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Understanding Privacy of Blockchain

Privacy of Blockchain

The anonymous coin is a digital currency with the characteristics of anonymous privacy protection in addition to the general digital currency functions.

The anonymity in the blockchain means that the data exchange between the nodes of the blockchain follows a fixed and predictable algorithm, so the blockchain network is trustless, and data can be exchanged based on addresses instead of personal identities. Then the anonymous coin is a digital currency with the characteristics of anonymous privacy protection in addition to the general digital currency functions.

Privacy coins (anonymous coins) were originally designed to hide user data and transactions, but this technology makes it difficult for companies and governments to track them. Therefore, anonymous coins are also used by some people with ulterior motives for criminal activities such as money laundering.

But of course the existence of privacy coins has his own value, as the founder of Ethereum Vitalik Buterin said: I see privacy as a way to prevent signaling concerns from encompassing all of our activity, and creating spheres where we are free to optimize for our own happiness and just our own happiness, and not what other people think about us.

Overview of The Development History of Privacy Technology

In December 2012, the first protocolto address the privacy issues of digital tokens-CryptoNote came out. The protocolintroduces two technologies: privacy address technology and ring signature technology, which provide privacy protection for the data receiver and sender, respectively.

In January 2013, BTC developer Gregory Maxwell proposed Coinjoin technology to improve the privacy of BTC. Coinjoin uses multi-signature technology. Traders need to complete their signatures independently. Only transactions that provide all signatures can be judged legal and be received by Network.

In May 2013, Matthew D. Green and other professors of Johns Hopkins University proposed the Zerocoin protocol. This protocolproposes to allow the destruction and re-generation of digital tokens to ensure the anonymity of token transactions without the participation of trusted third parties. In May of the following year, Matthew D. Green and others created Zerocash on the basis of Zerocoin and proposed a classic zero-knowledge proof method-zk-SNARKs.

In October 2015, Shen-Noether of the Monero Research Laboratory proposed RING-CT, which was developed based on the CryptoNote protocol. It is a technology that conceals the transaction amount and speeds up the transaction.

In July 2016, Tom Elvis Jedusorand proposed Mimblewimble. This technology retains the superior characteristics of BTC based on PoW consensus, and at the same time optimizes the UTXO collection, which can greatly improve the anonymity while greatly saving blockchain storage space.

Common Privacy Technology

CoinJoins

First proposed in 2013 by Greg Maxwell, CoinJoins are transactions where several different parties combine their multiple single-input, single-output transactions into a single multiple-input, multiple-output transaction. This breaks the direct link between sender and receiver, and if all outputs are the same size, it also obscures who received how much BTC. As time goes on, integration will become more complicated, and it will become more and more difficult to track the addresses of both parties to the transaction. After 8 to 10 integrations automatically, tracking becomes impossible. The only flaw is the transaction amount can be tracked.

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Ring Singatures

Like Bitcoin, the ring signature algorithm uses a hash value-based public key + private key model. The difference is that the ring signature technology mixes the public key of the transaction sender with another public key, then signs the information, and finally It is decrypted and verified by the recipient's private key, so that the outside world cannot determine which public key of the transaction initiator is, so as to realize the function of hiding the address information of the transaction sender, so that external attackers cannot see the correlation between the addresses.

RING-CT, the ring signature confidential transaction protocolcan be used to hide the amount of the transaction. At the same time, it solves the problem that the ring signature technology needs to split the transaction. Therefore, while enhancing the concealment of transactions, it can also accelerate the speed of digital token transactions.

Zk-SNARKs

The original groundbreaking idea of zero-knowledge proofs was developed in 1985 by Goldwasser, Micali, and Rackoff.  The definition of zero-knowledge proof is that the prover can make the verifier be correct in detail without providing any useful information to the verifier. Zero-knowledge proof can prove authenticity in a fast, effective, and at the same time preventing information leakage.

zk-SNARKs, The acronym zk-SNARK stands for “Zero-Knowledge Succinct Non-Interactive Argument of Knowledge,” developed by Eli Ben-Sasson et al. in 2015, and refers to a proof construction where one can prove possession of certain information, e.g., a secret key, without revealing that information, and without any interaction between the prover and verifier. It is an improvement on zero-knowledge proofs by enabling someone to succinctly and non-interactively prove that he/she knows something without revealing what the information is.

