A Practical Post-Quantum Distributed Ledger Protocol for Financial Institutions

2026-03-05

AI Summary

This work addresses the challenge faced by traditional financial institutions in reconciling transaction privacy with regulatory compliance when adopting distributed ledger technologies, noting that existing Ring-CT–based approaches are ill-suited for financial settings. To bridge this gap, the paper proposes a post-quantum secure lattice-based confidential transaction protocol that introduces a novel commitment mechanism enabling equivalent message linkage without requiring commitment openings. It further designs compact range proofs adaptable to both single-asset and multi-asset scenarios. By integrating lattice-based cryptography with zero-knowledge proofs, the scheme ensures transaction confidentiality while supporting public verifiability and regulatory auditability, thereby meeting stringent financial compliance requirements. The authors provide a comprehensive security analysis demonstrating the protocol’s robustness under standard cryptographic assumptions.

Technology Category

• Machine Learning: Privacy
• Game Theory and Economic Paradigms: Mechanism Design
• Search and Optimization: Distributed Search

Application Category

• Security and Privacy: Blockchains and distributed ledgers
• Economics, Online Markets and Human Computation: Economic aspects of blockchain and cryptocurrencies
• Responsible Web: Data and user privacy-enhancing technologies for the Web

Abstract

Traditional financial institutions face inefficiencies that can be addressed by distributed ledger technology. However, a primary barrier to adoption is the privacy concerns surrounding publicly available transaction data. Existing private protocols for distributed ledger that focus on the Ring-CT model are not suitable for adoption for financial institutions. We propose a post-quantum, lattice-based transaction scheme for encrypted ledgers which better aligns with institutions'requirements for confidentiality and audit-ability. The construction leverages various zero-knowledge proof techniques, and introduces a new method for equating two commitment messages, without the capability to open one of the commitment during the re-commitment. Subsequently, we build a publicly verifiable transaction scheme that is efficient for single or multi-assets, by introducing a new compact range-proof. We then provide a security analysis of it. The techniques used and the proofs constructed could be of independent interest.

Problem

• privacy
• distributed ledger
• financial institutions
• confidentiality
• auditability

Innovation

• post-quantum
• lattice-based cryptography
• zero-knowledge proof
• commitment scheme
• range proof