Depth | Big data killing era, privacy coins will be your life-saving straw

In the era of big data killing, your privacy has been completely ruined!

Nowadays, in order to eliminate crimes such as corruption and money laundering, centralized digital currency tries to replace traditional banknotes, but at the same time, centralized platforms such as WeChat, Alipay, and Meituan use artificial intelligence, big data and other technologies to treat personal privacy as personal privacy. Nothingness, like a deep prison in the dark, is always stared at, but without knowing it.

The privacy coin may be a good tool for us to protect our privacy.

The article first analyzes the dangers and drawbacks brought about by the centralized digital currency through various examples. Then introduces the privacy coin projects such as Zcash, Grin and Monero. How do these projects protect our privacy? Will the privacy currency become the mainstream currency and become the catalyst for the next bull market? Old irons, please read carefully!

A cashless society is coming soon!

In the next two decades, cash will gradually retreat from the historical stage.

This is not sensational. In fact, as early as a few years ago, the great movement to promote a cashless society has begun to sprout, and the invention of computers and information networks has made cashless society inevitable.

The cashless society has quietly been implemented in countries such as India.

At the end of 2016, Indian Prime Minister Narenda Modi announced the abolition of 500 yuan and 1,000 rupees of banknotes on the grounds of combating corruption, money laundering and allowing people to develop tax habits. If the people do not replace them with them within the specified time. New rupee notes, then these old rupee notes will turn into a pile of waste paper.

According to the data provided by the relevant agencies, all the 500 roubles and 1000 roubles of the two banknotes together accounted for 86% of the total amount of Indian currency circulation at that time. This unexpected move triggered a national chaos and made the people of the world stunned. .

In India, corruption, money laundering and tax evasion have reached a level that directly threatens the country’s economic lifeline. According to statistics, at the time, only about 2% of Indian citizens paid taxes in accordance with the law. When a country cannot fill the state treasury by means of taxes, etc., the huge national infrastructure will be difficult to function properly.

To the contrary, the drastic reforms of the Modi government did not solve these problems. Instead, they brought great suffering to the people and brought a fatal blow to the bottom of the country. After the introduction of the New Deal, the Indian people queued up in front of the bank because they were afraid that the money in their hands would become waste paper. And because of the chaotic monetary policy of the reform period, street vendors could not sell their goods.

The rich who should have been hit in this reform have hardly been affected. They can still evade taxes by transferring wealth to luxury goods such as diamonds that are easy to trade.

In August 2017, India’s abolition of the large-denomination legal currency reform campaign failed, and 99% of the abolished large-nosed rupee flowed back to the bank. The Modi government tried to combat corruption, money laundering and tax evasion by abolishing large denomination currencies. The plan is completely bankrupt.

Modi's reforms have been at the forefront of the world. Despite the government's hard work, it has also failed because of the excessively strong reforms.

But it doesn't have any effect. In this radical reform, most people saw the problems exposed by banknotes and they all invested in the embrace of Internet payment. Since the implementation of the New Deal, the number of users and profits of Paytm, India's largest Internet payment platform, has ushered in tremendous growth.

After the failure of the reform, the Indian government turned its focus to the Aadhar project, the world's largest biometric database, and the UPI unified electronic payment system, which is ready to build a “less cash society” from scratch, and then gradually transition to a “cashless society”. The cashless social movement has taken a big step forward.

Outside of India, cashless social movements have blossomed throughout Asia.

In January of this year, I was invited by Blockstack to attend the event in Hong Kong. Here, I first came into contact with the Hong Kong Octopus card. The Octopus card is very portable and practical. It can be used to make cash in a convenience store. When you need to pay the bill, you can complete the payment with a single brush, which is not as cumbersome as a bank card.

The Octopus card was originally used only for the subway, but because of the convenience of the Octopus card, all walks of life began to use it as a substitute for credit cards and cash to support Octopus card payments.

This is an Octopus card, which can protect your food, clothing and food.

