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BIP70 is the Bitcoin payment protocol for communication between a merchantand a pseudonymous customer. McCorry et al. (FC~2016) showed that BIP70 isprone to refund attacks and proposed a fix that requires the customer to signtheir refund request. They argued that this minimal change will provideresistance against refund attacks. In this paper, we point out the drawbacks ofMcCorry et al.'s fix and propose a new approach for protection against refundattacks using the Bitcoin multi-signature mechanism. Our solution does not relyon merchants storing refund requests, and unlike the previous solution, allowsupdating refund addresses through email. We discuss the security of ourproposed method and compare it with the previous solution. We also propose anovel application of our refund mechanism in providing anonymity for paymentsbetween a payer and payee in which merchants act as mixing servers. We finallydiscuss how to combine the above two mechanisms in a single payment protocol tohave an anonymous payment protocol secure against refund attacks.

A New Look at the Refund Mechanism in the Bitcoin Payment Protocol