Cryptographic proof of data knowledge

Abstract

A computer-implemented method of using blockchain transactions of a blockchain to cryptographically prove knowledge of data, comprising: generating a first transaction, wherein the first transaction is configured enforce one or more conditions, wherein the one or more conditions require at least a) a first data value generated based on i) a first message and ii) a first signature generated by signing the first message with a first private key corresponding to a first public key associated with a first party, and b) a second data value generated based on i) a second message and ii) a second signature generated by signing the second message with a first private key corresponding to a first public key associated with a second party, are supplied to the first transaction by a second transaction submitted to the blockchain; and causing the first transaction to be submitted to a blockchain network.

Description

[0001] CRYPTOGRAPHIC PROOF OF DATA KNOWLEDGE

[0002] TECHNICAL FIELD

[0003] The present disclosure relates to techniques for proving and verifying knowledge (and / or possession) of data using blockchain transactions.

[0004] BACKGROUND

[0005] Official statistics from HM Revenue & Customs showed that the tax gap for value added tax (VAT) was estimated to be £11.3 billion in 2019-2020, £6.3 billion in 2020-2021 and £7.6 billion in 2021-2022[1]. The tax gap in the UK is defined as "the difference between the amount of tax that should, in theory, be collected by HM Revenue and Customs (HMRC) against what is actually collected"121. The narrowing of the tax gap since 2020 might be due to the Make Tax Digital (MTD) policy implemented by the UK government in 2019 for VAT. The evidence for this hypothesis was then published in March 2022 by HRMC[3]. The VAT- registered businesses were required to implement the MTD policy from April 2022 to pay the correct amount of tax, reduce errors due to the inaccurate records when keeping them and using them to fill tax returns. In addition, the policy has two more requirements to VAT- registered businesses:

[0006] • use compatible software to submit their VAT tax returns directly to HMRC.

[0007] • keep digital records of their sales including segmented VAT.

[0008] SUMMARY

[0009] It is difficult for relevant entities such as HRMC or buyers to verify the integrity and immutability of VAT records if they are maintained by the business itself. In addition, VAT records are often in different formats and compatible software for generating, viewing, storing, VAT records is inconsistent across businesses, making it onerous, inefficient and time-consuming for HRMC to review and track them.

[0010] To address these problems, embodiments of the present disclosure can be used to implement an automated VAT system that can maintain the integrity and consistency of sales digital records through blockchain transactions, and improve the efficiency of the VAT claim process through on-chain recording. More generally, embodiments disclosed herein provide techniques for proving, cryptographically, knowledge and / or possession of data, and for verifying, cryptographically, that a party has knowledge and / or possession of data. The proof and verification of data knowledge / possession is performed automatically using blockchain transactions.

[0011] According to one aspect disclosed herein, there is provided a computer-implemented method of using blockchain transactions of a blockchain to cryptographically prove knowledge of data, wherein the method is performed by a coordinating party and comprises: generating a first blockchain transaction, wherein the first blockchain transaction is configured enforce one or more conditions, wherein the one or more conditions require at least a) a first data value generated based on i) a first message and ii) a first signature generated by signing the first message with a first private key corresponding to a first public key associated with a first party, and b) a second data value generated based on i) a second message and ii) a second signature generated by signing the second message with a first private key corresponding to a first public key associated with a second party, are supplied to the first blockchain transaction by a second blockchain transaction submitted to the blockchain; and causing the first blockchain transaction to be submitted to one or more blockchain nodes of a blockchain network.

[0012] According to one aspect disclosed herein, there is provided a computer-implemented method of using blockchain transactions of a blockchain to cryptographically prove knowledge of data, wherein the method is performed by a second party and comprises: obtaining a first blockchain transaction, wherein the first blockchain transaction is configured to release a first amount of a digital asset in response to one or more conditions being met, wherein the one or more conditions require at least a) a first data value generated based on i) a first message and ii) a first signature generated by signing the first message with a first private key corresponding to a first public key associated with a first party, and b) a second data value generated based on i) a second message signed and ii) a second signature generated by signing the second message with a first private key corresponding to a first public key associated with a second party, are supplied to the first blockchain transaction by a second blockchain transaction submitted to the blockchain; obtaining the first data value; generating the second data value; generating the second blockchain transaction; causing the second blockchain transaction to be submitted to one or more blockchain nodes of a blockchain network.

[0013] According to one aspect disclosed herein, there is provided a computer-implemented method performing by a first party and comprising: generating a first data value based on i) a first message and ii) a first signature generated by signing the first message with a first private key corresponding to a first public key associated with a first party; sending the first data value to a second party; generating a template blockchain transaction, wherein the template blockchain transaction transfers a first amount of a digital asset to a first public key associated with a coordinating party, wherein the first public key associated with the coordinating party is generated based on the first data value; and sending the template blockchain transaction to the second party.

[0014] The coordinating party generates a blockchain transaction (a first transaction) that is configured to verify that another transaction (a second transaction) supplied to the first transaction contains at least two data values. Only if the second transaction contains the two data values will the first transaction release a digital asset controlled by the first blockchain transaction (the amount of the digital asset may or may not be material). Therefore in order to release the digital asset, the party generating the second transaction must have knowledge of the first and second data values. As such, the proof and verification of the data values is performed automatically using the blockchain transactions.

[0015] The first data value is generated at least in part by a first party digitally signing a first message. Thus knowledge of the first message is required by the first party in order to generate the first data value. Similarly, the second data value is generated at least in part by a second party digitally signing a second message. Thus knowledge of the second message is required by the second party in order to generate the second data value. The second party must have knowledge of both the first and second data values to generate the second transaction.

[0016] Embodiments of the present disclosure may be implemented using an output-based blockchain. In this case, the first transaction contains an output containing a locking script configured to verify that an input of the second transaction contains the first and second data values.

[0017] Alternatively, embodiments of the present disclosure may be implemented using an account-based blockchain. In this case, the first transaction contains a smart contract configured to verify that a transaction supplied to the smart contract contains the first and second data values.

[0018] BRIEF DESCRIPTION OF THE DRAWINGS

[0019] To assist understanding of embodiments of the present disclosure and to show how such embodiments may be put into effect, reference is made, by way of example only, to the accompanying drawings in which:

[0020] Figure 1 is a schematic block diagram of a system for implementing a blockchain,

[0021] Figure 2 schematically illustrates some examples of transactions which may be recorded in a blockchain,

[0022] Figure 3 schematically illustrates an example system for proving knowledge / possession of data using a blockchain, and

[0023] Figure 4 schematically illustrates an example VAT collection process.

[0024] DETAILED DESCRIPTION OF EMBODIMENTS

[0025] 1. PROOF OF KNOWLEDGE Embodiments of the present disclosure enable parties to prove and verify the knowledge and / or possession of data. Hereinafter, the terms knowledge and possession may be used interchangeably. Figure 3 illustrates an example system 300 for implementing the embodiments disclosed herein. The example system 300 include a first party (e.g. Alice 103a), a second party (e.g. Bob 103b) and a coordinating party (e.g. Charlie) 301. The system

[0026] 300 may also include a third party (e.g. David) 302. Like Alice 103a and Bob 103b, Charlie

[0027] 301 and David 302 also operate respective computing equipment and may be configured to perform any action described as being performed by Alice 103a and / or Bob 103b with reference to Figures 1 and 2 below. It will be appreciated that any action described as being performed by Alice 103a, Bob 103b, Charlie 103c and David 103d may be performed using their respective computing equipment, unless the context requires otherwise. The system

[0028] 300 also comprises one or more blockchain nodes 104.

[0029] Alice 103a is configured to sign a first message using a first private key, generating a first signature. The first message may be generated solely by Alice 103a, or in collaboration with Bob 103b. The first private key has a corresponding public key. The public key may be linked to Alice's identity (or derived from a public key linked to her identity) and known to Charlie

[0030] 301 (it may also be known to Bob 302). Only Alice 103a can generate the first signature, which can be verified cryptographically, and therefore Alice 103a must have knowledge of the first message.

[0031] Alice 103a is configured to generate a first data value based on the first message and the first signature. For example, the first data value may be generated by inputting at least the first message and the first signature (e.g. a concatenation of the first message and the first signature) to a hash function, e.g. a SHA-based hash function such as SHA256. The first data value may in general by any commitment of the first message and first signature. In some examples, the first data value is a combination of the first message and first signature.