Octopus card

In the coming years, more and more social activities will be carried out in this cashless way, and the centralized digital currency will reach out to all aspects of your life. In many ways, this is a good thing. A cashless society can make it easier for you to buy coffee and buy electricity.

Round prison and centralized digital currency

But things have two sides, and this great historical movement has a bad side. Although a cashless society simplifies your life, it does not essentially change the nature of money. It is still a central, regulated currency.

If you equate digital currency with paper cash, then you are very wrong.

Similar to the Internet's business model of monitoring users and abusing data, the centralized digital currency you hold in your hands will put you in a round prison.

Note: In the round prison, the British philosopher Bentham first proposed in 1785 that through this design, all prisoners could be monitored with only one person, but the prisoners did not know if they were under surveillance.

Round prison

As a simple example, before you pick up your phone, your phone will know where you are going, who your friends are and what you want to buy. You can say that the phone monitors every aspect of your life.

Centralized digital currency will allow you to leak more privacy.

Living in this society, you can't live without money.

You need money to buy breakfast, take a taxi, buy daily necessities on Amazon and relax at the bar…

In the future cashless society, the centralized organization that issues digital currency will know all your transaction records. Through artificial intelligence to do data analysis, they can easily restore your every move. Your private data is not just on the Internet. Streaking up, but directly exposed to the spotlight in the round prison.

Governments, businesses, and hackers who get these transactional data will be involved in your life, “eavesdropping” on all the things you have done, everything you have ever loved or hated, all the places you have been to.

In a cashless society, taxation is no longer a headache for governments. Whenever you initiate a transaction, taxes are automatically deducted.

As Vinay Gupta, CEO of the blockchain project Matteture, said in his blog: "In a cashless society, taxes will be reduced to a piece of code."

All your trading activities, from small convenience foods in the grocery store to one or two dollars, to housing and vehicles, will be clear to tax officials.

This kind of regulatory convenience is also a double-edged sword. The government no longer has to worry about how to shut down some illegal websites and loan sharks. The government can easily blacklist them and prevent all transactions related to them. Eliminate these criminal activities from the source.

But is this a good thing? please consider it.

What if the government can freely pull you into the blacklist so that you can't make any transactions?

Or, if the government can arbitrarily freeze the trading system in the street shop, shutting down a store?

Imagine a scene where, at a formal dinner, you take the credit card as a host after you have enough to eat, but the waiter says that your credit card has a problem. In the eyes of the public, you have to pick up your mobile phone and ask the bank. You will continue to explain to the guests at the meeting whether this scene makes you fear?

Imagine that in a cashless society, this fear will grow geometrically.

This is how you feel when the government can freeze your trading business at any time.

a suffocating artificial agent

Now you have to call a government agency like the US Department of Transportation that has a poor service attitude and long waiting time to let them unfreeze your account, otherwise you can't buy any necessities. In the cold winter, you can't pay the electricity bill, you can't refuel the car to send the children to school. Even if there is an emergency in which you need money urgently, you have to call and wait in line. It is likely that you are "currently busy with the artificial seat" and background. After waiting for a few hours in the interlude of the music, I waited for a "call has been disconnected."

It is not even possible to sentence the death penalty to your trading account. It is not a cold-hearted bureaucrat, but an artificial mental retardation with artificial intelligence as a fraud detection algorithm.

"Sorry, our automatic fraud detection system detected an abnormal behavior in your account, so it automatically triggered a freeze on your account transaction. Now you are assigning a human agent. Please wait, your call is very important to us."

To combat potential terrorism, governments create various automatic detectors and blacklists in their systems.

Because these automatic detectors are designed by the government, the designers and the US Transportation Bureau, which are staggering in service attitudes, are the same people, so don't expect too much from them. Their automatic detectors may even be better than The fraud detection system of criticized credit card companies is even worse, with more false positives. It's probably just because an algorithm in the automated detection system doesn't figure out why you suddenly started online shopping, or how often you buy on Broadway, how come you suddenly rushed to a gas station store next door market, saying it's hard to hear. Point, your account may be frozen all the time.

