Virtual private blockchains: security overlays for permissioned blockchains

Blockchain technology, while maturing, is still lacking features that would be considered indispensable in real-world business applications. In particular, the lack of transaction confidentiality in a public blockchain is a challenging problem. A possible solution might be the concept of a private blockchain. However, maintaining such permissioned blockchains requires resources, depends on a central authority and contradicts the original philosophy of pioneering blockchain systems such as bitcoin. In this paper, the concept of virtual Private Blockchain(VPBC) is proposed as a mechanism to create a blockchain architecture with properties akin to those of a private blockchain, however leveraging existing public blockchain functionality. A VPBC can be set up between individuals or organisations, does not require any significant administrative maintenance, inherits all the functionality from the public blockchain, and achieves anonymity and transaction confidentiality with respect to any public blockchain node who does not belong to the VPBC. Building on this theoretical concept, it is then shown how the cryptographic technique of secret sharing can be used in order to implement a simple VPBC architecture. A proof-of-concept architecture has been created and the first experiments indicate that the creation of VPBCs for potential real-world application scenarios might be feasible.