[0032] Alice 103a is configured to send the first message and the first signature to Bob 103b. She may also send the first data value. Bob 103b may verify the first signature against the first message. That is, Bob 103b may verify that the first signature is a valid signature for the first message, using the public key corresponding to Alice's first private key. Bob 103b thus has knowledge of the first data value - it is either sent directly by Alice 103a to Bob 103b, or Bob 103b generates the first data value using the first message and the first signature received from Alice 103a.

[0033] Bob 103b is configured to sign a second message using a first private key (i.e. a first private key of Bob's, not the first private key of Alice 103a), generating a second signature. The second message may be generated solely by Bob 103b, or in collaboration with David 302. Bob's first private key has a corresponding public key. The public key may be linked to Bob's identity (or derived from a public key linked to his identity) and known to Charlie 301 (it may also be known to David 302). Only Bob 103b can generate the second signature, which can be verified cryptographically, and therefore Bob 103b must have knowledge of the second message.

[0034] Bob 103b is configured to generate a second data value based on the second message and the second signature. For example, the second data value may be generated by inputting at least the second message and the second signature (e.g. a concatenation of the second message and the second signature) to a hash function, e.g. a SHA-based hash function such as SHA256. The second data value may in general by any commitment of the second message and second signature. In some examples, the second data value is a combination of the second message and second signature.

[0035] Charlie 301 is configured to generate a first blockchain transaction that is configured to verify the knowledge of the first and second data values. The first blockchain transaction is configured to verify that a second blockchain transaction meets a set of conditions. One condition is that the second blockchain transaction contains the first data value. Another condition is that the second blockchain transaction contains the second data value. If both conditions are met, the creator of the second blockchain transaction must have knowledge of the first and second data values.

[0036] Bob 103b is configured to generate the second blockchain transaction, and therefore the second blockchain transaction proves that Bob 103b has knowledge of the first and second data values. Charlie 301 may generate the first blockchain transaction in response to a request from Bob 103b. Bob 103b may send the second data value to Charlie 301 so that she can generate the first blockchain transaction. Bob 103b may also send the first data value. In some examples, Charlie 301 obtains the first data value from a different party, e.g. Alice 103a.

[0037] Charlie 301 may submit the first blockchain transaction to the blockchain 150 directly or via a different entity, e.g. a service provider. Similarly, Bob 103b may submit the second blockchain transaction to the blockchain 150 directly or via a different entity, e.g. a service provider.

[0038] The first blockchain transaction may comprise one or more hash puzzles (e.g. data and script) configured to verify that the second blockchain transaction contains the first and second data values. For example, the first blockchain transaction may comprise a hash of the first and second data values, and logic (e.g. a set of opcodes or equivalent) configured to i) hash candidate data values from the second blockchain transaction, and ii) verify the resulting hash of the candidate data values matches the hash of the first and second data values.

[0039] The first blockchain transaction may be configured to verify that the second blockchain transaction meets additional set of conditions. An optional condition is that the second blockchain transaction contains a third signature generated using a second private key of Bob 103b. The second blockchain transaction may be required to contain a public key corresponding to Bob's second private key. The second private key may or may not be the same as Bob's first private key. In some examples, the second private key is generated based on (i.e. a function of) Bob's first private key. The second private key may also be a function of David's public key. Additionally or alternatively, the second private key may be a function of the second message or the second data value.

[0040] Another optional condition is that the second blockchain transaction contains a fourth signature generated using a first private key of Charlie 301. The second blockchain transaction may be required to contain a public key corresponding to Charlie's first private key. The public key may be linked to Charlie's identity, or derived from a public key linked to Charlie's identity.

[0041] The third and / or fourth signatures (generated by Bob 103b and Charlie 301 respectively) may sign a message based on some or all of the second blockchain transaction.

[0042] In some examples, the first blockchain transaction comprises a fifth signature generated using a second private key of Charlie 301. The first blockchain transaction may contain a public key corresponding to Charlie's second private key. The second private key may or may not be the same as Charlie's first private key. In some examples, the second private key is generated based on (i.e. a function of) Charlie's first private key. Additionally or alternatively, the second private key may be a function of the first message or the first data value.

[0043] The blockchain transactions may be transactions on an output-based blockchain (e.g. in the format of those shown in Figure 2). In this case, the first blockchain transaction may comprise one or more outputs, one of which comprises a locking script configured to enforce the conditions described above. The output may encumber (i.e. lock) an amount of a digital asset.

[0044] The first blockchain transaction may comprise one or more inputs, one of which references an output of a third blockchain transaction. Alice 103a may be configured to generate the third blockchain transaction. The output of the third blockchain transaction may be locked to Charlie's first or second public key. Alice 103a may obtain or generate Charlie's first and / or second public keys. The output of the third blockchain transaction may lock the same amount of the digital asset locked by the output of the second blockchain transaction.

[0045] In some examples, (an input of) the third blockchain transaction may require a signature generated using one of Bob's private keys. Alice 103a may send a template transaction to Bob 103b (i.e. a blockchain transaction missing one or more data items), for Bob 103b to apply his signature and return to Alice 103a (or submit directly to the blockchain network 106). Bob 103b may first verify that the first signature (i.e. Alice's signature) that signs the first message is valid, and / or that the first output of the third blockchain transaction is locked to Charlie's public key.

[0046] The third blockchain transaction may contain an additional output locked to a second public key of Alice 103a. Alice's second private key (corresponding to her second public key) may or may not be the same as her first private key. In some examples, the second private key is generated based on (i.e. a function of) Alice's first private key. The second private key may also be a function of Bob's public key. Additionally or alternatively, the second private key may be a function of the first message or the first data value.

[0047] The blockchain transactions may instead be transactions on an account-based blockchain. In this case, the first blockchain transaction may be (or comprise) a smart contract stored on the blockchain and configured to enforce the conditions described above. The smart contract may be stored in (or as part of) or otherwise linked to Charlie's account on the blockchain. The smart contract may be configured to release an amount of the digital asset to an address (or account) corresponding to (or derived from) Bob's public key or Charlie's public key.

[0048] 1.1 Value Added Tax (VAT) Automation Protocol

[0049] Value Added Tax is a tax added to products and services sold by VAT-registered businesses. In the UK, there are three rates for goods and services: standard 20%, reduced 5% and 0%. When selling goods or services, sellers must do the following to charge VAT on behalf of the UK government:

[0050] • calculate the VAT-inclusive price using the correct VAT rate,

[0051] • show the VAT information on the invoice - invoices must include the VAT number and display the VAT separately,

[0052] • show the transaction with a summary of VAT, and

[0053] • record the amount on a VAT return.

[0054] Example: A retailer bought wood from the farmer and the total price including 20% VAT was £120. Then the VAT-exclusive price is calculated: £120 - 1.20 = £100. The VAT amount the retailer can claim back is £20 the difference between the total price and the VAT-exclusive price if he uses wood to make a table and sells the table to a consumer. Note that, the consumer cannot claim the VAT back if he does not sell the table to anyone else. Normally, the invoice shows the VAT-exclusive price and the VAT separately. This can be naturally applied to a blockchain transaction that includes the VAT portion as a separated output. The VAT collection process is described in Figure 4.

[0055] To sum up, the supplier and retailer will collect the VAT at the point of sales and then pay the collected VAT to HMRC, they can also submit a VAT return to claim what they overpay VAT during the sales. The consumer as the final buyer can't claim VAT back.

[0056] The UK government announced a policy to make tax digital in 2015 and implemented it in 2019 for VAT. VAT-registered businesses and individuals have to implement the policy that helps reduce the tax gap through the following requirements:

[0057] • keep digital records,

[0058] • use software that works with Making Tax Digital, and

[0059] • submit updates every quarter, bringing the tax system closer to real-time.

[0060] Making Tax Digital will:

[0061] • make it easier for individuals and businesses to get their tax right,

[0062] • mean customers can integrate tax management with a range of business processes through software,

[0063] • contribute to wider productivity gains for businesses by encouraging digitalisation, and

[0064] • help reduce the amount of tax lost due to o improved accuracy of digital records, o additional help built into many software products, and o digital records being sent directly to HMRC.

[0065] Functional compatible software is: a software program or set of software programs, a product or set of products, and an application or set of applications.

[0066] The MTD policy requires data transfer or exchange within and between two software programs or applications to be done using digital links. A digital link is a transfer or exchange of data made electronically between software programs, products or applications. The following examples are accepted by HMRC as digital links:

[0067] • linked cells in spreadsheets,

[0068] • emailing a spreadsheet containing digital records, so the information can be imported into another software product,

[0069] • transferring a set of digital records onto a portable device (for example, a pen drive, memory stick or flash drive) and physically giving this to someone else, who then imports the data into their software,

[0070] • XML, CSV import and export, and download and upload of files,

[0071] • automated data transfer, and

[0072] • API transfer.