However, we always say that we want to keep our power in a cage. If an authoritarian government gains this power, what will happen?

When you post on the social media about what the government doesn't like, or if you call for opposition to corruption and corruption, or if you are dissatisfied with the government, you are likely to have serious trouble: you go home from work. I found that my trading account was frozen. You can't go home by bus. The police drone has been waiting for you on the route you are going home most. Prepare to arrest the net and use it as unfairly. The trial treats you.

However, don't be too disappointed with the future, the emergence of privacy coins has brought us new hope.

As the name suggests, privacy tokens are anonymous, decentralized cryptocurrencies that have certain attributes of cash.

No one knows how you spend or spend your cash. You can take out cash at the ATM, use cash to buy some chewing gum at a nearby convenience store, or buy a neighbor's idle desk lamp. There are no records for all transactions, and you won't record every penny like a credit card. Clear and clear.

Privacy-oriented cryptocurrencies may be our only hope in a cashless society. Of course, you can also choose to return to the ancient times of changing things.

If I don't have anything to hide

Before we officially start discussing these privacy-oriented cryptocurrencies, it is important to understand:

Why do we need to protect privacy?

Don't we want all transactions to be transparent and traceable? Maybe you are thinking, "I am not a criminal suspect, I have nothing to hide."

The Guardian reporter Glenn Greenwald, who exposed the Snowden case, told us in the TED speech "Why privacy matters" that "I don't have anything to hide" is the classic defense of those who don't care about privacy or privacy. "

In the speech, Greenwald said, if you have nothing to hide, very good, then please give me your personal e-mail password, in the next three months, I will help you check the e-mail every day, if you encounter any interesting things I am not as happy as Lele, I will share it with netizens on social media.

If you still have nothing to hide, then you need to know that privacy has nothing to do with crime.

We don't want to broadcast our private life to the world. We don't want neighbors to see the scene of changing clothes at home through the window. We don't want someone to eavesdrop on the sweet words between us and our loved ones. We don't want some cold bureaucratic government or companies to secretly monitor every part of our lives. second.

Each of us has our own three views. No matter what your perception of life is, there will always be people who hold the opposite view. Maybe you are conservative in your behavior. There are always people in the society who are more open than you, and vice versa. Maybe you are an environmentalist. Some people in the society think that climate change is a joke. Maybe you are actively calling for protection of animals. The right, and there will be people in the community who don’t care if the cows are unhappy every day, just because the beef is not good.

No one wants to accept "patient greetings" with different views of hostile forces. But what about criminals who abuse their privacy to conceal illegal gains? Should law enforcement agencies have the right to punish criminals?

Nowadays, criminals usually use money-laundering transactions in places such as nightclubs. The illegal income may come from drugs or murder. However, criminals usually use some means to cross the sea and disguise these illegitimate money into the legal income of nightclubs. Shouldn’t we provide law enforcement with the privilege to punish these violations?

Should not! There are other ways for law enforcement.

You may doubt my point of view.

Money Laundering (Third Edition) Financial Crime Investigation Study Guide

This is a book written to the law enforcement department of financial crimes, which introduces all the tricks that people try to hide illegal gains. It has evolved to the third edition.

One of my close friends is a white-collar criminal investigator. He does not need to use a bunch of new tools to find clues about suspects hiding illegal income. The experience of handling cases for many years makes him know where to start.

Note: White-collar crime refers to crimes committed by white-collar workers. Also known as gentleman crime, Sven crime. White-collar criminals mostly have high social and economic status, and usually use their duties to commit crimes, such as short selling, false reporting of balance sheets, manipulation of the stock market, corruption, fraud, fraud, bribery, personal income tax evasion, economic intelligence, etc. . The white-collar crimes in the United States are very serious, and the economic losses caused by them far exceed the economic losses caused by crimes of property infringement such as robbery and theft in blue-collar crimes.

