In an era when digital privacy is being constantly eroded and most people appear in countless data profiles across the web, anonymity is becoming a greater and greater cause of concern. The cynical in the world will mount their high-horses and point to all the illegal activity that anonymity in blockchain facilitates, but as we will discover this kind of activity is not new to blockchain or cryptocurrencies.

Bitcoin in particular is often accused of being the primary payment method for drug dealers, human traffickers, money launderers, terrorists and every other criminal enterprise that exists. The fact of the matter is that the almighty dollar is still the medium of choice for those that operate in the shadows. Aided as they are by the countless “trusted” financial organisations that enable them to operate.

For those with the money, these institutions have, for decades, enabled money from less-than-desirable sources to be legitimized. And that’s all perfectly legal and those that would wring their hands over Bitcoin’s use wouldn’t even bat an eyelid at what goes in countless private Swiss banks. For some reason it’s OK for the super-wealthy to obfuscate their wealth, but the moment that this becomes available to the man on the street these same institutions, that help the wealthy hide their money, are up in arms about how cryptocurrency is dangerous and untaxable. No matter which way you cut it, it’s hypocrisy.

Bitcoin wasn’t meant to be the solution to financial anonymity, it is actually more of a side-effect; unfortunately, an analysis of the technology and the government investigations into it, demonstrate it’s a side effect that doesn’t truly exist. The phrase that many use, in referring to Bitcoin, is pseudo-anonymity. Yes, you can store and use Bitcoin with the only marker being your wallet address. But, as has been demonstrated when governments feel nefarious activity has taken place, it is well within their power to subpoena exchanges for the KYC information relating to that wallet address. So instantly that address and all associated transactions are linked to your KYC documents and no doubt a selfie of you holding them. This demonstrates why blockchain anonymity is not really all that anonymous. The plus side to this revelation is that it puts the kibosh on the idea that cryptocurrencies are the perfect unit of exchange for money launderers, arms-dealers etc. As the SEC have demonstrated, it’s just as easy for them to jail criminals who use crypto as it is to jail those that use fiat currency (at least in digital form).

So, Bitcoin is not anonymous as it is far too easy to associate transactions with individuals. There are a few circuitous approaches one can adopt to increase Bitcoin’s anonymity including the use of multiple wallets, multi-input transactions and tumblers. But these approaches make using cryptocurrency harder, are not really that effective, and, as anyone who has been following our articles will know, these work-arounds just create further barriers to mass adoption, because they are neither easy-to-use nor user-friendly.

So what is needed is an option that would allow one to use the blockchain in a genuinely anonymous way that doesn’t require one to go to such lengths to stay anonymous. We are not the first to recognize this problem, there have been a slew of privacy coins created specifically to tackle this issue. Unfortunately, as we will discover, focusing solely on privacy will not bring these blockchains any closer to mass adoption.

Take Monero, this blockchain very much has privacy baked into it, through a combination of “Ring Confidential Transactions” & “Stealth Addresses”. Monero is, certainly, a thoroughly private blockchain, however concerns have been raised regarding Monero’s ability to scale. The use of decoy coins makes the size of the average Monero transaction 10 times greater than Bitcoin. This, and Monero’s storage of its transaction history won’t be an immediate problem but could lead to bottlenecks as it scales. This as we know is a critical barrier to mass adoption.

ZCash is another strong example of a privacy coin. ZCash uses zero-knowledge proofs to create “Shielded Transactions”. These zero knowledge proofs aka “zk-SNARKs” allows almost all data (minus time stamps and transaction fees) to be hidden from validators in the network. Once again critics argue that ZCash isn’t without its problems as zk-SNARKS required a trusted set-up and it has more than a whiff of centralization about it. Vitalik however doesn’t see this as a problem “If I was using cryptocurrency for a high-privacy-demanding usecase, I’d go for what seems more likely to protect confidentiality and not give a crap about luxuries like decentralization.” So, the very man who posed The Trilemma now regards decentralization as a luxury in the context of the pursuit of privacy. Why? Well maybe because achieving anonymity, scalability, security & decentralization in one protocol seems too greater a stretch to achieve. And maybe it was, until Neutro.

As we have discussed in a previous article Neutro solves The Trilemma, though the Neutro protocol does it whilst still allowing for anonymity of private transactions. The main factor behind The Neutro Protocol’s anonymity is the encryption of the data in each block. Symmetric keys will be used for this encryption, using the chosen shard-chain block producer’s public key. In essence, only you, the receiver and shard-chain block producer knows to which address and what amount of tokens you sent from your address.

Neutro can use these tools to ensure anonymity is maintained without having to compromise The Trilemma, creating a protocol that is truly decentralized, secure, scalable and really anonymous.