Ask anyone on the street and the first reason that comes to mind when they hear about “cryptocurrency” or “privacy” is the misconception of its use for nefarious reasons (which run the gamut from blackmail, darknet purchases to terrorism).

This article presents to you many reasons for privacy in today’s and the very near future’s interconnected world of personal finance.

First, we have to set this premise: understand that blockchain is here to stay and is already being integrated into large scale financial institutions (eg. JP Morgan Chase (1), Fidelity (2), and others) that you use on a daily basis.

On to how this will affect you. Ask yourself these questions:

Would you want your health insurance company to know that you spent money (seen on a publicly ledgered blockchain) on cigarettes? Would you want your employer to know that you take breaks to go to Starbucks every day at 10am and 3pm? Would you want your vehicle insurance company to know that you privately settled a small fender bender and chose not to file a claim? Would you want your loan company to raise your interest rates if they found out you lost 70% of your financial portfolio? Would you want the balance of your financial assets be laid out on the public blockchain? Would you want your publicly ledgered blockchain showing that you/your significant other spent a large amount at a fertility clinic or abortion clinic?

For the common person, most will not know how to or have the resources to track transactions from one wallet to another and trace it back to an IP address which identifies your house. However, this takes a matter of minutes at the institutional level and is spurring the niche industry of Blockchain Forensics. Already there are companies such as CiperTrace offering solutions to reverse analyze blockchain transactions. The Danish (3) and Japanese (4) governments have employed such solutions to solve crimes. However, several such blockchain forensic companies have been contracted by the US Federal government (IRS, Homeland Security, ICE) (5), with custom software that harvests blockchain data to reverse look up transactions and trace it back to individuals.

“I’ve debated this issue around the world, every single time somebody has said to me, “I don’t really worry about invasions of privacy because I don’t have anything to hide.” I always say the same thing to them. I get out a pen, I write down my email address. I say, “Here’s my email address. What I want you to do when you get home is email me the passwords to all of your email accounts, not just the nice, respectable work one in your name, but all of them, because I want to be able to just troll through what it is you’re doing online, read what I want to read and publish whatever I find interesting. After all, if you’re not a bad person, if you’re doing nothing wrong, you should have nothing to hide.””

- Glenn Greenwald, lawyer, journalist and author of No Place to hide at Ted Conference (6)

If you are a cryptoinvestor and entered via Coinbase or Gemini and linked your bank account, all of your wallets are non-shielded and are all linked back to you. Your personal characteristics of how you trade, your preferences of project types, whether you are an easy prey for scam projects, are all out there for the reaping.

“We believe that privacy is a fundamental human right. No matter what country you live in, that right should be protected in keeping with four essential principles:

First, companies should challenge themselves to de-identify customer data or not collect that data in the first place.

Second, users should always know what data is being collected from them and what it’s being collected for. This is the only way to empower users to decide what collection is legitimate and what isn’t. Anything less is a sham.

Third, companies should recognize that data belongs to users and we should make it easy for people to get a copy of their personal data, as well as correct and delete it.

And fourth, everyone has a right to the security of their data. Security is at the heart of all data privacy and privacy rights.”

- Tim Cook, CEO Apple Inc. (7)

References:

1. http://fortune.com/2017/10/16/jp-morgan-bitcoin-blockchain/

2. https://www.wsj.com/articles/fidelity-offers-professional-investors-access-to-a-new-world-trading-bitcoin-1539621000

3. https://www.newsbtc.com/2017/02/21/denmark-bitcoin-tracing-transactions/

4. https://cryptoslate.com/japanese-police-adopt-cybersecurity-software-to-trace-bitcoin-transactions/

5. https://cointelegraph.com/news/public-records-show-us-government-tripled-investment-in-blockchain-analysis-firms-in-2018

6.https://www.ted.com/talks/glenn_greenwald_why_privacy_matters/transcript#t-927598

7. https://twitter.com/tim_cook/status/1055035539915718656

The Current State of Privacy

The state-of-the-art of privacy cryptography is “Zero-Knowledge Proofs”. Zero-knowledge proofs validate the truth of something without revealing how that truth is known or sharing the content of this truth with the verifier. Hence, when applying Zero-knowledge proofs to cryptocurrency, transactions can be validated without revealing any information about the sender’s address, the transaction amount or the receiver’s address.

ZCash is a pioneer cryptocurrency that employed zero-knowledge proofs in their Zero-Knowledge Succinct Non-Interactive Argument of Knowledge (ZK-SNARK) algorithm. However, “less than 1% of ZCash transactions are between shielded and unshielded addresses” (1). This creates a vulnerability for users that desire privacy, the other 99% of unshielded transactions are datapoints for chainanalysis allowing inquisitive individuals to decipher the 1% of private transactions.

