| Title | How Bitcoin Users Reclaim Their Privacy Through its Anonymous Sibling, Monero | |
| Date | Saturday September 03 2016, @08:02PM | |
| Author | martyb | |
| Topic | ||
| from the mucho-monero dept. | ||
Bitcoin right now is not really anonymous. While Bitcoin addresses aren't necessarily linked to real-world identities, they can be. Monitoring the unencrypted peer-to-peer network, analyses of the public blockchain and Know Your Customer (KYC) policy or Anti-Money Laundering (AML) regulations can reveal a lot about who's using Bitcoin and for what.
This is not great from a privacy perspective. For example, Bitcoin users might not necessarily want the world to know where they spend their money, what they earn or how much they own; similarly, businesses may not want to leak transaction details to competitors.
Additionally, the fact that the transaction history of each bitcoin is traceable puts the fungibility of all bitcoins at risk. "Tainted" bitcoins, for example, may be valued less than other bitcoins, possibly even calling into question Bitcoin's value proposition as money.
There are potential solutions that may increase privacy and improve fungibility in Bitcoin. But most of these solutions are either partial, works-in-progress or just largely theoretical.
To reclaim their privacy right now, therefore, have begun to utilize one of its competitors: the altcoin Monero.
The article continues with an explanation of how Monero works differently from Bitcoin. Monero is based on the CryptoNote reference implementation, which is an altcoin that was designed from scratch. It uses XMR as its native currency which is one of the top altcoins by market capitalization It has implementation details that greatly reduce the ability of someone to follow the chain of inputs and outputs of transactions and trace back someone's identity. The real trick is Monero's use of "Ring Signatures":
The actual magic comes from a cryptographic signature scheme called "ring signatures," based on the older concept of "group signatures." Ring signatures exist as several iterations and variations, but all share the property of obfuscating which cryptographic key signed "which" message, while still proving "that" a cryptographic key signed "a" message. The version used by Monero is called "Traceable Ring Signatures (pdf)," invented by Eiichiro Fujisaki and Koutarou Suzuki.
Lastly, a Bitcoin holder can exchange Bitcoin for Monero, perform a transaction, and then (if desired) convert any change from the transaction back to Bitcoin (with suitable delays to allow other transactions to occur on the Monero blockchain.)
| Links |
printed from SoylentNews, How Bitcoin Users Reclaim Their Privacy Through its Anonymous Sibling, Monero on 2024-04-29 11:42:05