[0073] 1.1.1 Blockchain-based Tax System

[0074] There is an existing blockchain-based technique, described in PCT application no. PCT / EP2021 / 067806, that allows the Tax Authority (e.g., HMRC) to collect VAT from buyer or refund it to the seller through blockchain transactions. The identities of buyers and sellers can be efficiently proved by digital signatures shown on the transactions. This technique utilises hash puzzles to allow sellers to prove the item has been sold forward and collect the related VAT on behalf of the tax authority.

[0075] This technique commits VAT to an escrow transaction and makes VAT available for collection by the Tax Authority after a specific time or by the seller before that time. This is achieved by three transactions:

[0076] - VATi+1- commits the VAT to the escrow.

[0077] VATPay: pays the VAT to the tax authority (TA).

[0078] VATRef-. refunds the VAT to the buyer-seller B_Si+1 where the buyer-seller B_Si+1is the entity who purchases as well as sells the item, e.g., wholesaler. Note that B_Snis the entity who ONLY PURCHASES the item, and B_S0is the entity who ONLY SELLS the item. Table 1. The VAT escrow transaction generated when TA commits the VAT

[0079]

[0080] Table 2. The Tax authority generates a VAT payment transaction to collect the VAT when the seller B_Si+1does not resell the goods after a time ti+1 Table 3. The Seller B_Si+1generates the refund VAT transaction to claim refunded VAT when it sells goods to a buyer before the time period ti+1, where SVi+1is a shared secret between the tax authority and the seller B_Si+1.

[0081] Note that the existing technique requires the tax authority and the seller to construct a commitment channel to determine these three transactions. The transactions of the commitment channel are shown in Tables 1 to 3. However, the commitment channel design may affect the efficiency of VAT payments for TA and all buyer-sellers in this model, especially, when the volume of goods sales is high. It is a time-consuming process because the TA and buyer-seller need to negotiate each VAT payment about the time and the generation of the associated three transactions (e.g., requiring the TA and buyer-seller's signatures in advance).

[0082] 1.1.2 Invoice-linked Public Keys

[0083] In the sale of goods and services, typically the buyer and seller need to exchange an invoice (denoted IV) that shows the details of the purchased items including the price and the amount of VAT. To exchange the invoice, two parties can construct a confidential communication channel to exchange the invoices by a shared secret value S (e.g. using Diffie-Hellman key exchange or similar), which is calculated as follows:

[0084] C — T v / y D I — T7 y D / seller1 lbuyervbuyer1seller

[0085] Where Vseueris the seller's private key with respect to the public key PKseuer, and Vbuyeris the buyer's private key with respect to the public key PKbuyer. Here it is assume d PKbuyerand PKseuerare well-known public keys and used by the buyer and seller to identify each other and establish an authenticated and confidential communication channel to exchange the invoices. These two public keys link to their identities and are never used to send or receive any digital asset transfers.

[0086] The invoice is signed by the seller using the private key associated with PKseuerand sent to the buyer. The signed invoice is INVsigned= SHA-256( / W| \SIGINV), where SIGINVis the buyer's signature on the invoice. When the buyer and the seller reach an agreement about the invoice, the seller derives a new sub public key PKS1to receive transfers such that PKS1= PKseller+ HMAC-256(S, INVsigned) X G, and the buyer derives a sub public key to receive change like this: PKchange = PKbuyer + HMAC-256(S, INVsigned) X G, where HMAC refers to a Hash-based Message Authentication Code that is used to verify integrity and authenticity of messages, G is the elliptic curve generator point.

[0087] These two public keys PKS1and PKchangeare used in the output of a payment transaction. The seller can verify PKchangeto make sure the provided invoice is the same as the one recorded on chain, and then publish the transaction to the blockchain to complete the payment. The buyer can verify the PKS1to check the immutability of the invoice as well. There are alternative methods that may be used to include (i.e. embed) the invoice into a public key, see e.g. PCT / EP2021 / 078601.

[0088] 1.1.3 Value Added Tax Automation Protocol

[0089] The existing blockchain technique described above commits VAT to an escrow transaction and allows VAT to be collected by the tax authority HRMC after a specific time or by the seller before that time. However, the previous technique requires timing of VAT collection at the point of sales, which is less practical as businesses (e.g., retailers) are not sure when the next sale will be. Therefore, to address this issue, this section describes an alternative blockchain-based VAT automation protocol that allows businesses to pay VAT directly to HRMC through blockchain transactions, and claim VAT back using blockchain transactions when the next sale occurs. The sales invoices are embedded into these transactions to provide tamper-proof evidence when they want to claim VAT back. In addition, these invoices can be independently verified by related entities (e.g., sellers, buyers and HMRC).

[0090] The novel technique differs from the previous one in that the VAT is sent directly to HMRC along with the invoice, without time limits and intermediaries. The benefits of the proposed protocol are as follows:

[0091] • HMRC can automatically collect VAT from buyers.

[0092] • HMRC can obtain a uniform format of the VAT payment record.

[0093] • Buyers can efficiently claim the VAT from HMRC using the on-chain recorded invoices when they re-sell the goods or services.

[0094] • All relevant entities can record VAT in a uniform digital format. Automation facilitates the efficient transfer of VAT payment responsibilities between different entities.

[0095] When the goods or services are sold to different entities and the new products made up of the goods or services are re-sold again, the related entities can claim their VAT individually.

[0096] 1.1.3.1 VAT Collection

[0097] The protocol will be described by way of an example involving four main entities in a VAT system:

[0098] • Alice - the primary producer of goods and services, who collects the VAT from Bob but directly transfers it to HMRC. The goods produced by Alice is denoted A.

[0099] • Bob - the retailer, who pays the VAT when he buys goods from Alice and can claim the VAT back if he can prove that he sells the goods to customer. The goods produced by Bob is denoted B.

[0100] • David - the consumer and final buyer, who pays the VAT but cannot claim it.

[0101] • HMRC - VAT only collector, denoted G, who collects the VAT for each sale and returns VAT for each re-sale.

[0102] The entity-related public keys are listed below:

[0103] • P Alice ~ Alice's public keys, used to sign invoices. It is linked to her identity and shared to the counterparty of payment and HMRC. The invoice is signed by PKAuceorits derived public keys. For simplicity, we use PKAUceto represent its derived public keys. The provable link can be provided to entities associated with the sale, such as buyers and HMRC. This applies to other public keys used for invoice signing and UTXO spending.

[0104] • PKA- Alice's public keys, used to spend the UTXO.

[0105] • PKBob- Bob's public keys, used to sign invoices.

[0106] • PKB- Bob's public keys, used to spend UTXOs.

[0107] • PKG- HMRC's well-known public key, used to derive sub public keys for receiving VAT. These sub public keys need to be verified by Alice and Bob when they make payments. In particular, Bob needs to ensure the VAT is paid to the HMRC, and Alice cannot cheat him with a fake HMRC's public key.

[0108] Table 4 shows the details of prices and VAT for each sale. The collected VAT is shown on the invoice and will be transferred directly to HMRC. The refundable VAT is the amount of VAT that can be claimed if the product is re-sold. The net VAT is the amount that will be collected by HMRC after all claims are done. INVA1is the invoice of product A sold by Alice to Bob and is created by producer Alice. INVB1is the invoice of product Ef sold by Bob to David and is created by producer Bob.

[0109] Table 4. Examples of prices and VAT for each sale.

[0110] Let's take the sale between Alice to Bob as an example. The processes of VAT collection can be applied to other sales between any two business entities.

[0111] When Alice sells product A to Bob, the VAT automation system implements the following steps:

[0112] 1. Alice generates the invoice INVA1and signs it INVsigned-Ai= H(INVA1\\SIGAUce), where the signature SIGAUceis Alice's signature on the invoice and can be verified using Alice's identity-linked public key PKAUce, the ' | | ' operator refers to concatenation. Doing this, Alice can maintain the integrity of the invoice. If anyone changes the invoice, it will result in the failure of the SIGAUceverification. She sends the signed invoice (including the invoice INVA1and the signature SIGAUce) to Bob. 2. Bob verifies SIGAiiceto ensure that the invoice is provided by Alice. After passing the signature verification and agreeing to the invoice, he requests a payment transaction template.

[0113] 3. Alice creates the template, including a HMRC's public key PKVAT-A1in an output of the payment transaction, and sends it to Bob. The input is null at this stage as Bob will fund the transaction later.

