# Private Overlays with P2PKH Transactions

Ty Everett (<ty@projectbabbage.com>)

## Abstract

In BRC-22 overlay networks, various forms of state tracking for UTXOs can be incorporated. Servers can track UTXOs according to many criteria, enabling many use-cases. There is no fundamental requirement that a server relies on strictly on-chain data for these operations. In this document, we explore the use of off-chain secrets and offset values, enabling private overlay networks to be tracked among transactions that, on the surface, appear only to be normal P2PKH spends. Various models will be explored, from overlay network secrets to data linkages revealed off-chain. All of these methodologies rely on the isomorphic properties of the curve, enabling the owners of the UTXOs to retain spendability rights even when the P2PKH outputs also contain other information stored within offsets from the root key. This information is used to make on-chain record of private, off-chain data, which can later be revealed.

## Use Case #1 — Network Access Secrets

In the first use-case, a user sends a transaction to an overlay. The transaction pays some Bitcoins to a P2PKH address. The user reveals the public key to the overlay node at time of transaction submision. The user has computed the pblic key used as follows:

* Take off-chain data (d) and hash it to get h
* Add the hash to the actual recipient key to obtain the final public key

Now the user can also reveal to the overlay node the value for d which produced h, and can identify the party who is receiving it.


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