July 15th, 2008


The Cocaine Auction Protocol: Anonymous auctions with almost no crypto.

Several extremely rich and ruthless men are gathered around a table. An auction is about to be held in which one of them will offer his next shipment of cocaine to the highest bidder. The seller describes the merchandise and proposes a starting price. The others then bid increasing amounts until there are no bids for 30 consecutive seconds. At that point the seller declares the auction closed and arranges a secret appointment with the winner to deliver the goods.

We may assume that, in a game with such high stakes and shady players, nobody is going to trust anybody else any more than strictly necessary. We may also assume that the people who take part in the auction all know each other (otherwise one of them might be a police agent), but that no-one who places a bid wants to be identified to the other bidders or to the seller. Nobody except buyer and seller should know who won the auction; and even the seller should not be able to find out the identity of the highest bidder before committing to the sale. But none of the participants should have to trust any other: the protocol cannot rely on a judge or policeman to act as arbitrator and must instead be self-enforcing.

This paper examines the anonymity layer on which the auction protocol is built and proposes for it a provocative implementation technique that does not use any cryptography. This novel approach offers substantial performance gains. Interestingly its security, while using mechanisms that were once considered dubious, turns out to be essentially equivalent to that of a cryptographically strong alternative, so long as we use realistic threat models. Furthermore the anonymous broadcast primitive is also interesting from the protocol modelling point of view in that, for many cases, it gives a more faithful representation of what actually happens.