,66 +905,6 @@ payment system.
% no comment around randomizing the serial numbers on bills % no comment around randomizing the serial numbers on bills
\subsection{NFC payments}
We have so far focused on how Taler could be used for Web payments;
however, Taler can also be naturally used over other protocols, such
as near field communication (NFC). Here, the user would hold his
NFC-enabled device running a wallet application near an NFC terminal
to obtain the contract and confirm the payment on his device, which
would then transfer the coins and obtain a receipt. An NFC
application would be less restricted in its interaction with the
point-of-sale system compared to a browser extension. Thus, running
Taler over NFC is largely a simplification of the process.
Specifically, there are no significant new concerns arising from an
NFC device possibly losing contact with a point-of-sale system.
For Web payments, Taler only employs idempotent operations to
ensure coins are never lost, and that transactions adequately persist
even in the case of network or endpoint failures. As a result, the
NFC system can simply use the same transaction models to replay
transmissions once contact with the point-of-sale system is
reestablished.
\subsection{Peer-to-peer payments}
Peer-to-peer payments are possible with Taler as well; however,
we need to distinguish two types of peer-to-peer payments.
First, there is the {\em sharing} of coins among entities that
mutually trust each other, for example within a family. Here, all
users have to do is to export and import electronic coins over a
secure channel, such as encrypted e-mail or via NFC. For NFC, the
situation is straightforward because we presumably do not have to worry
about man-in-the-middle attacks, while secure communication over the
Internet is likely to remain a significant usability challenge. We
note that sharing coins by copying the respective private keys across
devices is not taxable: the exchange is not involved, no contracts are
signed, and no records for taxation are created. However, the
involved entities must trust each other, because after copying a private
key both parties could spend the coins, but only the first transaction
will succeed. Given this crucial limitation
inherent in sharing keys, we consider it ethically acceptable that
sharing is not taxable.
Second, there is the {\em transactional} mutually exclusive transfer
of ownership. This requires the receiving party to have a {\em
reserve} with an exchange, and the exchanges would have to support
wire transfers among them. If taxability is desired, the {\em
reserve} would still need to be tied to a particular citizen's
identity for tax purposes, and thus require similar identification
protocols as commonly used for establishing a bank account. As such, in
terms of institutions, one would expect this setup to be offered most
easily by traditional banks.
In terms of usability, transactional
transfers are just as easy as sharing when performed over NFC, but
more user friendly when performed over the Internet as they do not
require a secure communication channel: the Taler protocol is by
design still safe to use even if the communication is made over an
unencrypted channel. Only the authenticity of the proposed contract
needs to be assured.
\subsection{Usability for merchants} \subsection{Usability for merchants}
@ -982,7 +944,7 @@ sales with incoming wire transfers from the exchange. Taler
simplifies this for merchants by providing a generic payment simplifies this for merchants by providing a generic payment
processing {\em backend} for the Web shops. processing {\em backend} for the Web shops.
\begin{figure*}[h!] \begin{figure*}[b!]
\begin{center} \begin{center}
\begin{tikzpicture}[ \begin{tikzpicture}[
font=\sffamily, font=\sffamily,
@ -1276,6 +1238,85 @@ the money earned. With Bitcoin, there is no definitive time until a
payment can be said to be confirmed (step 19, Figure~\ref{fig:bitcoin}), payment can be said to be confirmed (step 19, Figure~\ref{fig:bitcoin}),
leaving merchants in a bit of a tricky situation. leaving merchants in a bit of a tricky situation.
Addressing the scalability problems of Bitcoin in the style of BOLT
introduces semi-centralized intermediaries, similar to Taler's use of
exchanges. We expect a Taler exchange operating in BTC to offer
stronger security to all parties and stronger anonymity to customers,
as well as being vastly cheaper to operate and more compatible with
existing financial regulations.
\section{Future work}
This paper has focused on how Taler would work for Web payments.
However, the underlying cryptography should work just as well for
other domains. In particular, we plan to adapt Taler for NFC and
peer-to-peer payments in the future.
\subsection{NFC payments}
We have so far focused on how Taler could be used for Web payments;
however, Taler can in theory also be used over other protocols, such
as near field communication (NFC). Here, the user would hold his
NFC-enabled device running a wallet application near an NFC terminal
to obtain the contract and confirm the payment on his device, which
would then transfer the coins and obtain a receipt. A native NFC
application would be less restricted in its interaction with the
point-of-sale system compared to a browser extension, and the security
of the communication channel is also comparable. Thus, running
Taler over NFC is largely a simplification of the existing process.
In particular, there are no significant new concerns arising from an
NFC device possibly losing contact with a point-of-sale system, as for
Web payments, Taler already only employs idempotent operations to
ensure coins are never lost, and that transactions adequately persist
even in the case of network or endpoint failures. As a result, the
NFC system can simply use the same transaction models to replay
transmissions once contact with the point-of-sale system is
reestablished.
\subsection{Peer-to-peer payments}
Peer-to-peer payments are in principle possible with Taler as well;
however, we need to distinguish two types of peer-to-peer payments.
First, there is the {\em sharing} of coins among entities that
mutually trust each other, for example within a family. Here, all
users have to do is to export and import electronic coins over a
secure channel, such as encrypted e-mail or via NFC. For NFC, the
situation is straightforward because we presumably do not have to worry
about man-in-the-middle attacks, while secure communication over the
Internet is likely to remain a significant usability challenge. We
note that sharing coins by copying the respective private keys across
devices is not taxable: the exchange is not involved, no contracts are
signed, and no records for taxation are created. However, the
involved entities must trust each other, because after copying a private
key both parties could spend the coins, but only the first transaction
will succeed. Given this crucial limitation
inherent in sharing keys, we consider it ethically acceptable that
sharing is not taxable.
Second, there is the {\em transactional} mutually exclusive transfer
of ownership. This requires the receiving party to have a {\em
reserve} with an exchange, and the exchanges would have to support
wire transfers among them. If taxability is desired, the {\em
reserve} would still need to be tied to a particular citizen's
identity for tax purposes, and thus require similar identification
protocols as commonly used for establishing a bank account. As such, in
terms of institutions, one would expect this setup to be offered most
easily by traditional banks.
In terms of usability, transactional
transfers are just as easy as sharing when performed over NFC, but
more user friendly when performed over the Internet as they do not
require a secure communication channel: the Taler protocol is by
design still safe to use even if the communication is made over an
unencrypted channel. Only the authenticity of the proposed contract
needs to be assured.
\section{Conclusion} \section{Conclusion}
Customers and merchants should be able to easily adapt their existing Customers and merchants should be able to easily adapt their existing