Secure Deterministic Wallet and Stealth Address: Key-Insulated and Privacy-Preserving Signature Scheme With Publicly Derived Public Key

Deterministic Wallet (DW) and Stealth Address (SA) mechanisms have been widely adopted in the cryptocurrency community, due to their virtues on functionality and privacy protection, which come from a key derivation mechanism that allows an arbitrary number of derived keys to be generated from a master key. However, these algorithms suffer a vulnerability that, when one derived key is compromised somehow, the damage is not limited to the leaked derived key only, but to the master key and in consequence all derived keys are compromised. In this article, we introduce and formalize a new signature variant, called Key-Insulated and Privacy-Preserving Signature Scheme with Publicly Derived Public Key (PDPKS), which fully captures and improves the functionality, security, and privacy requirements of DW and SA. We propose a PDPKS construction and prove its security and privacy in the random oracle model. Furthermore, we implement the construction with parameters for 128-bit security, and the results show that it is practically efficient for the setting of cryptocurrencies. With its solid guarantee on functionality, security and privacy, as well as its practical efficiency, our PDPKS construction provides a practical cryptographic tool that refines DW and SA, without security vulnerability.