[0114] 4. Bob verifies the PKVAT-A1to ensure that the VAT is paid to HMRC for the signed invoice.

[0115] 5. Bob signs the transaction and sends it back to Alice.

[0116] 6. Alice checks the finalized transaction (see Table 3) to ensure Bob did not make a change to her outputs (e.g., HMRC's public key PKVAT-A~) , and then publishes the transaction to the blockchain.

[0117] Alice's payment receiving public key is generated by using the technique described above in section 1.1.2:

[0118] PKA= PKAlice+ HMAC-256((V^ceX PKBob), lNVsigned) X G, where VAUceis the private key associated with PKAUce, and VAUcex PKBobis the shared secret between Alice and Bob used to construct a confidential communication channel to exchange the invoice.

[0119] For HMRC, a VAT receiving public key PKVAT-product indexhas the following requirements:

[0120] • link to the sales invoice,

[0121] • can be verified by Alice, Bob and HMRC, and

[0122] • can only be spent by HMRC.

[0123] Therefore, the VAT receiving public key for INVA1is generated slightly differently: Note that, Alice can also concatenate other information (e.g., date) into the hash of the signed invoice H(jNVsigned-Ai). The concatenated information requires prior HMRC approval and is known to Bob.

[0124] Table 5. The schematic of a sale transaction for product A

[0125] Note that the values shown in the transaction TXIDA1are only examples. They can represent the exact price and VAT amount of the payment, or the amount of tokens equivalent to the fiat values.

[0126] 1.1.3.2 VAT Refund

[0127] If product A is used in product B17and Bob sells Ef to David with the invoice INVB1, Bob can request a VAT refund paid on the invoice INVA1. To claim the VAT, Bob needs to provide HMRC two things:

[0128] • the signed purchase invoice INVsigned-A, and

[0129] • the signed sales invoice INVsigned-B1.

[0130] INVsigned-B!=H(INVB| \SIGBob) is the signed invoice concatenating Bob's signature and the invoice INVB1. When HMRC receives the VAT refund request from Bob, it publishes a refund transaction and notifies Bob.

[0131] In order to spend the UTXO of the VAT refund transaction, one (except HMRC) needs to know the following information to calculate < H^INVsigned-Bi\ \INVsigned-Ai') >: • invoices INVA1and INVB1, and

[0132] • the signatures S / Gj4iand SIGB1on the corresponding invoices.

[0133] The invoices may not necessarily contain confidential information and may be easily obtained in some way. This is not problematic since the signatures S / Gj4iand SIGB1are only known by Bob and HMRC. The output also locks the VAT to Bob's public key PKBand HMRC's public key PKG. Note that, though HMRC's public key PKGjust represents a key belonging to HMRC, it can be different to the one used in the VAT receiving key derivation. For simplicity, the same notation is used. For Bob, the unlocking script of spending the UTXO of TXIDRefund-Aiis as follows:

[0134] If Bob did not claim, HMRC can get the VAT back using the following unlocking script:

[0135] < SIGPKCX PKG>.

[0136] As mentioned, David was the final buyer. He cannot apply for a VAT refund because he only has one signed invoice from Bob, but not another invoice showing a new VAT paid to HMRC.

[0137] To sum up, this system can be easily integrated to the existing HMRC's VAT system through blockchain-enabled software such as wallet applications. Invoices including VAT information are recorded on the blockchain and can be traced and verified by HMRC with the associated public keys. Any entity that does not know the related signed invoices cannot track the public key associated with invoice on the blockchain, which preserves the privacy of VAT payments.

[0138] 1.1.4 References

[0139] [1] "Tax gaps: Summary," HMRC, 22 06 2023. [Online], Available: https: / / www.gov.uk / government / statistics / measuring-tax-gaps / 2-tax-gaps- vat#:~:text=During%20the%20COVID%2D19%20period,5.4%25%20in%202021%20to%2020 22.

[0140] [2] "The tax gap and compliance yield," HRMC, [Online], Available: https: / / assets.publishing.service.gov.uk / media / 5a748da4ed915d0e8e3991ca / The_tax_gap_ and_compliance_yield what_they_are_and_how_they_relate.pdf.

[0141] [3] "Evaluating additional tax revenue from Making Tax Digital for VAT," HRMC, 1003 2022. [Online], Available: https: / / www.gov.uk / government / publications / evaluating-additional- tax-revenue-from-making-tax-digital-for-vat.

[0142] 2. EXAMPLE SYSTEM OVERVIEW

[0143] A blockchain refers to a form of distributed data structure, wherein a duplicate copy of the blockchain is maintained at each of a plurality of nodes in a distributed peer-to-peer (P2P) network (referred to below as a "blockchain network") and widely publicised. The blockchain comprises a chain of blocks of data, wherein each block comprises one or more transactions. Each transaction, other than so-called "coinbase transactions", points back to a preceding transaction in a sequence which may span one or more blocks going back to one or more coinbase transactions. Coinbase transactions are discussed further below.

[0144] Transactions that are submitted to the blockchain network are included in new blocks. New blocks are created by a process often referred to as "mining", which involves each of a plurality of the nodes competing to perform "proof-of-work", i.e. solving a cryptographic puzzle based on a representation of a defined set of ordered and validated pending transactions waiting to be included in a new block of the blockchain. It should be noted that the blockchain may be pruned at some nodes, and the publication of blocks can be achieved through the publication of mere block headers.

[0145] The transactions in the blockchain may be used for one or more of the following purposes: to convey a digital asset (i.e. a number of digital tokens), to order a set of entries in a virtualised ledger or registry, to receive and process timestamp entries, and / or to timeorder index pointers. A blockchain can also be exploited in order to layer additional functionality on top of the blockchain. For example, blockchain protocols may allow for storage of additional user data or indexes to data in a transaction. There is no pre-specified limit to the maximum data capacity that can be stored within a single transaction, and therefore increasingly more complex data can be incorporated. For instance this may be used to store an electronic document in the blockchain, or audio or video data.

[0146] In an "output-based" model (sometimes referred to as a UTXO-based model), the data structure of a given transaction comprises one or more inputs and one or more outputs. Any spendable output comprises an element specifying an amount of the digital asset that is derivable from the proceeding sequence of transactions. The spendable output is sometimes referred to as a UTXO ("unspent transaction output"). The output may further comprise a locking script specifying a condition for the future redemption of the output. A locking script is a predicate defining the conditions necessary to validate and transfer digital tokens or assets. Each input of a transaction (other than a coinbase transaction) comprises a pointer (i.e. a reference) to such an output in a preceding transaction, and may further comprise an unlocking script for unlocking the locking script of the pointed-to output. So consider a pair of transactions, call them a first and a second transaction (or "target" transaction). The first transaction comprises at least one output specifying an amount of the digital asset, and comprising a locking script defining one or more conditions of unlocking the output. The second, target transaction comprises at least one input, comprising a pointer to the output of the first transaction, and an unlocking script for unlocking the output of the first transaction.

[0147] In such a model, when the second, target transaction is sent to the blockchain network to be propagated and recorded in the blockchain, one of the criteria for validity applied at each node will be that the unlocking script meets all of the one or more conditions defined in the locking script of the first transaction. Another will be that the output of the first transaction has not already been redeemed by another, earlier valid transaction. Any node that finds the target transaction invalid according to any of these conditions will not propagate it (as a valid transaction, but possibly to register an invalid transaction) nor include it in a new block to be recorded in the blockchain.

[0148] An alternative type of transaction model is an account-based model. In this case each transaction does not define the amount to be transferred by referring back to the UTXO of a preceding transaction in a sequence of past transactions, but rather by reference to an absolute account balance. The current state of all accounts is stored by the nodes separate to the blockchain and is updated constantly.

[0149] Figure 1 shows an example system 100 for implementing a blockchain 150. The system 100 may comprise a packet-switched network 101, typically a wide-area internetwork such as the Internet. The packet-switched network 101 comprises a plurality of blockchain nodes 104 (often referred to as "miners") that may be arranged to form a peer-to-peer (P2P) network 106 within the packet-switched network 101. Whilst not illustrated, the blockchain nodes 104 may be arranged as a near-complete graph. Each blockchain node 104 is therefore highly connected to other blockchain nodes 104.

[0150] Each blockchain node 104 comprises computer equipment of a peer, with different ones of the nodes 104 belonging to different peers. Each blockchain node 104 comprises processing apparatus comprising one or more processors, e.g. one or more central processing units (CPUs), accelerator processors, application specific processors and / or field programmable gate arrays (FPGAs), and other equipment such as application specific integrated circuits (ASICs). Each node also comprises memory, i.e. computer-readable storage in the form of a non-transitory computer-readable medium or media. The memory may comprise one or more memory units employing one or more memory media, e.g. a magnetic medium such as a hard disk; an electronic medium such as a solid-state drive (SSD), flash memory or EEPROM; and / or an optical medium such as an optical disk drive.