However, zk-SNARKs have two obvious flaws. First, rely on trusted initial settings. zk-SNARKs cannot avoid the risk of developers, and developers may disclose public parameters for different reasons. Second, the encryption technology of zk-SNARKs is based on elliptic curve ciphers, which cannot be cracked by current computers. But with the improvement of computer performance, especially the advancement of quantum computers, this method without quantum resistance may be brute-forced in the future.

Minmble-Wimble

Minmble-Wimble, is a spell derived from "Harry Potter", which means tongue-tying spell, which can make the tongue knotted. The creator of Minmble-Wimble used a pseudonym (Voldemort's French name) to publish the white paper, and then disappeared, just like Satoshi Nakamoto. Mimblewimble is an improvement upon confidential transactions and CoinJoin from Bitcoin. Key features include no public addresses, complete privacy, and a compact blockchain.

In Mimble-Wimble, the privacy and scalability of cryptocurrency have been significantly improved. In the transaction, there is no transaction address, and the transaction amount is also hidden. At the same time, the transactions in the intermediate state can be merged, so that the information available for tracking is very little. This not only reduces the storage capacity that needs to be consumed for processing transactions, but also enhances the privacy coefficient of the transaction. While providing strong privacy, it also improves scalability.

Privacy Coin Classification

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Which are the Privacy Projects on the Mexo Platform?

Monero (XMR) is a Proof-of-Work cryptocurrency which started in 2014. It focuses on privacy, decentralization and scalability and relies on private and censorship-resistant transactions through the use of  ring signaturesstealth addresses, and Ring Confidential Transactions (RingCT). Ring signatures allow a sender to sign a transaction with 11 users’ keys, obscuring which key is theirs. Stealth addresses allow a receiver to use a one-time address for each transaction, hiding their true public key. RingCT allows for the amounts transacted to be blinded, but verifiably non-inflationary.

Token name: XMR

Dash is an open-source blockchain and cryptocurrency focused on offering a fast, cheap global payments network that is decentralized in nature. According to the project’s white paper, Dash seeks to improve upon Bitcoin (BTC) by providing stronger privacy and faster transactions. DASH uses a hybrid method called "coinjoin". The Dash network benefits from higher rewards and encourages miners to act as master nodes. Each miner of the master node has one thousand DASH as a buffer fund and every user who initiates a transaction can use these buffer funds, thus achieving the effect of "coinjoin". At last, Bitcoin transaction information is disrupted and difficult to track thanks to "coinjoin".

Token name: DASH

Zcash is the first blockchain system to use a zk-SNARKs zero-knowledge proof technology, which can provide complete payment confidentiality while still being able to use public blockchains to maintain a decentralized network. Zcash transactions automatically hide the sender, receiver, and amount of all transactions on the blockchain, and only those who have the view key can see the content of the transaction. However, users have complete control, and they can choose to provide other people with the view key.

Token name: ZEC

Horizen is a fork coin of Zcash fork coin, also using zk-SNARKs. (Fork route: Zcash-Zclassic-Zencash was later renamed Horizen). Horizen is an inclusive ecosystem where everyone is empowered and rewarded for their contributions. Horizen’s massively scalable platform enables businesses and developers to quickly and affordably create their own public or private blockchains utilizing the largest node network in the industry. Horizen’s Sidechain SDK provides all necessary components for easy and fast deployment of a fully customizable blockchain.

Token name: ZEN

Conclusion

The basic interpretation of the term privacy is information that is unwilling to be disclosed. The content of privacy, that is, the objective aspect, refers to facts or behaviors that specific individuals do not disclose their affairs, information, or domains, and do not want others to detect or interfere. Similarly, privacy is a natural right of an individual, and a person can choose to disclose or not disclose his personal information.

From the perspective of the definition of privacy alone, the existence of privacy coins is necessary. The emergence of privacy coins gives people more choices. For privacy coin enthusiasts, its emergence has protected the information that individuals are not willing to disclose economically, making it more comfortable to carry out economic activities; but at the same time, it should be noted that privacy is not a place outside the law. The emergence of privacy coins It is not to facilitate illegal elements to engage in illegal activities.

Hope to see the rise of the privacy coin track in the future, and to identify illegal behaviors while protecting people's right to privacy to the utmost extent.

Reference

  • This article was organized and edited by Mexo, please indicate the source for reprint.
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