On the Malleability of Bitcoin Transactions

We study the problem of malleability of Bitcoin transactions. Our first two contributions can be summarized as follows: (i) we perform practical experiments on Bitcoin that show that it is very easy to maul Bitcoin transactions with high probability, and (ii) we analyze the behavior of the popular Bitcoin wallets in the situation when their transactions are mauled; we conclude that most of them are to some extend not able to handle this situation correctly. The contributions in points (i) and (ii) are experimental. We also address a more theoretical problem of protecting the Bitcoin distributed contracts against the “malleability” attacks. It is well-known that malleability can pose serious problems in some of those contracts. It concerns mostly the protocols which use a “refund” transaction to withdraw a financial deposit in case the other party interrupts the protocol. Our third contribution is as follows: (iii) we show a general method for dealing with the transaction malleability in Bitcoin contracts. In short: this is achieved by creating a malleability-resilient “refund” transaction which does not require any modification of the Bitcoin protocol.