There are also several other attempts at anonymous currency, including Monero (XMR), DASH and ZCoin (XZC). First, let’s discuss ZCoin. ZCoin employs Proof of Work with the Lyra2 algorithm, and has a total supply of 21.4 million coins. XZC uses the zerocoin algorithm, which essentially works by “burning” a coin (and its history), and “minting” a new coin. Zerocoin has its merits, however, it does not hide the transaction value. Moreover, zerocoin minting is an optional feature for ZCoin. At the time of this writing, less than a 10% of ZCoin’s transactions use minted coins. This leaves over 90% of the transactions as datapoints for chain analysis and reverse transaction lookup. ZCoin transactions hide the sender’s identity, however, receiver addresses and the transaction values are broadcast on the blockchain, this is only pseudo-privacy.

By allowing privacy features to be optional, ZCash, DASH and ZCoin have created an environment of transparent-shielded-transparent transactions. This significantly undermines the efforts of users desiring private transactions.

Alongside ZCash as marketcap leaders of the privacy sector, is Monero (XMR). Monero has a supply of 18.4million initially with a slow infinite tail emission. XMR uses the Cryptonight algorithm for proof of work, and uses RingCT/RingSig to confuse any inquisitor of sender and transaction. The algorithm mixes the input from transactions and mixes them up. However, the algorithm only uses the data from a maximum of 7 transactions (upgraded from 4). Monero has just implemented the Bulletproof algorithm to hide transaction values. The main factor that gives XMR the role of privacy sector marketcap leader is the fact that its privacy is non-optional, all addresses and transactions are by default, private only.

Up until now, there is no perfect privacy cryptocurrency, not a single offering in the market is close to ideal.

References:

Laura Shin. Unchained podcast episode 88, 10/16/18, 57’22’’

The Case for the Completely Private and Secure Cryptocurrency — PirateChain

PirateChain ($ARRR) is a newly forged cryptocurrency ingenuously designed to be the best at one feature — Privacy. The total ARRR will number just under 200 million. Block time is approximately 60 seconds and reward halving will occur every 388,885 blocks or about 270 days.

ARRR possesses the best features of ZCash’s, ZK-SNARK, and Monero’s, default privacy enforcement. All addresses are by default shielded z-addresses only, as are all transactions are by default z-transactions only. This means that balances of every address are not visible to anyone else beside the user. The transactions also cannot be tracked as there is no trace of the transaction. The thoughtful developers have also enabled interaction with the Tor network to further secure privacy right from the source: the user’s IP address.

Another very unique feature of PirateChain is the anonymity set. It is purposefully designed to use virtually every transaction that has ever occurred to create the anonymity set. Compared to XMR’s use of 7 transactions for RingSig, ZCash’s or ZCoin’s set of 1000 is an improvement, but Pirate’s inclusion of an infinite set of transactions creates an impregnable set.

Hence, for the first time, the algorithm of ARRR allows a cryptocurrency where it is impossible to know or track who sent a transaction, how much the transaction amount is, and who received the transaction. Add to that, no one can see the balances of the addresses and thus, this creates the perfect anonymous currency.

Privacy is not PirateChain’s only outstanding feature. PirateChain is also secured by Bitcoin’s network using delayed Proof of Work (dPOW). Komodo and hence ARRR secures its blockchain is by the use of 64 elected Notary Nodes that notarize transactions and embedding them into Bitcoin’s network in a delayed manner.

PirateChain is an independent chain built on the komodo platform. Komodo was fork of ZCash, hence inheriting the Equihash algorithm, ZK-SNARKS, and the upcoming SAPLING upgrade. SAPLING will enable the use of lite wallets and mobile wallets, both which are currently in development. Additionally, new technology often brings new developments. The team behind Pirate is developing its own exchange, Tortuga. Tortuga will be the world’s first privacy-centric exchange. PirateChain also introduced the first z-transaction on private mining pools, on a chain tipbot and soon, on a e-commerce plug-in for merchants.

As you can see, PirateChain ($ARRR) is for all essential purposes the perfect Privacy-centric Cryptocurrency by being absolutely and incomparably private, while at the same time undeniably secure in this sector.

In the 2 months since its inception, many investors have found PirateChain. With no founders’ or developers’ rewards, the growth of ARRR is organic community driven support. Over 1000 twitter followers are supporting PirateChain, bringing ARRR to the rank of the 3rd highest Equihash hashrate in industry (following ZCash and Horizen):

If this report has peaked your interest, find out more by visiting the website of any of the social media outlets:

Website: pirate.black

Twitter: @PirateChain

Discord: https://discord.gg/q3WEARj

Reddit: https://bitcointalk.org/index.php?topic=4979549.0

Bitcoin Talk: https://bitcointalk.org/index.php?topic=4979549.0

Or, if you’re ready to try it out, there is an small onboarding fund offering ARRR at a low rate (all funds raised go towards community development): https://dexstats.info/onboarding.php