[0151] The blockchain 150 comprises a chain of blocks of data 151, wherein a respective copy of the blockchain 150 is maintained at each of a plurality of blockchain nodes 104 in the distributed or blockchain network 106. As mentioned above, maintaining a copy of the blockchain 150 does not necessarily mean storing the blockchain 150 in full. Instead, the blockchain 150 may be pruned of data so long as each blockchain node 150 stores the block header (discussed below) of each block 151. Each block 151 in the chain comprises one or more transactions 152, wherein a transaction in this context refers to a kind of data structure. The nature of the data structure will depend on the type of transaction protocol used as part of a transaction model or scheme. A given blockchain will use one particular transaction protocol throughout.

[0152] A blockchain node 104 may be configured to forward transactions 152 to other blockchain nodes 104, and thereby cause transactions 152 to be propagated throughout the network 106. A blockchain node 104 may be configured to create blocks 151 and to store a respective copy of the same blockchain 150 in their respective memory. A blockchain node 104 may also maintain an ordered set (or "pool") 154 of transactions 152 waiting to be incorporated into blocks 151. The ordered pool 154 is often referred to as a "mempool". This term herein is not intended to limit to any particular blockchain, protocol or model. It refers to the ordered set of transactions which a node 104 has accepted as valid and for which the node 104 is obliged not to accept any other transactions attempting to spend the same output.

[0153] In a given present transaction 152j, the (or each) input comprises a pointer referencing the output of a preceding transaction 152i in the sequence of transactions, specifying that this output is to be redeemed or "spent" in the present transaction 152j. Spending or redeeming does not necessarily imply transfer of a financial asset, though that is certainly one common application. More generally spending could be described as consuming the output, or assigning it to one or more outputs in another, onward transaction. In general, the preceding transaction could be any transaction in the ordered set 154 or any block 151. The preceding transaction 152i need not necessarily exist at the time the present transaction 152j is created or even sent to the network 106, though the preceding transaction 152i will need to exist and be validated in order for the present transaction to be valid. Hence "preceding" herein refers to a predecessor in a logical sequence linked by pointers, not necessarily the time of creation or sending in a temporal sequence, and hence it does not necessarily exclude that the transactions 152i, 152j be created or sent out-of-order (see discussion below on orphan transactions). The preceding transaction 152i could equally be called the antecedent or predecessor transaction.

[0154] Due to the resources involved in transaction validation and publication, typically at least each of the blockchain nodes 104 takes the form of a server comprising one or more physical server units, or even whole a data centre. However in principle any given blockchain node 104 could take the form of a user terminal or a group of user terminals networked together.

[0155] The memory of each blockchain node 104 stores software configured to run on the processing apparatus of the blockchain node 104 in order to perform its respective role or roles and handle transactions 152 in accordance with the blockchain node protocol. It will be understood that any action attributed herein to a blockchain node 104 may be performed by the software run on the processing apparatus of the respective computer equipment. The node software may be implemented in one or more applications at the application layer, or a lower layer such as the operating system layer or a protocol layer, or any combination of these.

[0156] Any given blockchain node may be configured to perform one or more of the following operations: validating transactions, storing transactions, propagating transactions to other peers, performing consensus (e.g. proof-of-work) / mining operations. In some examples, each type of operation is performed by a different node 104. That is, nodes may specialise in particular operation. For example, a nodes 104 may focus on transaction validation and propagation, or on block mining. In some examples, a blockchain node 104 may perform more than one of these operations in parallel. Any reference to a blockchain node 104 may refer to an entity that is configured to perform at least one of these operations.

[0157] Also connected to the network 101 is the computer equipment 102 of each of a plurality of parties 103 in the role of consuming users. These users may interact with the blockchain network 106 but do not participate in validating transactions or constructing blocks. Some of these users or agents 103 may act as senders and recipients in transactions. Other users may interact with the blockchain 150 without necessarily acting as senders or recipients. For instance, some parties may act as storage entities that store a copy of the blockchain 150 (e.g. having obtained a copy of the blockchain from a blockchain node 104).

[0158] Some or all of the parties 103 may be connected as part of a different network, e.g. a network overlaid on top of the blockchain network 106. Users of the blockchain network (often referred to as "clients") may be said to be part of a system that includes the blockchain network 106; however, these users are not blockchain nodes 104 as they do not perform the roles required of the blockchain nodes. Instead, each party 103 may interact with the blockchain network 106 and thereby utilize the blockchain 150 by connecting to (i.e. communicating with) a blockchain node 106. Two parties 103 and their respective equipment 102 are shown for illustrative purposes: a first party 103a and his / her respective computer equipment 102a, and a second party 103b and his / her respective computer equipment 102b. It will be understood that many more such parties 103 and their respective computer equipment 102 may be present and participating in the system 100, but for convenience they are not illustrated. Each party 103 may be an individual or an organization. Purely by way of illustration the first party 103a is referred to herein as Alice and the second party 103b is referred to as Bob, but it will be appreciated that this is not limiting and any reference herein to Alice or Bob may be replaced with "first party" and "second "party" respectively. T1

[0159] The computer equipment 102 of each party 103 comprises respective processing apparatus comprising one or more processors, e.g. one or more CPUs, GPUs, other accelerator processors, application specific processors, and / or FPGAs. The computer equipment 102 of each party 103 further comprises memory, i.e. computer-readable storage in the form of a non-transitory computer-readable medium or media. This memory may comprise one or more memory units employing one or more memory media, e.g. a magnetic medium such as hard disk; an electronic medium such as an SSD, flash memory or EEPROM; and / or an optical medium such as an optical disc drive. The memory on the computer equipment 102 of each party 103 stores software comprising a respective instance of at least one client application 105 arranged to run on the processing apparatus. It will be understood that any action attributed herein to a given party 103 may be performed using the software run on the processing apparatus of the respective computer equipment 102. The computer equipment 102 of each party 103 comprises at least one user terminal, e.g. a desktop or laptop computer, a tablet, a smartphone, or a wearable device such as a smartwatch. The computer equipment 102 of a given party 103 may also comprise one or more other networked resources, such as cloud computing resources accessed via the user terminal.

[0160] The client application 105 may be initially provided to the computer equipment 102 of any given party 103 on suitable computer-readable storage medium or media, e.g. downloaded from a server, or provided on a removable storage device such as a removable SSD, flash memory key, removable EEPROM, removable magnetic disk drive, magnetic floppy disk or tape, optical disk such as a CD or DVD ROM, or a removable optical drive, etc.

[0161] The client application 105 comprises at least a "wallet" function. This has two main functionalities. One of these is to enable the respective party 103 to create, authorise (for example sign) and send transactions 152 to one or more bitcoin nodes 104 to then be propagated throughout the network of blockchain nodes 104 and thereby included in the blockchain 150. The other is to report back to the respective party the amount of the digital asset that he or she currently owns. In an output-based system, this second functionality comprises collating the amounts defined in the outputs of the various 152 transactions scattered throughout the blockchain 150 that belong to the party in question. Note: whilst the various client functionality may be described as being integrated into a given client application 105, this is not necessarily limiting and instead any client functionality described herein may instead be implemented in a suite of two or more distinct applications, e.g. interfacing via an API, or one being a plug-in to the other. More generally the client functionality could be implemented at the application layer or a lower layer such as the operating system, or any combination of these. The following will be described in terms of a client application 105 but it will be appreciated that this is not limiting.

[0162] The instance of the client application or software 105 on each computer equipment 102 is operatively coupled to at least one of the blockchain nodes 104 of the network 106. This enables the wallet function of the client 105 to send transactions 152 to the network 106. The client 105 is also able to contact blockchain nodes 104 in order to query the blockchain 150 for any transactions of which the respective party 103 is the recipient (or indeed inspect other parties' transactions in the blockchain 150, since in embodiments the blockchain 150 is a public facility which provides trust in transactions in part through its public visibility). The wallet function on each computer equipment 102 is configured to formulate and send transactions 152 according to a transaction protocol. As set out above, each blockchain node 104 runs software configured to validate transactions 152 according to the blockchain node protocol, and to forward transactions 152 in order to propagate them throughout the blockchain network 106. The transaction protocol and the node protocol correspond to one another, and a given transaction protocol goes with a given node protocol, together implementing a given transaction model. The same transaction protocol is used for all transactions 152 in the blockchain 150. The same node protocol is used by all the nodes 104 in the network 106.