The tools we added to stop money laundering only brought more problems without solving them.

Speaking of KYC (know your customer) rules, when you apply for registration on the exchange, the exchange needs you to upload your ID card and photos, they need your personal information, such as your place of residence and phone number. But centralized organizations have proven time and time again that they cannot guarantee data security.

The centralization agency is leaking our information almost every day. In July 2017, Equifax, one of the three largest credit rating agencies in the United States, revealed privacy data for nearly half of the US population, and this is just the tip of the iceberg in the information breach.

Major information disclosure incidents/hacking incidents around the world

Almost every major organization on the planet leaks data every day.

It is difficult to ensure security for such a large-scale organization.

Protected Media CEO Asaf Greiner once said, “In the past six years, identity theft has exceeded $107 billion in the United States.” That is to say, the loss of identity theft in the United States has exceeded the sum of all other types of property theft.

Knowing your customer rules and centralizing a large amount of private data leaves the criminals with an opportunity to incur more crime.

Knowing your customer rules does not stop criminals. Criminals know how to buy 100 people's identity information on a dark network for $25 and then steal it by falsifying their identity. These laws will put innocent people at risk.

Just as people usually think that bloody and violent computer games can induce young people to murder and arson, people usually have such prejudice against young people after the 80s and 90s. Especially after a large-scale shooting incident, the media will have a deeper understanding of the life of the suspect. Once he discovers that he is playing computer games, the rhythm comes: "Aha! I am solving the crime! It must be that these computer games induce him to commit crimes." ""

It’s as if legally banned from such evil games, violence will not happen again!

The probability of such people is crazy.

Bloody and violent computer game

People who are influenced by network public opinion tend to store all identity data in a database, otherwise it will not stop the occurrence of terrorism! Even if this centralized regulation only captures a criminal, the regulator will think it is worthwhile. But in fact, we have opened up new criminal channels for transnational criminals.

Black market website Silk Road

In the future cashless society, the black market will be the only place to use cash?

Whether it's illegal drugs, guns or banned books, there are always people who take risks for their interests, build black markets in some places, and sell them to you.

Shouldn't we stop these illegal activities? Is this a good reason to eliminate cash? No.

Again, law enforcement does not need any new tools to ban the black market, just using current technology.

Instead, the world needs a black market.

I am not misleading you because the definition of the black market varies widely from country to country.

If you live in a healthy, stable First World country, business and society work well, the police are seriously performing their duties, the government provides the services it promises… In this case, the black market is only Where the bad guys buy and sell drugs and carry out paid services, this black market needs to be banned.

But if you live in an unstable country like Venezuela, Zimbabwe and Argentina, this is not the same.

Venezuela annual inflation rate

Source: Steve Hanke, Professor of Applied Economics at Johns Hopkins University

I recently organized an investigation team for the Human Rights Foundation. I interviewed many people who have experienced hyperinflation. According to these interviewees, people may need to queue for a few hours in order to buy some sugar, and it may take a month to buy a small piece of bread. In this case, the black market is where people get the necessities of life.

Therefore, talking about the nature of things cannot be separated from the environment in which they exist.

For those countries where the social system has completely collapsed?

Suppose you live in a first world country, political ideas and your left-leaning party come to power, and suspend all funding programs that support you. The new government can legitimize this process through a variety of operations, and they can directly close three or four organizations that are out of funding allocations. They can even say that they are taking over the pilots of these organizations and “researching” the issues by shutting down all organizations in the pilot, but their real goal is not to study these organizations but to close them completely.

At this time, you can no longer donate to human rights organizations that can balance government power and supervise government administration. After a while, the government's power will expand like a snowball. Soon, the government has no constraints.

This is not an alarmist. It is happening in Turkey, and dictators around the world have similar routines.

Dictator around the world

In societies where the rule of law or the rule of law has been trampled on, we see the ruling party accusing the opposition, arresting them, or simply finding a reason to suspend the sources of funding for these opposition groups. To a certain extent, the centralized digital currency means the end of the separation of powers in the United States.

