Balancing privacy and accountability in digital payment methods using zk-SNARKs

In this paper we propose and implement a digital permissioned decentralized anonymous payment scheme that finds a balance between anonymity and auditability. This approach allows banks to ensure that their clients are not participating in illegal financial transactions, whilst clients stay in control over their sensitive, personal information. Existing anonymous payment schemes often provide good privacy, but only little or mostly no auditability. We provide both by extending the Zerocash zk-SNARK based approach and adding functionality that allows for customer due diligence ‘at the gate’. Clients can do fully anonymous transactions up to a certain amount per time unit and larger transactions are forced to include verifiably encrypted transactions details that can only be opened by a select group of ‘judges’.