[0163] An alternative type of transaction protocol operated by some blockchain networks may be referred to as an "account-based" protocol, as part of an account-based transaction model. In the account-based case, each transaction does not define the amount to be transferred by referring back to the UTXO of a preceding transaction in a sequence of past transactions, but rather by reference to an absolute account balance. The current state of all accounts is stored, by the nodes of that network, separate to the blockchain and is updated constantly. In such a system, transactions are ordered using a running transaction tally of the account (also called the "position" or "nonce"). This value is signed by the sender as part of their cryptographic signature and is hashed as part of the transaction reference calculation. In addition, an optional data field may also be signed the transaction. This data field may point back to a previous transaction, for example if the previous transaction ID is included in the data field.

[0164] Some account-based transaction models share several similarities with the output-based transaction model described herein. For example, as mentioned above, the data field of an account-based transaction may point back to a previous transaction, which is equivalent to the input of an output-based transaction which references an outpoint a previous transaction. Thus both models enable linking between transactions. As another example, an account-based transaction contains a "recipient" field (in which a receiving address of an account is specified) and a "value" field (in which an amount of digital asset may be specified). Together the recipient and value fields are equivalent to the output of an outputbased transaction which may be used to assign an amount of digital asset to a blockchain address. Similarly, an account-based transaction has a "signature" field which includes a signature for the transaction. The signature is generated using the sender's private key and confirms the sender has authorized this transaction. This is equivalent to an input / unlocking script of an output-based transaction which, typically, includes a signature for the transaction. When both types of transaction are submitted to their respective blockchain networks, the signatures are checked to determine whether the transaction is valid and can be recorded on the blockchain. On an account-based blockchain, a "smart contact" refers to a transaction that contains a script configured to perform one or more actions (e.g. send or "release" a digital asset to a recipient address) in response to one or more inputs (provided by a transaction) meeting one or more conditions defined by the smart contact's script. The smart contract exists as a transaction on the blockchain, and can be called (or triggered) by subsequent transactions. Thus, in some examples, a smart contract may be considered equivalent to a locking script of an output-based transaction, which can be triggered by a subsequent transaction, and checks whether one or more conditions defined by the locking script are met by the input of the subsequent transaction. 3. UTXO-BASED MODEL

[0165] Figure 2 illustrates an example transaction protocol. This is an example of a UTXO-based protocol. A transaction 152 (abbreviated "Tx") is the fundamental data structure of the blockchain 150 (each block 151 comprising one or more transactions 152). The following will be described by reference to an output-based or "UTXO" based protocol. However, this is not limiting to all possible embodiments. Note that while the example UTXO-based protocol is described with reference to bitcoin, it may equally be implemented on other example blockchain networks.

[0166] In a UTXO-based model, each transaction ("Tx") 152 comprises a data structure comprising one or more inputs 202, and one or more outputs 203. Each output 203 may comprise an unspent transaction output (UTXO), which can be used as the source for the input 202 of another new transaction (if the UTXO has not already been redeemed). The UTXO includes a value specifying an amount of a digital asset. This represents a set number of tokens on the distributed ledger. The UTXO may also contain the transaction ID of the transaction from which it came, amongst other information. The transaction data structure may also comprise a header 201, which may comprise an indicator of the size of the input field(s) 202 and output field(s) 203. The header 201 may also include an ID of the transaction. In embodiments the transaction ID is the hash of the transaction data (excluding the transaction ID itself) and stored in the header 201 of the raw transaction 152 submitted to the nodes 104.

[0167] Say Alice 103a wishes to create a transaction 152j transferring an amount of the digital asset in question to Bob 103b. In Figure 2 Alice's new transaction 152j is labelled " TxT. It takes an amount of the digital asset that is locked to Alice in the output 203 of a preceding transaction 152i in the sequence, and transfers at least some of this to Bob. The preceding transaction 152i is labelled “ Txo" in Figure 2. TAT? and Txi are just arbitrary labels. They do not necessarily mean that Txo is the first transaction in the blockchain 151, nor that Txi is the immediate next transaction in the pool 154. Txi could point back to any preceding (i.e. antecedent) transaction that still has an unspent output 203 locked to Alice. The terms "preceding" and "subsequent" as used herein in the context of the sequence of transactions refer to the order of the transactions in the sequence as defined by the transaction pointers specified in the transactions (which transaction points back to which other transaction, and so forth). They could equally be replaced with "predecessor" and "successor", or "antecedent" and "descendant", "parent" and "child", or such like. It does not necessarily imply an order in which they are created, sent to the network 106, or arrive at any given blockchain node 104. Nevertheless, a subsequent transaction (the descendent transaction or "child") which points to a preceding transaction (the antecedent transaction or "parent") will not be validated until and unless the parent transaction is validated. A child that arrives at a blockchain node 104 before its parent is considered an orphan. It may be discarded or buffered for a certain time to wait for the parent, depending on the node protocol and / or node behaviour.

[0168] One of the one or more outputs 203 of the preceding transaction Txo comprises a particular UTXO, labelled here UTXOo. Each UTXO comprises a value specifying an amount of the digital asset represented by the UTXO, and a locking script which defines a condition which must be met by an unlocking script in the input 202 of a subsequent transaction in order for the subsequent transaction to be validated, and therefore for the UTXO to be successfully redeemed.

[0169] The locking script (aka scriptPubKey) is a piece of code written in the domain specific language recognized by the node protocol. A particular example of such a language is called "Script" (capital S) which is used by the blockchain network. The locking script specifies what information is required to spend a transaction output 203, for example the requirement of Alice's signature. Locking scripts appear in the outputs of transactions. The unlocking script (aka scriptSig) is a piece of code written the domain specific language that provides the information required to satisfy the locking script criteria. For example, it may contain Bob's signature. Unlocking scripts appear in the input 202 of transactions.

[0170] So in the example illustrated, UTXOo in the output 203 of TAT? comprises a locking script [Checksig PA] which requires a signature Sig PA of Alice in order for UTXOo to be redeemed (strictly, in order for a subsequent transaction attempting to redeem UTXOo to be valid). [Checksig PA contains a representation (i.e. a hash) of the public key PA from a publicprivate key pair of Alice. The input 202 of Txi comprises a pointer pointing back to Txi (e.g. by means of its transaction ID, TxIDo, which in embodiments is the hash of the whole transaction Txo). The input 202 of Txi comprises an index identifying UTXOo within Txo, to identify it amongst any other possible outputs of Txo. The input 202 of Txi further comprises an unlocking script <Sig PA> which comprises a cryptographic signature of Alice, created by Alice applying her private key from the key pair to a predefined portion of data (sometimes called the "message" in cryptography). The data (or "message") that needs to be signed by Alice to provide a valid signature may be defined by the locking script, or by the node protocol, or by a combination of these.

[0171] When the new transaction Txi arrives at a blockchain node 104, the node applies the node protocol. This comprises running the locking script and unlocking script together to check whether the unlocking script meets the condition defined in the locking script (where this condition may comprise one or more criteria).

[0172] Note that the script code is often represented schematically (i.e. not using the exact language). For example, one may use operation codes (opcodes) to represent a particular function. "OP_..." refers to a particular opcode of the Script language. As an example, OP_RETURN is an opcode of the Script language that when preceded by OP_FALSE at the beginning of a locking script creates an unspendable output of a transaction that can store data within the transaction, and thereby record the data immutably in the blockchain 150. E.g. the data could comprise a document which it is desired to store in the blockchain.

[0173] Typically an input of a transaction contains a digital signature corresponding to a public key PA. In embodiments this is based on the ECDSA using the elliptic curve secp256kl. A digital signature signs a particular piece of data. In some embodiments, for a given transaction the signature will sign part of the transaction input, and some or all of the transaction outputs. The particular parts of the outputs it signs depends on the SIGHASH flag. The SIGHASH flag is usually a 4-byte code included at the end of a signature to select which outputs are signed (and thus fixed at the time of signing). The locking script is sometimes called "scriptPubKey" referring to the fact that it typically comprises the public key of the party to whom the respective transaction is locked. The unlocking script is sometimes called "scriptSig" referring to the fact that it typically supplies the corresponding signature. However, more generally it is not essential in all applications of a blockchain 150 that the condition for a UTXO to be redeemed comprises authenticating a signature. More generally the scripting language could be used to define any one or more conditions. Hence the more general terms "locking script" and "unlocking script" may be preferred.

