Blockchain-based, Privacy-preserving, First Price Sealed Bid Auction (FPSBA) Verifiable by Participants

Abstract

Auction is becoming a prevalent method for trading goods. Bidding-based auctions can assist sellers and buyers in identifying the real value of the asset. Utilizing the internet, auctions have been modernized and become e-auctions. Although e-auction is becoming a popular platform for online bidding, the platform is prone to multiple threats and is potentially vulnerable. For example, data generated from e-auction is being stored in a central database, which is often at the risk of being compromised or failure. In addition, the central data center might act maliciously and leak sensitive information to one of the bidders. Utilizing the blockchain concept in the e-auction systems can mitigate the aforementioned threats. Blockchain-based auction systems will be up and running due to blockchain’s distributed nature, i.e., such e-auction systems are more resilient. Moreover, thanks to the hash functions, embedded in blockchain, and the immutability of the blockchain, there is a negligible chance for cheating. While blockchain brings about previously-mentioned value proposition for e-auctions, the method can have shortcomings as well. First and foremost, lack of privacy is a well-known challenge for blockchain-based e-auctions owing to the transparent nature of the blockchain network. Bids submitted by users are visible to the world and this can violate user’s privacy. To address this controversial issue of lack of privacy, in this work, an improved version of blockchain-based e-auction is designed in a fashion that users submit concealed value of their bids into the blockchain and will send the bids in plaintext format to an off-chain code. The off- chain code will calculate the winner. The winner is then verified by each participant. Compared to other blockchain-based auctions, the proposed methodology helps preserving user privacy. Also, integrity of the off-chain is assessed by each bidder and if participants identify any flaw in the performance of the off-chain code, the participants can dispute.