Address Ownership

Address ownership tackles a specific problem within the Travel Rule: self-hosted wallet transactions. Unlike virtual asset service providers (VASPs), which hold virtual assets on behalf of the owner, self-hosted wallets allow the owner to hold virtual assets and control the private key used to transact themselves.

Self-hosted wallets are a greater challenge when it comes to requesting and storing personal data since there is no organisation behind it, and expecting every individual who owns a wallet to store the personal information of their counterparts and the transaction is unfeasible. Moreover, it would pose a big risk regarding data security.

The closest solution so far is requesting to prove ownership of a self-hosted wallet when depositing or withdrawing from a VASP. This means VASPs have the responsibility to validate that their customer owns a given self-hosted wallet and store this proof.

AOPP (Digital Signature Proofs)

For every wallet address there's a unique corresponding private key. Such a private key is used to authorise the spending of coins belonging to said wallet address by digitally signing a transaction. The transaction is validated by the miners by verifying the correctness of the digital signature. Only when the digital signature is correct, the transaction is deemed valid and added to the next mined block.

With AOPP, the unique relationship between the wallet address and private key is utilised to prove address ownership. Instead of signing a transaction, a predetermined message (usually a human-readable text) is signed and the resulting digital signature is submitted to 21 Travel Rule. By asserting the correctness of the digital signature 21 Travel Rule can deduce that the submitter of the message's digital signature owns the private key that can also be utilised to craft a valid transaction for the corresponding wallet address.