[0174] 4. SIDE CHANNEL

[0175] As shown in Figure 1, the client application on each of Alice and Bob's computer equipment 102a, 120b, respectively, may comprise additional communication functionality. This additional functionality enables Alice 103a to establish a separate side channel 107 with Bob 103b (at the instigation of either party or a third party). The side channel 107 enables exchange of data separately from the blockchain network. Such communication is sometimes referred to as "off-chain" communication. For instance this may be used to exchange a transaction 152 between Alice and Bob without the transaction (yet) being registered onto the blockchain network 106 or making its way onto the chain 150, until one of the parties chooses to broadcast it to the network 106. Sharing a transaction in this way is sometimes referred to as sharing a "transaction template". A transaction template may lack one or more inputs and / or outputs that are required in order to form a complete transaction. Alternatively or additionally, the side channel 107 may be used to exchange any other transaction related data, such as keys, negotiated amounts or terms, data content, etc.

[0176] The side channel 107 may be established via the same packet-switched network 101 as the blockchain network 106. Alternatively or additionally, the side channel 301 may be established via a different network such as a mobile cellular network, or a local area network such as a local wireless network, or even a direct wired or wireless link between Alice and Bob's devices 102a, 102b. Generally, the side channel 107 as referred to anywhere herein may comprise any one or more links via one or more networking technologies or communication media for exchanging data "off-chain", i.e. separately from the blockchain network 106. Where more than one link is used, then the bundle or collection of off-chain links as a whole may be referred to as the side channel 107. Note therefore that if it is said that Alice and Bob exchange certain pieces of information or data, or such like, over the side channel 107, then this does not necessarily imply all these pieces of data have to be send over exactly the same link or even the same type of network.

[0177] 5. FURTHER REMARKS

[0178] Other variants or use cases of the disclosed techniques may become apparent to the person skilled in the art once given the disclosure herein. The scope of the disclosure is not limited by the described embodiments but only by the accompanying claims.

[0179] For instance, some embodiments above have been described in terms of a bitcoin network 106, bitcoin blockchain 150 and bitcoin nodes 104. However it will be appreciated that the bitcoin blockchain is one particular example of a blockchain 150 and the above description may apply generally to any blockchain. That is, the present invention is in by no way limited to the bitcoin blockchain. More generally, any reference above to bitcoin network 106, bitcoin blockchain 150 and bitcoin nodes 104 may be replaced with reference to a blockchain network 106, blockchain 150 and blockchain node 104 respectively. The blockchain, blockchain network and / or blockchain nodes may share some or all of the described properties of the bitcoin blockchain 150, bitcoin network 106 and bitcoin nodes 104 as described above.

[0180] In preferred embodiments of the invention, the blockchain network 106 is the bitcoin network and bitcoin nodes 104 perform at least all of the described functions of creating, publishing, propagating and storing blocks 151 of the blockchain 150. It is not excluded that there may be other network entities (or network elements) that only perform one or some but not all of these functions. That is, a network entity may perform the function of propagating and / or storing blocks without creating and publishing blocks (recall that these entities are not considered nodes of the preferred bitcoin network 106).

[0181] In other embodiments of the invention, the blockchain network 106 may not be the bitcoin network. In these embodiments, it is not excluded that a node may perform at least one or some but not all of the functions of creating, publishing, propagating and storing blocks 151 of the blockchain 150. For instance, on those other blockchain networks a "node" may be used to refer to a network entity that is configured to create and publish blocks 151 but not store and / or propagate those blocks 151 to other nodes.

[0182] Even more generally, any reference to the term "bitcoin node" 104 above may be replaced with the term "network entity" or "network element", wherein such an entity / element is configured to perform some or all of the roles of creating, publishing, propagating and storing blocks. The functions of such a network entity / element may be implemented in hardware in the same way described above with reference to a blockchain node 104.

[0183] Some embodiments have been described in terms of the blockchain network implementing a proof-of-work consensus mechanism to secure the underlying blockchain. However proof- of-work is just one type of consensus mechanism and in general embodiments may use any type of suitable consensus mechanism such as, for example, proof-of-stake, delegated proof-of-stake, proof-of-capacity, or proof-of-elapsed time. As a particular example, proof- of-stake uses a randomized process to determine which blockchain node 104 is given the opportunity to produce the next block 151. The chosen node is often referred to as a validator. Blockchain nodes can lock up their tokens for a certain time in order to have the chance of becoming a validator. Generally, the node who locks the biggest stake for the longest period of time has the best chance of becoming the next validator.

[0184] It will be appreciated that the above embodiments have been described by way of example only. More generally there may be provided a method, apparatus or program in accordance with any one or more of the following Statements.

[0185] Statement 1. A computer-implemented method of using blockchain transactions of a blockchain to cryptographically prove knowledge of data, wherein the method is performed by a coordinating party and comprises: generating a first blockchain transaction, wherein the first blockchain transaction is configured enforce one or more conditions, wherein the one or more conditions require at least a) a first data value generated based on i) a first message and ii) a first signature generated by signing the first message with a first private key corresponding to a first public key associated with a first party, and b) a second data value generated based on i) a second message and ii) a second signature generated by signing the second message with a first private key corresponding to a first public key associated with a second party, are supplied to the first blockchain transaction by a second blockchain transaction submitted to the blockchain; and causing the first blockchain transaction to be submitted to one or more blockchain nodes of a blockchain network.

[0186] Statement 2. The method of statement 1, wherein the one or more conditions require that c) a third signature generated with a second private key corresponding to a second public key associated with the second party and / or d) a fourth signature generated with a first private key corresponding to a first public key associated with the coordinating party, is supplied to the first blockchain transaction by the second blockchain transaction.

[0187] Statement 3. The method of statement 1 or statement 2, wherein the first data value is a first hash value generated by hashing the first message and the first signature and / or wherein the second data value is a second hash value generated by hashing the second message and the second signature.

[0188] Statement 4. The method of statement 3, wherein the first blockchain transaction comprises a third hash value generated by hashing the first hash value and the second hash value, and wherein the first blockchain transaction is configured to hash the first and second hash values, as supplied by the second blockchain transaction, to generate a resulting hash, and verify that the resulting hash corresponds to the third hash value.

[0189] Statement 5. The method of statement 2, wherein the second public key associated with the second party is generated based on at least the first private key controlled by the second party, a first public key associated with a third party, and the second message. Statement 6. The method of statement 5, wherein the second public key associated with the second party is generated based on a first public key corresponding to the first private key controlled by the second party.

[0190] Statement 7. The method of any preceding statement, comprising receiving at least the second data value from the second party, wherein said generating of the first blockchain transaction is in response to said receiving of the second data value.

[0191] Statement 8. The method of any preceding statement, wherein the blockchain is an output-based blockchain, wherein the first blockchain transaction comprises a first output comprising a first locking script configured to enforce the one or more conditions.

[0192] Statement 9. The method of statement 8, wherein the first blockchain transaction comprises a first input that references a first output of a third blockchain transaction, wherein the first output of the third blockchain transaction is locked to a second public key associated with the coordinating party, and wherein the first input of the first blockchain transaction comprises a fifth signature generated with a second private key corresponding to the second public key associated with the coordinating party.

[0193] Statement 10. The method of statement 9, wherein the second public key associated with the coordinating party is generated based on the first data value and a third public key associated with the coordinating party.

[0194] Statement 11. The method of any of statements 1 to 7, wherein the blockchain is an account-based blockchain, wherein the first blockchain transaction is a smart contract configured to enforce the one or more conditions.

[0195] Statement 12. The method of statement 11, wherein the smart contract is configured to release a first amount of a digital asset to an account controlled by the second party.

[0196] Statement 13. The method of any preceding statement, wherein the first message is a first invoice relating to a first item, wherein the second message is a second invoice relating to the first item, and wherein the first amount of the digital asset is or represents a Value- added Tax (VAT) payment relating to the first item.

[0197] Statement 14. A computer-implemented method of using blockchain transactions of a blockchain to cryptographically prove knowledge of data, wherein the method is performed by a second party and comprises: obtaining a first blockchain transaction, wherein the first blockchain transaction is configured to release a first amount of a digital asset in response to one or more conditions being met, wherein the one or more conditions require at least a) a first data value generated based on i) a first message and ii) a first signature generated by signing the first message with a first private key corresponding to a first public key associated with a first party, and b) a second data value generated based on i) a second message signed and ii) a second signature generated by signing the second message with a first private key corresponding to a first public key associated with a second party, are supplied to the first blockchain transaction by a second blockchain transaction submitted to the blockchain; obtaining the first data value; generating the second data value; generating the second blockchain transaction; causing the second blockchain transaction to be submitted to one or more blockchain nodes of a blockchain network.

