Not long ago, I posted an article outlining Darkcoin, and went into a bit of detail about it’s DarkSend system. Since that time, I have come to realize how truly revolutionary this program could be. Due to it’s very nature, Darkcoin could boost not only itself, but Bitcoin as well. However, first things first.

Is Darkcoin Anonymous? And What is Darksend? A Recap of How Darkcoin Works

DarkSend functions in a way that is very similar to a tumbler, which is an idea that has been around for quite a while, but with a few specifications that increase the effectiveness. It has went through multiple changes and updates, but the most recent release, release candidate 2 (RC2), is nearing complete anonymity.

When a user, let’s call him Tim, sends darkcoins through DarkSend to another user, let’s call her Sandy, he must send 10 darkcoins, even if that amount is larger than what he would like to pay her. DarkSend then puts his coins in a pool, and pauses until two additional users initiate transactions. These new users will add their own 10 darkcoins to the pool, and DarkSend blends the 30 coins into a random assortment. If we assume that Tim wanted to send Sandy 8 darkcoins, then at this point 8 darkcoins would be deposited into Sandy’s wallet, but those 8 coins would be a mix of coins from all 3 users that had initiated transactions. Tim’s remaining 2 coins are placed into a Random Pool Address (RPA) which was created during the transaction. This RPA is not tied to any user, thus it is impossible to connect to a specific user, but Tim can access it.

This process is happening for the other 2 users that sent 10 darkcoins through DarkSend as well, so at the end, it is impossible to determine which transaction was related to a specific user. To an outside observer, 3 users put 30 darkcoins in, and 3 – 6 addresses receive coins out (3 if each user intended to send a full 10 darkcoins, up to 6 if each user intended to send less than 10 darkcoins).

So, How Does this Effect Bitcoin? Is Darkcoin a Good Investment?

Well, it doesn’t directly. While there are developers working on similar systems that could work with Bitcoin, the complexity of accomplishing true anonymity through this method requires a significant investment in developing the software to handle it. Unless the core Bitcoin developers decided to integrate this type of system directly into it, then it is unlikely to match Darkcoin.

However, that is the point. That is exactly the reason that Darkcoin will grow, and also the reason that it will be beneficial to Bitcoin. Thanks to DarkSend’s anonymity granting ability, there is a good chance that Darkcoin will be adopted by individuals that are overly concerned with concealing their identity. While there are many legitimate reasons to do this, there are also many “darker” reasons to. Bitcoin has suffered at times because of it’s reputation for being an “anonymous currency” (it isn’t) used for online black markets.

Due to the fact that Bitcoin is NOT anonymous, and thus is a risk for the individuals accessing these markets, it seems likely that some will begin to adopt Darkcoin instead. This could potentially jump-start Darkcoin’s growth, greatly increasing it’s trading volume, while improving the reputation, and legitimacy, of Bitcoin at the same time.

Is The Separation Between Darkcoin’s Anonymous Nature and Bitcoin’s Transparency Mixed With Psudonymity Necessary?

Obviously this, with enough work, could be an integrated system, with no need for multiple currencies. However, I think that would be detrimental. One of Bitcoin’s biggest selling points is the public ledger that can easily be analyzed. DarkSend is a brilliant idea, and Darkcoin will do very well with such skilled developers behind it, but the currencies should remain separated.

Bitcoin is fighting for mainstream acceptance, price stabilization, and transparency. Regulators, governments, banks, and the public are all shining a spotlight on it. Any attempt to increase Bitcoin’s anonymity would be ammunition for it’s opponents. With the current separation, Bitcoin can stay in the light, and Darkcoin can remain hidden, and thrive, in the dark.