In this era, if you disagree with the rulers, you can come up with evidence to compete with them. And when the ruler has complete control over the only digital currency, it will all end.

The end of cash also means the end of free choice. The defense of freedom is the use of privacy-oriented cryptocurrencies. Many people say that there are no killer apps in the blockchain field, but they are all wrong.

The cryptocurrency has found a way to simulate the effects of cash in an environment that is completely hostile to the Internet.

Return of privacy


The biggest feature of cash is that it is really very difficult to track, which is why criminals in the big movies are always asking the victims to provide cash and not to buy new ones.

In other words, anonymity is the main feature of cash.

In the scenario of using cash, only the parties to the transaction are aware of the occurrence of the transaction.

Bitcoin must be anonymous, right? Because I heard that the evil bad guys buy illegal drugs on the black market website Silk Road, or people or groups like criminals and North Korea who are inconvenient to use cash will choose Bitcoin as a means of payment.

But in fact, Bitcoin is not anonymous at all!

In the early days of Bitcoin's development, it seemed to be anonymous, because it was not a climate, and governments all ignored it. But today, the security brought by Bitcoin through the pseudonym is not really meaningful. Security on the ground.

Early blockchains were easily tracked, and Bitcoin made every transaction stored on its blockchain public. The blockchain is the third component of the three-entry accounting system, except for debits and credits, the budget indicator, which opens the financial history of the entire system to everyone.

Note: The three-entry bookkeeping method is an academic concept envisioned by Carnegie Mellon University professor ljiri Yuji, which provides a framework for a new accounting method that replaces standard accounting formulas with a more complex framework (assets = liabilities + income)

Even in the past few years, the hybrid service used to hide bitcoin transaction information (by third parties, disrupting the link between the Bitcoin sender address and the recipient address to hide transaction information) and other technologies have come online. Bitcoin transactions are still easy to track.

As governments continue to strengthen their supervision in the blockchain sector, blockchain data analysis services have sprung up. In many ways, blockchain makes it easier to track the flow of funds. In contrast, past methods of tracking international remittances or tracking offshore banks in the Cayman Islands have been more like the actions of cavemen in ancient times .

As governments and companies are eager to learn about all aspects of our lives, their demand for new technologies for blockchain data analysis has increased accordingly, and the accuracy of blockchain data analysis services can be foreseen in the coming years. And speed will be a breakthrough improvement.

The privacy-oriented cryptocurrency directly sentenced the blockchain data analysis service to death. Privacy-oriented cryptocurrencies give us real anonymity over or even more than cash.

To do this, privacy-oriented cryptocurrency projects must address a "twenty-two military regulations."

Note: Article 22 of the military regulations is derived from the novel "The 22nd Military Regulations" written by American writer Joseph Heller. It means that there are problems, rules that are not logical and difficult to achieve, or dilemmas. situation.

How can we prove the existence of cryptocurrency transactions without storing the records on a central server or on a publicly visible blockchain?

In the real world, the problem has been solved. I handed you the cash and you took the cash. Your eyes saw the transaction process, and by counting the money you found that there was no problem in the amount, so you are sure that the transaction is complete.

Code Co., Ltd. Neil Stephenson

To achieve cash-like anonymity, the privacy currency uses a number of encryption techniques. For example, when two people or two entities trade, each step of the transaction process is confused. The information that is confused includes where the money comes from, who is the two sides of the transaction, how much money each party has and how the transaction occurs. Time and so on.

The "22nd Military Regulations" mentioned above is a problem facing every privacy-oriented cryptocurrency. How can I prove that the transaction really happened without revealing the transaction information? This is also the cryptocurrency science. The most cutting-edge issues in the research.

According to the non-interactive zero-knowledge proof theory (meaning that the prover can believe that a statement is correct without providing any useful information to the verifier), that is, we often say zk-SNARKS, by using a ring Signing anonymous addresses (and bringing all transactions together, so an attacker can't identify any single transaction individually, and developers of privacy-oriented cryptocurrencies are struggling at the forefront of human cryptography to further advance cryptography.

