Editor's Note: This article comes fromDC News（ID：shenliancaijing）Editor's Note: This article comes from
, Author: Mark, reproduced by Odaily with authorization.
In 2020, the market has ushered in a bull market, but the anonymous currency track has not seen any changes for a long time.In the context of "institutional bulls", the grayscale "calling" of the market's famous "banker" pushed anonymous coins such as ZEC to the majority of investors. The founder of Grayscale even claimed that 2021 will be the year of privacy protection, decentralization and resistance to censorship.Therefore, one side is Grayscale's "calling orders", and the other side is the challenge of supervision. In the contradiction between opportunities and risks, anonymous coins may be more worthy of our attention and research.
secondary title
A Brief History of Anonymous TechnologyIn 2008, Satoshi Nakamoto released the Bitcoin white paper, and Bitcoin became a "free currency" and an "anonymous payment network" in the eyes of a few people.In fact, because of its financial attributes and address anonymity, Bitcoin frequently appears in areas such as cross-border fund transfers, money laundering, dark web and other illegal transactions.But Bitcoin is not truly anonymous and untraceable. Because the bitcoin address seems anonymous, but it can be monitored from the data on the bitcoin chain, and the addresses and transaction amounts of both parties to the transaction can be tracked in depth. Any data that is in line with reality, such as real-name OTC transactions, will make the relevant address information leakage.Based on this, some developers began to explore a technology that can not only disclose privacy, but also enable fast and low-fee secure transactions, and the concept of anonymous coins was born.There is no specific general rationale for privacy coins, but they all share the common goal of achieving privacy when transacting.- In the early days, many anonymous coins were achieved by improving the technology of Bitcoin, such as Zcash and Dash, which solved the anonymity problem through technologies such as coin mixer and zero-knowledge proof.
Mixed currency in the fund poolimage description
Dash's currency mixing processimage description
Transfer process of XMR ring signatureAccording to historical records, in the 17th century, in France, when ministers made comments to the king, in order not to expose their identities, they used the method of ring signatures, so that the king did not know which minister took the lead in making comments. When this concept was used in XMR, XMR became one of the most anonymous anonymous coins at that time. However, this technology can only hide the transaction parties. Later, XMR upgraded the Bulletproof Protocol to make the transaction amount anonymous. .Zero-knowledge proof is also one of the more common anonymous technologies, which was proposed by S.Goldwasser, S.Micali and C.Rackoff in the early 1980s.In 2019, the emergence of privacy coins Grin and Beam brought attention to an anonymity technology called the MimbleWimble protocol. The concept of MimbleWimble comes from a user nicknamed Tom Elvis Jedusor. In July 2016, he published related articles on the IRC channel #bitcoin-wizards, and then this concept was used to improve the anonymous function of public chain transactions.image description
Comparison of Bitcoin and Mimblewimble transaction methodsMimbleWimble is a scalable, privacy-based blockchain protocol. It can verify all valid transactions without having to store the entire history of the chain.If A pays B and then pays it all to C, the blockchain can record A to C without showing B. A simpler way to understand it is to compare how a user transacts in Bitcoin with how it transacts in Mimblewimble after the transaction.After understanding the development history of anonymous coin technology, let’s take a look at the six popular anonymous coin projects in the current market.secondary title
- Six Popular Anonymous Coins
XMR: A high-anonymity application currency that can be mined by ordinary computersXMR is currently the leading project among anonymous coins. Launched under the name BitMonero in 2014, XMR brought a new proof-of-work method: ring signature technology.The ring signature method greatly improves the anonymity of coin mixing. At least six "decoy" coins are added to each transaction, making the actual source and destination nearly impossible to trace. In a ring sign, a user signs a transaction, which can only be traced to a group but not specifically to the person in the group.By default, XMR is automatically anonymous, currency mixing can be done automatically, and the transaction amount can be hidden when bulletproof proof is used. And using a one-time address, payment records cannot be traced.Although it seems that XMR has a high degree of anonymity, the large block data makes the scalability extremely poor, and it is difficult to implement Layer 2 solutions.- In terms of mining, XMR uses an anti-ASIC algorithm, which enables ordinary users and professional mining machine users to mine Monero fairly. XMR can be mined using ordinary computers, which also gives hackers the opportunity to spread the Trojan horse into the computer network, unknowingly control the "botnet" and let users mine XMR for them.
