A Note on Chain Reactions in Traceability in CryptoNote 2.0

This research bulletin describes a plausible attack on a ring-signature based anonymity system. We use as motivation the cryptocurrency protocol CryptoNote 2.0 ostensibly published by Nicolas van Saberhagen in 2012. It has been previously demonstrated that the untraceability obscuring a one-time key pair can be dependent upon the untraceability of all of the keys used in composing that ring signature. This allows for the possibility of chain reactions in traceability between ring signatures,causing a critical loss in untraceability across the whole network if parameters are poorly chosen and if an attacker owns a sufficient percentage of the network. The signatures are still one-time,however,and any such attack will still not necessarily violate the anonymity of users. However,such an attack could plausibly weaken the resistance CryptoNote demonstrates against blockchain analysis. This research bulletin has not undergone peer review,and reflects only the results of internal investigation.