If you’re wondering why privacy has become the new hot topic in crypto land lately, it’s important to understand why privacy is a valuable asset for crypto holders.
Keep in mind that many are libertarians or anarchists, who value true freedom and with that comes the right to privacy.
This used to be a relatively universal truth for many people, but now in this day and age we are conditioned to believe that our privacy needs to be sacrificed in order to obtain better security from all of those boogey men out there.
This has resulted in a surveillance state where nearly every single aspect of your life is recorded by the big brother with eyes everywhere.
Why is privacy an important part of cryptocurrency?
Fungibility is a big part of the need for privacy with crypto coins.
To quote Andreas Antonopolous: “The money in my pocket is the same as the money in your pocket”
So in other words, No matter where my dollar comes from or how I obtain it, it still holds the same value as any other dollar.
To focus on Bitcoin in particular… it has a lack of fungibility because each coin is traceable. This means that if at any time a particular coin was involved with a scam and somehow ends up in your hands, you might not be able to trade that coin due to a thing called blacklisting, or censorship by miners.
Ethereum on the other hand is looking to address this issue by adopting “Zero Knowledge Proofs” called zk-SNARKs. which was originally developed by Zcash.
Here are some popular coins that hold privacy in high regard
Monero:
Monero is a secure, private, untraceable currency. It is open-source and freely available to all.
It uses a cryptographically sound system that allows you to send and receive funds without your transactions being publicly visible on the blockchain. This ensures that your purchases, receipts, and other transfers remain private by default.
Zcash.
So Zcash is the first open, permissionless cryptocurrency that can fully protect the privacy of transactions using zero-knowledge cryptography. If Bitcoin is like http for money, Zcash is https—a secure transport layer
Zcash brings fungibility to cryptocurrency by unlinking shielded coins from their history on the blockchain.
Zclassic
This one is a fork of Zcash that allocates all mining rewards directly to the miners, while with zcash, 20% of the rewards go to the founders for the first 4 years. However, Zclassic does use the same trusted parameters as Zcash. Zclassic believes in equity, no censorship and no governing body.
Let’s take a better look
Monero takes advantage of ring signatures, now according to their website, A ring signature is a type of group signature that makes use of your account keys and a number of public keys (also known as outputs) pulled from the blockchain using a triangular distribution method. Over the course of time, past outputs could be used multiple times to form possible signer participants. In a "ring" of possible signers, all ring members are equal and valid. There is no way an outside observer can tell which of the possible signers in a signature group belongs to your account. So, ring signatures ensure that transaction outputs are untraceable. Moreover, there are no fungibility issues with Monero given that every transaction output has plausible deniability (e.g. the network can not tell which outputs are spent or unspent).
Zcash is pioneering the use of zero-knowledge proofs, applying cutting-edge cryptography to blockchain technology. Zero-knowledge proofs allow fully encrypted transactions to be confirmed as valid.
With Zcash, users can enjoy the advantages of using a public blockchain, while still being sure that their private information is protected.
All you need to do is look at the people behind zcash- They are the scientists, advisors and engineers of ZECC who developed and launched the Zcash protocol; this includes all of the authors of the Zerocash protocol, most of the creators of the Zerocoin protocol, and leading researchers of zk-SNARKs themselves.
Ethereum can take advantage of zero knowledge proofs or zk-SNARKs because Ethereum’s flexible smart contract interface enables a large variety of applications, many of which have probably not yet been conceived. The possibilities grow considerably when adding the capacity for privacy. Imagine, for example, an election or auction conducted on the blockchain via a smart contract such that the results can be verified by any observer of the blockchain, but the individual votes or bids are not revealed. Another possible scenario may involve selective disclosure where users would have the ability to prove they are in a certain city without disclosing their exact location. The key to adding such capabilities to Ethereum is zero-knowledge succinct non-interactive arguments of knowledge (zk-SNARKs) – precisely the cryptographic engine underlying Zcash.
Sources & Additional Information :
Monero
Ring signatures
Zcash
Zclassic
Ethereum & zk-SNARKs
More on Ethereum
worth also checking:
DASH + EXCL
XZC + ZDASH
Good post! :)
Thanks a bunch for the information. privacy is in deed going for a very high value in my books, especially in a "Big Brother is watching us" society. I really can't wait to see STEALTH coming out to be applied to BitShares. That'll be a different world altogether. ;) Namaste :)
Great video, Heidi, thankyou. One point I'd like to add is regarding the relationship between privacy and dignity. When someone or some entity takes away your privacy they're taking away your dignity. The way in which people in heavily surveilled countries like the UK just blithely accept dignity-eroding things like CCTV drives me frickin' crazy!!!!!
Thanks for protecting us from the bogey-men Heidi :))
You are really good at this! You might be interested to know Silvio Micali is one of the inventors of zero knowledge proof cryptography. You also might want to familiarize yourself with the work of Dr.Tatsuaki Okamoto, particularly his work on attribute based cryptography.
Hello Heidi,
What's your take on "ripple" or "xrp" which are attempting a payment transfer network? There seem to be all kinds of cryptocurrencies coming out, obviously some handling security, and/or confidentiality better than others. I think bitcoin, ethereum, dash, monero are here to stay but suspect a few others to come out of the woodwork. Interesting to see ripple have the 3rd largest market cap in the world this past week yet they do have a massive volume at around 100,000,000,000 ripple.
