Over the past couple of months privacy-centric solutions have been growing in importance and popularity for the nascent cryptocurrency industry.
Also read: Monero Rising: Why Dark Markets Matter
Privacy-Centric Tools Development Driven By Surveillance Concerns
When it comes to cryptocurrencies one treasured goal is the ability to remain private, which requires both an anonymous and fungible currency. At times, it seems fungibility is the holy grail of the ecosystem. Bitcoin definitely achieves most of the qualities of sound money, but some believe it needs a lot of work in the development of fungibility.
Privacy cannot work without the basics of a fungible asset as both fundamentals are mutually exclusive. The rise in popularity concerning both fungibility and anonymity can be seen with the latest trends in market trading and development.
Just recently Bitcoin.com spoke with Daniel Krawisz about his new bitcoin shuffler, Shufflepuff. Krawisz explained he was still in the developmental process but had achieved the first shuffled transaction on August 15th. The Coin Shuffle protocol finds other users to tumble their bitcoins as variants of this technology are the most common protocol for mixing Bitcoins.
On August 29th, another tumbling protocol called TumbleBit was announced on Reddit, with the post being very popular among cryptocurrency community. The project developers say they are producing a roadmap in the near future. The team gives credit to David Chaum’s ecash for inspiring some of the project’s attributes.
The TumbleBit white paper explains:
Every payment made via TumbleBit is backed by bitcoins, and comes with a guarantee that Tumbler can neither violate anonymity, nor steal bitcoins, nor “print money” by issuing payments to itself. We prove the security of TumbleBit using the real/ideal world paradigm and the random oracle model. Security follows from the standard RSA assumption and ECDSA unforgeability. We implement TumbleBit, mix payments from 800 users and show that TumbleBit’s off- blockchain payments can complete in seconds.
The creators of TumbleBit say Bitcoin’s initial popularity began with the perception of anonymity. However, the blockchain surveillance industry has “demonstrated weaknesses in Bitcoin’s anonymity properties.” This has increased the need for privacy tools and platforms like JoinMarket are seeing $1 million USD pass through its services every month. TumbleBit developers believe they have created a tool with “anonymity to be provided in the face of the anonymity-enhancing service itself.”
The Yin and Yang of Cryptocurrency’s Privacy & Transparency
The need for privacy tools is important to a lot of people. Aside from tumbling, some cryptocurrency enthusiasts have moved towards other more privacy-focused currencies, particularly Monero and Dash. Both of these coins have seen a significant rise in use over the past few months, with their anonymizing features.
Privacy concepts have gained in popularity because of the rise of software firms crawling the Bitcoin blockchain to monitor transactions. Companies such as Elliptic, Block Seer, and Chainalysis have shown their products are making Bitcoin fungibility difficult. These types of businesses are working directly with law enforcement and the software they provide claim to prevent malicious behaviors such as exchange hacks, ransomware, and Dark Net Market usage.
The yin and the yang of privacy and transparency is continuing to progress full circle. With surveillance techniques on the rise, methods of added privacy also has increased. Concepts like Shufflepuff and TumbleBit have gotten a lot of Bitcoin users excited. But some are critical of mixing platforms at the moment due to the block size issue and additional fees. Some believe that Bitcoin has become less private due to small blocks and rising fees, increasing the cost of Coin-Join services.
As time progresses, the battle between privacy-centric techniques and state-sponsored surveillance will most likely continue the cat and mouse game. But privacy advocates are steadily pushing to develop new tools that they hope will keep users a step ahead of the watchers.
What do you think about privacy and fungibility being a top priority in the world of cryptocurrency? Let us know in the comments below.
Images courtesy of Bitcoin.com, Shutterstock
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