Note: The ring signature refers to the public key that hides the private key in the n public keys. The specific application lies in hiding the sender of the transaction on the blockchain.

The privacy currency items include Monero (codenamed XMR), Zcash (ZEC), ZCoin (XZC), and cryptocurrency (Beam and Grin) based on the MimbleWimble protocol.

Big zero coin Zcash

Let us start with the introduction of the big zero coin.

Big zero coin Zcash

What is a big zero coin? The official website of the Great Zero Coin pointed out the right direction:

A zero-knowledge proof allows the prover to prove to the verifier that the statement is true and valid without revealing any information beyond the validity of the statement.

Essentially, large coins allow transactions to occur in the invisible third party, while also allowing users to prove certain details of the transaction without revealing any information about the transaction.

Imagine a scenario like this:

Suppose you have a color blind friend. You hand him two balls, one green and the other red. The two balls in his eyes are the same, he can't see any difference, and you can.

In fact, you don't want him to know which one is green and which one is red, but you really want to prove that you know it. In other words, you have to prove to him that the two balls are different.

You can do this: You ask him to take the two balls in their hands and put them behind them, then choose whether to exchange the two balls.

Every time when he shows you the ball in both hands, you can tell exactly if he has exchanged two balls.

He repeats it many times, so that you can't guess the answer every time in terms of probability. You can now convince your friends that the two balls are actually different, but since it is zero-knowledge proof, your friends still don't know which ball is green and which ball is red.

This idea is useful if I want to prove that a $10,000 amount has been sent to a specific address and I don't want to reveal who sent it.

Zero-knowledge proofs don't take up too much processing time, and proof of things can be quickly computed and tested.

All of this requires only a few passwords. A "view password" allows the user to view certain attributes of the transaction, and a "pay password" allows the user to control their funds.

But the zero-knowledge proof is not perfect. Its biggest drawback is that it requires a group of people to perform multi-party calculations in the initial stages of cryptocurrency creation. You need to believe that at least one of the members of this group is not a traitor. You also need to believe that there is no back door in the system .

If this group of people did not complete these tasks during the founding phase, you can also get a blockchain, but this blockchain is a flaw in the sky, and you can't roll back and fix it in the future.

Monroe Monero


After talking about the big zero coins, let’s talk about the Monroe.

Monroe Monero

For password punks that are very privacy-conscious, Monroe may be their first choice.

Just as Bitcoin’s founder, Nakamoto, has remained anonymous, many of the major developers of Monroe are also completely anonymous.

Monroe has been promoting its fungibility, why?

The Investopedia website defines alternatives as:

“Alternative means that goods, securities or instruments are the same and therefore interchangeable. In other words, they are products made up of many identical parts that can be easily replaced by other identical products. The weight or quantity is sold, which means they are replaceable."

But what does this have to do with cryptocurrency? What is the alternative in cryptocurrency?

It can be explained that if someone uses Bitcoin to engage in illegal activities, such as buying illegal drugs through the dark net, then these bitcoins, which are the trading medium, will receive the attention of the government. The government will monitor the circulation of these bitcoins. Capture criminals. Since it is no longer convenient to use, its value may also plummet, so these bitcoins will be difficult to spend in the future.

And the cash is different. We don't even know what the money in our pocket was used before. This is actually a good thing. As we often say, what happened in Las Vegas is left in Las Vegas.

The world's largest casino Las Vegas

We don't know if the one hundred dollar bill in hand was used to buy an ice cream cone or to make some illegal transactions. Whether or not this banknote was used for illegal purposes before it came to my hands was not related to me. My one hundred dollars is still worth one hundred dollars, and it will not shrink like bitcoin. I can still use it to make some legitimate transactions. I can use it to buy old books in second-hand bookstores, or use it to buy some fresh vegetables at the farmer's market. It is not monitored by the government because of where it has been or where it is held by someone.

