The security notion of covert security introduced by Aumann and Lindell (TCC'07) allows the adversary to successfully cheat and break security with a fixed probability 1-e, while with probability e, honest parties detect the cheating attempt. Asharov and Orlandi (ASIACRYPT'12) extend covert security to enable parties to create publicly verifiable evidence about misbehavior that can be transferred to any third party. This notion is called publicly verifiable covert security (PVC) and has been investigated by multiple works. While these two notions work well in settings with known identities in which parties care about their reputation, they fall short in Internet-like settings where there are only digital identities that can provide some form of anonymity.
In this work, we propose the notion of financially backed covert security (FBC), which ensures that the adversary is financially punished if cheating is detected. Next, we present three transformations that turn PVC protocols into FBC protocols. Our protocols provide highly efficient judging, thereby enabling practical judge implementations via smart contracts deployed on a blockchain. In particular, the judge only needs to non-interactively validate a single protocol message while previous PVC protocols required the judge to emulate the whole protocol. Furthermore, by allowing an interactive punishment procedure, we can reduce the amount of validation to a single program instruction, e.g., a gate in a circuit. An interactive punishment, additionally, enables us to create financially backed covert secure protocols without any form of common public transcript, a property that has not been achieved by prior PVC protocols.