Short Paper: Debt Representation in UTXO Blockchains

    •  Chiu, M., Kalabic, U., "Short Paper: Debt Representation in UTXO Blockchains", Financial Cryptography and Data Security, Borisov, Nikita and Diaz, Claudia, Eds., DOI: 10.1007/​978-3-662-64331-0_3, February 2021, pp. 57-64.
      BibTeX TR2021-014 PDF
      • @inproceedings{Chiu2021feb,
      • author = {Chiu, Michael and Kalabic, Uros},
      • title = {Short Paper: Debt Representation in UTXO Blockchains},
      • booktitle = {Financial Cryptography and Data Security},
      • year = 2021,
      • editor = {Borisov, Nikita and Diaz, Claudia},
      • pages = {57--64},
      • month = feb,
      • publisher = {Springer},
      • doi = {10.1007/978-3-662-64331-0_3},
      • url = {}
      • }
  • Research Areas:

    Control, Dynamical Systems, Optimization


We provide a UTXO model of blockchain transactions that is able to represent both credit and debt on the same blockchain. Ordinarily, the UTXO model is solely used to represent credit and the representation of credit and debit together is achieved using the account model because of its support for balances. However, the UTXO model provides superior privacy, safety, and scalability when compared to the account model. In this work, we introduce a UTXO model that has the flexibility of balances with the usual benefits of the UTXO model. This model extends the UTXO model, which represents credits as unmatched outputs, by representing debts as unmatched inputs. We apply our model to solving the problem of transparency in mortgage markets, in which some transparency is necessary for a healthy market, but complete transparency leads to adverse outcomes. Here, the pseudonymous properties of the UTXO model protect the privacy of loan recipients while still allowing an aggregate view of the loan market. We present a prototype of our implementation in Tendermint and discuss the design and its benefits.