[0198] Statement 15. The method of statement 14, comprising sending the first data value and the second value to the coordinating party.

[0199] Statement 16. The method of statement 14 or statement 15, wherein obtaining the first data value comprises obtaining the first message and the first signature, and wherein the method comprises: verifying that the first signature is a valid signature for the first message; obtaining a template blockchain transaction from the first party, wherein the template blockchain transaction transfers the first amount of the digital asset to a first public key associated with the coordinating party; verifying that the first public key associated with the coordinating party is generated based on the first data value; signing the template blockchain transaction to generate a third blockchain transaction; and causing the third blockchain transaction to be submitted to the first party or one or more blockchain nodes of the blockchain network.

[0200] Statement 17. The method of any of statements 14 to 16, wherein the blockchain is an output-based blockchain, wherein the first blockchain transaction comprises a first output locking the first amount of the digital asset and a first locking script configured to enforce the one or more conditions, wherein the second blockchain transaction comprises a first input that references the first output of the first blockchain transaction, and wherein the second blockchain transaction comprises a first output locked to a third public key associated with the second party.

[0201] Statement 18. A computer-implemented method performing by a first party and comprising: generating a first data value based on i) a first message and ii) a first signature generated by signing the first message with a first private key corresponding to a first public key associated with a first party; sending the first data value to a second party; generating a template blockchain transaction, wherein the template blockchain transaction transfers a first amount of a digital asset to a first public key associated with a coordinating party, wherein the first public key associated with the coordinating party is generated based on the first data value; and sending the template blockchain transaction to the second party.

[0202] Statement 19. The method of statement 18, wherein the template blockchain transaction transfers a second amount of the digital asset to a second public key associated with the first party, wherein the second public key associated with the first party is generated based on at least the first private key controlled by the first party, a first public key associated with the second party, and the first message. Statement 20. Computer equipment comprising: memory comprising one or more memory units; and processing apparatus comprising one or more processing units, wherein the memory stores code arranged to run on the processing apparatus, the code being configured so as when on the processing apparatus to perform the method of any of statements 1 to 19.

[0203] Statement 21. A computer program embodied on computer-readable storage and configured so as, when run on one or more processors, to perform the method of any of statements 1 to 19.

[0204] According to another aspect disclosed herein, there may be provided a method comprising the actions of one, some or all of the first party, second party and coordinating party.

[0205] According to another aspect disclosed herein, there may be provided a system comprising the computer equipment of one, some or all of the first party, second party and coordinating party.

Claims

CLAIMS1. A computer-implemented method of using blockchain transactions of a blockchain to cryptographically prove knowledge of data, wherein the method is performed by a coordinating party and comprises: generating a first blockchain transaction, wherein the first blockchain transaction is configured enforce one or more conditions, wherein the one or more conditions require at least a) a first data value generated based on i) a first message and ii) a first signature generated by signing the first message with a first private key corresponding to a first public key associated with a first party, and b) a second data value generated based on i) a second message and ii) a second signature generated by signing the second message with a first private key corresponding to a first public key associated with a second party, are supplied to the first blockchain transaction by a second blockchain transaction submitted to the blockchain; and causing the first blockchain transaction to be submitted to one or more blockchain nodes of a blockchain network.

2. The method of claim 1, wherein the one or more conditions require that c) a third signature generated with a second private key corresponding to a second public key associated with the second party and / or d) a fourth signature generated with a first private key corresponding to a first public key associated with the coordinating party, is supplied to the first blockchain transaction by the second blockchain transaction.

3. The method of claim 1 or claim 2, wherein the first data value is a first hash value generated by hashing the first message and the first signature and / or wherein the second data value is a second hash value generated by hashing the second message and the second signature.

4. The method of claim 3, wherein the first blockchain transaction comprises a third hash value generated by hashing the first hash value and the second hash value, and wherein the first blockchain transaction is configured to hash the first and second hashvalues, as supplied by the second blockchain transaction, to generate a resulting hash, and verify that the resulting hash corresponds to the third hash value.

5. The method of claim 2, wherein the second public key associated with the second party is generated based on at least the first private key controlled by the second party, a first public key associated with a third party, and the second message.

6. The method of claim 5, wherein the second public key associated with the second party is generated based on a first public key corresponding to the first private key controlled by the second party.

7. The method of any preceding claim, comprising receiving at least the second data value from the second party, wherein said generating of the first blockchain transaction is in response to said receiving of the second data value.

8. The method of any preceding claim, wherein the blockchain is an output-based blockchain, wherein the first blockchain transaction comprises a first output comprising a first locking script configured to enforce the one or more conditions.

9. The method of claim 8, wherein the first blockchain transaction comprises a first input that references a first output of a third blockchain transaction, wherein the first output of the third blockchain transaction is locked to a second public key associated with the coordinating party, and wherein the first input of the first blockchain transaction comprises a fifth signature generated with a second private key corresponding to the second public key associated with the coordinating party.

10. The method of claim 9, wherein the second public key associated with the coordinating party is generated based on the first data value and a third public key associated with the coordinating party.

11. The method of any of claims 1 to 7, wherein the blockchain is an account-based blockchain, wherein the first blockchain transaction is a smart contract configured to enforce the one or more conditions.

12. The method of claim 11, wherein the smart contract is configured to release a first amount of a digital asset to an account controlled by the second party.

13. The method of any preceding claim, wherein the first message is a first invoice relating to a first item, wherein the second message is a second invoice relating to the first item, and wherein the first amount of the digital asset is or represents a Value-added Tax (VAT) payment relating to the first item.

14. A computer-implemented method of using blockchain transactions of a blockchain to cryptographically prove knowledge of data, wherein the method is performed by a second party and comprises: obtaining a first blockchain transaction, wherein the first blockchain transaction is configured to release a first amount of a digital asset in response to one or more conditions being met, wherein the one or more conditions require at least a) a first data value generated based on i) a first message and ii) a first signature generated by signing the first message with a first private key corresponding to a first public key associated with a first party, and b) a second data value generated based on i) a second message signed and ii) a second signature generated by signing the second message with a first private key corresponding to a first public key associated with a second party, are supplied to the first blockchain transaction by a second blockchain transaction submitted to the blockchain; obtaining the first data value; generating the second data value; generating the second blockchain transaction; causing the second blockchain transaction to be submitted to one or more blockchain nodes of a blockchain network.

15. The method of claim 14, comprising sending the first data value and the second value to the coordinating party.

16. The method of claim 14 or claim 15, wherein obtaining the first data value comprises obtaining the first message and the first signature, and wherein the method comprises: verifying that the first signature is a valid signature for the first message; obtaining a template blockchain transaction from the first party, wherein the template blockchain transaction transfers the first amount of the digital asset to a first public key associated with the coordinating party; verifying that the first public key associated with the coordinating party is generated based on the first data value; signing the template blockchain transaction to generate a third blockchain transaction; and causing the third blockchain transaction to be submitted to the first party or one or more blockchain nodes of the blockchain network.

17. The method of any of claims 14 to 16, wherein the blockchain is an output-based blockchain, wherein the first blockchain transaction comprises a first output locking the first amount of the digital asset and a first locking script configured to enforce the one or more conditions, wherein the second blockchain transaction comprises a first input that references the first output of the first blockchain transaction, and wherein the second blockchain transaction comprises a first output locked to a third public key associated with the second party.

18. A computer-implemented method performing by a first party and comprising: generating a first data value based on i) a first message and ii) a first signature generated by signing the first message with a first private key corresponding to a first public key associated with a first party; sending the first data value to a second party; generating a template blockchain transaction, wherein the template blockchain transaction transfers a first amount of a digital asset to a first public key associated with a coordinating party, wherein the first public key associated with the coordinating party is generated based on the first data value; and sending the template blockchain transaction to the second party.

19. The method of claim 18, wherein the template blockchain transaction transfers a second amount of the digital asset to a second public key associated with the first party, wherein the second public key associated with the first party is generated based on at least the first private key controlled by the first party, a first public key associated with the second party, and the first message.

20. Computer equipment comprising: memory comprising one or more memory units; and processing apparatus comprising one or more processing units, wherein the memory stores code arranged to run on the processing apparatus, the code being configured so as when on the processing apparatus to perform the method of any of claims 1 to 19.

21. A computer program embodied on computer-readable storage and configured so as, when run on one or more processors, to perform the method of any of claims 1 to 19.

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