Just what I needed for some quick explanations to others. Thanks, @heiditravels
Perfect! That's my goal :)
Super interesting. Great tips as always Heidi, thanks for sharing your research and experience!
Important topic. Well done.
She does good work. Shared this on twitter.
You must love this post, it is right in your wheelhouse eh?
Yeah, definitely! I still have a lot to learn about the newest cryptographic methods that are being developed. Such an exciting time in tech!
#YearOfCrypto
I've always said.
Bitshares also has privacy. It just needs a grandma friendly GUI. Which is being worked on. http://docs.bitshares.eu/bitshares/tutorials/confidential-transactions.html
Good to know, thanks for sharing that info!
followed, yes, good to know.
the word 'fungibility' always reminds me of fungus, and I still don't know what it means.
My one Steem is worth the same as your one Steem, because they're fungible. My car is not worth the same as your car, because they are not fungible.
It is a lawyerly word. Free trade?
Heidi, that was a stellar post!!!
And not just because I finally figured out here what zk-SNARKs finally stands for but it was a nice addition.
LOL
Have a nice weekend!
Furthermore, shared on the twitter machine and tagged you there:
Disclaimer: I am just a bot trying to be helpful.
nice post!
good posting.... voted and followed...^^
It should be noted that this is a theoretical risk. As far as we know no Bitcoins have ever been blacklisted in this way, and with almost certainty we can say that no coins have been censored by miners in this way (the level of collusion required would be very high, and it would probably become public pretty soon if it happened).
Doesn't STEEM also promote security and privacy?
The fact that I can see the value of your wallet on this website by just going to your profile doesn't exactly scream privacy, I'd say they value transparency.
Transparency does not always afford more security. In fact, the wrong kind of transparency only increases the security costs. For instance the burglars can know who to rob by finding out who owns a gun, who has a safe, what the net worths are, where they are, and guess what? Smart phones report location, and when you combine that with other useful info (actionable intelligence) it doesn't necessarily reduce the cost of security.
If security is about protecting rights and we want to protect property rights by protecting owners of property from theft, then it's likely not transparency which helps with that. At the same time if a token is completely anonymous to the point where someone can steal it and you have no way to prove where you got it from or that you ever owned it then that isn't good for security. Also there are many grey areas, such as if you are kidnapped then you probably want your phone to report your location, or if you're the victim of theft you probably want the ability to reverse the loss, so the people who favor absolutes aren't actually in favor of security.
Perfect example is the DAO situation with Ethereum where a smart contract had a bug which a hacker took advantage of to violate the property rights of tens of thousands of people and potentially take away $100 million dollars possibly destroying the credibility of Ethereum to millions. The result was the Ethereum community did a hard fork because the Ethereum community values property rights and security, and because it is ethical. Of course many would say this violated "code is law" and "immutability" but those two concepts aren't as universal as property rights and the ethics of the situation.
In the future autonomous agents (bots/AI) will manage resources. These will not be under the direct control of any human being. If one of these AIs were to become hostile to human interests, or begin violating rights on a massive scale, we would expect humans to join forces to shut the AI down. Of course there will be humans likely on the other side of that debate, debating that the AI has rights to self determination and freedom, but this is both an ethical debate as well as a debate on what to do to improve security for human beings (protect human rights). If cryptography is not protecting human rights then it's not so easy to justify ethically, and anonymity, cryptography, privacy, these protect human rights like life, liberty, property, pursuit of happiness, but when these same tools violate human rights then in my opinion we need to know how to violate the sanctity of the code which exists only to protect rights in the first place. I don't believe there are absolutes and in the world of grey we have to choose between least bad outcomes.
No, actually Steemit is anti-privacy. Everything on Steemit is transparent. Law enforcement can see every post so don't do anything you don't want your grandma or local cop to see.
Great explanation!
Thanks for the info! I study.
It is so rare to find a woman on the Internet who cares about privacy and who blogs about it. You are going against the trend.
There's a ton of these systems, but none of them can actually prove end to end anonymity.
The best anonymous system I've seen comes from the original NSA Draft of Cryptocurrencies called "How To Make a Mint".
http://groups.csail.mit.edu/mac/classes/6.805/articles/money/nsamint/nsamint.htm
It's simpler with less things to go wrong than these other convoluted schemes and easier to implement now we have blockchains to prevent double spending.
Nice post though!
Enough important information in this post
Do you really do these videos for 14 dollars?
Good article. Nice to see I'm not the only one who thinks like this. I'm not sure if coins are that high risk. The quality coins are here to stay and it's like buying in at the S&P 500 50 years ago. Cryptos will fall and rise at a more rapit phase any investment market has ever seen. Just hold (literaly) and enjoy the ride. I was wondering if anyone of you uses: https://www.coincheckup.com I don't know any other site that gives such good inisghts in the team, the product, advisors, community, the business and the business model, etc. Check for example: https://www.coincheckup.com/coins/Zcash#analysis To watch Zcash Detailed analysis.