ZEC: The first zero-knowledge proof privacy coinZEC is one of the hottest privacy coin projects recently. ZECh is a forked currency modified based on the code of Bitcoin version 0.11.2. It uses an advanced zk-SNARKs zero-knowledge proof form of anonymous currency, which allows ZEC to have the function of anonymous payment.Because of these changes, ZEC can hide the transaction amount and transaction party information when conducting transactions. By default, ZEC transactions are not anonymous, and this can be adjusted by the user. Only users who hold the private key can see the content of the transaction.- It has to be said that although ZEC uses the code improvement of Bitcoin, it inherits the advantages of Bitcoin, improves the algorithm, and has the function of anonymity at the same time, realizing the original vision of Bitcoin.
ZEN: a privacy protection technology blockchain platform with more application prospectsHorizen actually originated from Zcash. In the early days of Zcash, 20% of the mining fee was used, so Zcash’s first fork coin, Zclassic, appeared. The mining rules were modified, and 100% of the rewards were obtained by miners.Horizen was established in May 2017 by adding a more suitable economic governance model on the original basis of Zclassic, retaining all the advantages of Zcash. Horizen is a blockchain platform with cutting-edge privacy protection technology. Like Zcash, it can provide optional privacy features for each user, giving users complete control over digital activity records.Different from most projects, Horizen's side chain will be able to support the establishment of third-party platforms and technologies, which enables Horizen to accommodate a large number of real and useful services and provide more application scenarios.For example, in DeFi, games, NFT, supply chain, anonymous finance, voting, etc.- All Ethereum-based applications can also be implemented on Horizen. In terms of privacy, Horizen has an optional anonymity feature. This not only meets the regulatory requirements, but also protects your privacy.
DASH: Innovative PoS+PoW-like hybrid miningLaunched in 2014, Dash was originally called Darkcoin, which improved the technology based on Bitcoin to solve the problem of protecting users' privacy. The Dash team has boldly declared: Dash is digital cash that you can spend anywhere.The main innovation of Dash is that it improves Bitcoin to use the proof-of-work algorithm and uses the X11 algorithm. This is a modification of the proof-of-stake algorithm that requires 11 rounds of the scientific algorithm for hashing.Using currency mixing to protect trader information and enable privacy on the Dash blockchain allows users to transfer money with low fees.The anonymity effect of Dash is not so obvious. It can only mix the number of tokens and cannot hide the address.Dash mining adopts a method similar to PoW+PoS. Users can pledge a certain amount of Dash as nodes to participate in transaction verification.- Dash, like XMR, is used by many users for dark web transactions. According to related reports, Dash may have become the cryptocurrency of choice for dark web transactions and illegal transactions.
