How can a business or charity publish proof of XMR reserves?

Question

Is Monero too private to allow auditing?

Without a rich list or transparent blockchain how can a business or charity publish proof of XMR reserves?

Answer 1

Currently, this is not possible. There is however a patch that allows just this ready to be merged:

https://github.com/moneromooo-monero/bitmonero/tree/signed-key-images

This is possible:

Two new commands are added that allow proof of reserves:

• export_key_images will generate a file containing a dump of all an acocunt's key images, sign with the corresponding output private keys.

• import_key_images will load such a file on a wallet with only the matching view key, which will allow simplewallet to determine which of the outputs received by the wallet are spent, and which are not, deducing the resulting balance.

The steps needed for party A to prove reserves to party B would then be:

• A discloses their private view key to B
• B can then see incoming transactions to A's wallet, but can't spend them (as A did not share the spend key, just the view key)
• A generates a signed key images file with export_key_images and gives it to B
• B runs import_key_images to determine the wallet balance

Note that B can be "the public at large" if A wants to, by making public the view key and the signed key images.

A may then supply an updated key images list whenever required. For example, a tax auditor may require a yearly update, made on tax day. A charity may decide to update that list daily on their website. It also means that A can decide at any moment to stop supplying this data, which will make A's subsequent spends private again from that point.

There are also RPC commands that will return the same data as a string for automation.

Note that this patch set was not merged yet, and is thus unreviewed, and may yet change before it is merged.