The world we live in today is a digital and globalized world, and even though that is seen in a positive light, there is one thing that is constantly at stake in this digital era, that is privacy. It seems to have become a particularly valuable thing today, considering the collection and storage of personal data is taking place at a historically unprecedented level. But the blockchain technology has the power to solve this very pressing issue of privacy; the blockchain tech is really all about privacy.

Created as a fork of Monero, which is already famous for being one of the most anonymous and private cryptocurrencies, Loki is looking to create a completely anonymous, private and secure network for communication and trade. Loki is basically a hybrid of the Proof-of-Work and Proof-of-Service based blockchain, which allows for the development of applications.

Differences Between Loki and Monero

First thing first, there is no competition going on between Monero and Loki. Now that’s out of the way, lets dive into the differences between the two.

Loki basically expands on what Monero has already created. What Loki does is, it simply uses Monero’s privacy features to create a foundation for its second service layer of Service Nodes, which utilize an architecture that is very much similar to other private Internet protocols, in order to allow for private communications on the Loki network.

Furthermore, Loki includes numerous dynamic features to its block rewards, governance funding, and updates to the CryptoNight hashing algorithm. However, the biggest change of all is the enabling of applications, called SNApps that are built on top of the Loki network. One more significant difference is that Loki has a 0.5% per year inflation rate, where as Monero’s inflation rate is fixed.

Key Features of the Loki Technology

In order to differentiate itself from all the other privacy coins, Loki has incorporated some of its rather unique technology.

Mixin Distribution

To understand this, the ring signature needs to be explained. A ring signature works by creating a ring of signers, where all but one is just a decoy. These ring signatures usually contain the true unspent output that is being sent and a number of decoys. These decoys are called mixins and look like unspent outputs, but necessarily aren’t.

Loki samples the mixins, centered on the spending habits of the users, which ultimately means that a third-party can’t ever assume the oldest mixin is a decoy.

Block Reward Equilibrium

In order to create a balance in the rewards for miners and service nodes, Loki uses a block reward equilibrium algorithm, which rebalances how the block rewards are allocated, regularly.

Moreover, if hashing power and difficulty on the network were to decline, the miners will receive a higher proportion of the block rewards. Whereas, if the number of active Service Nodes decreases below an expected amount, the Service Nodes are given a higher proportion of the block reward.

Loki Messenger-Oh SNApp!

Loki is building Service Node Applications (SNApps) on its blockchain and the first SNApp they planned was a decentralized, private and encrypted messaging service called Loki Messenger. There are already private messaging applications available but they have a downside, that is, they are built using centralized servers that can potentially be the targets of a third-party attack. Where as, in the case of Loki Messenger, the public-private key cryptography is used to maintain privacy.

Working of Loki’s Messenger

The receiving address serves as the Loki holder’s public key. Meanwhile, the sender broadcasts its message to three random Service Nodes, and this is signed with the public address of the receiver. Each Service Node has the ability to hold messages for up to 24 hours in their “message pool”.

The Team

The Advisors

You can read Loki’s whitepaper here.