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Blockchain-based digital currencies are playing a radical importance in today's trading activities. As a result, a variety of digital currency exchanges were founded and their transaction scales are exploding. At the same time with the rise of a tokenized economy, more and more countries such as Japan, Germany, or Australia, are accepting cryptocurrency payments. There is huge potential that the market will continue to expand globally and accept the commercialization of digital currency.
Currently, most digital currency exchanges and peer-to-peer transaction providers focus on ensuring the security of transactions but pay little attention to fairness. For example, HTLC (Hashed Time-lock Contract), a widely-used atomic exchange technology, is vulnerable to denial of service (DoS) attacks. Attackers may launch DoS attacks in the period of time-lock to make the counterparty unable to get refunded in a specific time.
Meanwhile, during the process of trading between the digital currency and the goods, buyers prefer paying to the seller after the goods are received, whereas the seller has an opposite preference in mind. This situation makes the transaction and delivery unable to be met at the same precise time, it can be persistent to achieve atomic exchange with the guaranteed fairness. A common solution is resorting to a trusted third-party to achieve fairness, however, this solution is not entirely satisfactory due to previous failures. There have been several Bitcoin exchanges and online markets (such as Mt. Gox, Silk Road) that went down due to hacker attacks. For decades, fair exchange protocols have been extensively studied. However, the recent emergence of blockchain takes fair exchange protocols to a renaissance.
We developed Themis, a fair exchange system for digital currencies. Based on blockchain technology, Themis provides a decentralized digital currency escrow service to provide fair exchange services among digital currencies, digital assets, and physical goods. Themis leverages a novel group escrow protocol, along with threshold encryption, anonymous reputation mechanisms, non-interactive zero-knowledge proof, high performance digital signature algorithms, in order to provide atomic exchange with guaranteed fairness. Also, Themis is able to mitigate DoS attacks, and provide privacy for all peers.
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