Zcoin is a 16-year-old project. It was officially renamed Firo recently. It is somewhat similar to Zcash, and it is a paper by the same author at different times. Later, the development directions of the two took different paths. Zcoin first adopted the Zerocoin protocol, then adopted the Sigma protocol, removed the pre-trust mechanism, and then began to improve the Lelantus protocol.image description
Zcoin's Anonymous Protocol Information DetailsZcoin's Lelantus protocol is about to go live. It can also be seen from the above table that Zcoin has been improving its anonymity technology and performance from the initial protocol to the final protocol.- BEAM: Eliminate all intermediate states of UTXO, straight-through transactions
image description
Comparison of Beam and Grin under the MW agreement Image source: First-class warehouse research instituteReleased in January 2019, BEAM, like Grin, is based on the Mimblewimble protocol. Similar to other anonymous coins, the transaction amount, sender, and receiver are hidden using anonymous transactions. There is no "address" in the system, and each user only holds the private key of the UTXO that he owns.The anonymity function of BEAM can be turned on selectively, and the anonymity function is enabled by default. In fact, there are no "transparent" transactions at all, and viewing the blockchain provides no information to the outside world. BEAM also implements the Dandelion Scheme, a network policy that significantly increases anonymity. "Dandelion" prevents external traffic from inferring any valuable information.At present, the market evaluates the value of anonymous coins mainly in the following four aspects:1. Technology. What technology is used by the project to achieve anonymity, to what extent is the anonymity achieved, and how to ensure transaction performance and security while achieving anonymity.The early Dash is a relatively simple way to achieve anonymity, and the later Zcoin can be used by users to choose whether to be anonymous, and has relatively high performance. However, in the development process, anonymous coins will abandon security and start to adopt a method similar to PoW+PoS to use nodes to verify transactions, which also brings great risks. Another part is that it is impossible to review the total amount of tokens due to the realization of anonymity technology, such as ZEC and XMR. Once a problem occurs in the project, the additional tokens will not be known, which will cause damage to investors.2. Regulatory issues. The compliance of anonymous projects is the most important, and it is impossible to achieve real compliance at this stage, but you can choose projects that can switch on and off anonymous transactions. For example, ZEN has two addresses and four transaction methods, and you can choose to trade anonymously, semi-anonymously and non-anonymously. This kind of project can avoid risks to a greater extent.4. Application scenarios. For most anonymous currency projects, payment is the main application scenario, such as merchant transfer, or payment on some special websites, such as ZEN, ZEC and XMR can be used on Pornhub. When the usage scenarios of anonymous coins increase and the number of users and transactions increases, the possibility of large-scale applications in the future will become higher.secondary title
The Conundrum of Privacy CoinsAt this stage, anonymous coins give everyone the impression that they can be used as a tool for illegal crimes, transfer of illegal assets, money laundering, and as a means of payment on the dark web, etc.According to Mosaic’s 2019 Market Research Report on Anonymous Coins, among the 44 popular merchant websites on the dark web, 43 accept Bitcoin, 10 accept XMR, 9 accept BCH, 7 accept LTC, and 4 accept Bitcoin. Receive DASH, 4 receive ETH, and 2 receive ZEC.Although Bitcoin is still a relatively popular means of payment in the dark web, compared with Bitcoin that has entered the mainstream field of vision, the living space of anonymous coins that focus on anonymity and anti-tracking is relatively small, and supervision is the biggest thing in front of them. problem.On November 3, 2020, the Financial Information Analysis Institute (FIU) of the Financial Services Commission of Korea issued a legislative notice for the implementation regulations of the legislative amendments to the Specified Financial Information Act. According to the implementation regulations, virtual asset service providers will be prohibited from trading anonymous coins and processing virtual assets with money laundering risks.On May 25, 2018, Dash, XMR, and ZEC were removed from the Korean exchange; on October 10, 2019, XMR, ZEC, Dash, and ZEN were removed from OKEx Korea.image description
Announcement on Bittrex Delisting 3 Anonymous CoinsIn addition, on January 15, 2021, Bittrex delisted XMR, ZEC, and DASH, but did not state the reason for the delisting, but it is conceivable that it may be due to the regulatory risks of anonymous coins.Although anonymous coins can be used to do evil, technology is innocent, and it can also be seen that anonymous coins do have their unique value when privacy issues are valued.With the rapid development of big data, cloud computing, artificial intelligence and other technologies, user data is gradually becoming transparent, and the issue of user privacy protection is getting more and more attention, and the privacy issue of transaction data is also important.In addition, in addition to the well-known payment applications, anonymous coins are also developing in the direction of platformization. For example, Horizen (ZEN) can not only realize anonymous transactions, but also a side chain, which can use various applications built on the platform to protect users’ privacy. Privacy and data security.Anonymous coins can also be applied in some specific application scenarios, which can protect participant information from being leaked, such as anonymous voting, payment, charity, auction and other applications.