Since all the transactions in Monroe are anonymous, this means that we don't know where the Monroe coins of these transactions come from, that is, it is like cash, and will not be monitored by the government because of the previous circulation process.

In addition to the interchangeability of the Monroe currency, the largest cryptographic basis for the Monroe currency may be the ring signature mechanism.

The circular signature mechanism originated in France in the seventeenth century. When the ministers went to the king, in order to prevent the king from tracing who led the signature, they invented a circular signature, and everyone’s name was Arranged in a circle, which hides the original order of the signatures, so that the source cannot be traced.

The ring signature mechanism of Monroe is to combine this idea with the public key + private key mode of bitcoin based on hash value, mix the public key of the sender of the transaction with another public key, and then carry out the information. Signed, and finally decrypted by the recipient's private key, so that the outside world can not determine which one of the transaction initiator's public key, so that the Monroe currency realizes the function of hiding the sender's address information, making the external attacker Unable to see the association between addresses.

That is to say, in the ring signature, a group of people needs to be brought together and they are allowed to sign messages or transactions together. As an outsider, I know that this group of people signed the deal, but I don't know which of the group has signed the deal, he may be anyone in this group.

How does the ring signature mechanism work in privacy-oriented cryptocurrencies?

This is explained on the official website of Monroe:

“The ring signature mechanism uses your account public key and many public keys (also called outputs) extracted from the blockchain by the riangular distribution method. Over time, past output can be Used multiple times to form a possible signing participant. In the "ring" of the possible signer, all ring members are equal and valid. External observers cannot determine which of the possible signers in the signature group belong to your account. Therefore, the ring signature ensures that the output of the transaction cannot be tracked."

In other words, Monroe coins mix the output of a bunch of trades, so it's hard to tell which trades belong to whom. If others are not sure which transaction belongs to me, then I can find a lot of reasonable reasons to deny this fact.

Small coin Zcoin

Next we will talk about the small coin Zcoin, which is an implementation of the Zero Coin.

Small coin Zcoin

The small coin uses the onion network that is commonly used by the dark net and one of its implementations: Tor, The Onion Router to try to keep the transaction secret. But using onion routing is not a new technology. The National Security Agency (NSA) and the US Federal Bureau of Investigation (FBI) have considerable experience in managing onion routing. They only need to revert one node or multiple nodes. So using only onion routing is not enough.

The Zero Coin Agreement was originally proposed by Professor Matthew Green of Johns Hopkins University and some graduate students. Their intention was to use Bitcoin as a privacy extension, but it has never been adopted. The Zero Coin Agreement provides anonymity by creating a rich currency service. Essentially, it puts together a bunch of cryptocurrency transactions and mixes them. Each transaction is mixed in a large number of transactions, so it is difficult to recover the input and output of the original transaction.

It sounds like money laundering, yes, Professor Green was inspired by the money laundering pool.

Currently, there are already rich currency services in Bitcoin, but they are all operated by third parties, which means you must trust this third party. If the third party providing the service is rebelled, then the voucher service loses its meaning and all your cryptocurrency transactions will be tracked. This is like using invisible ink to mark cash, except that the zero-coin protocol implements a coin service at the protocol level and does not need to trust any third party at all.

Designers of the Zero Coin Agreement and the Small Coin have considered that the protocol-level hybrid service is superior to the ring signature in terms of anonymity.

One of the biggest advantages of the hybrid service seems to be that it doesn't mix some output like a circular signature, but mixes thousands of transactions together so large that it's hard to anonymize.

According to the official website of the small coin:

The small coin has an anonymous set that stores all the small coins that have been dug in a specific RSA accumulator (a data structure similar in function to the Merkle tree). The RSA accumulator can be extended to Thousands.

The biggest drawback of small coin is that the amount of computation caused by these features is very large. According to the small zero currency entry on Bitcoin Wikipedia:

“Because the verification process of small coin is much larger than the calculation of bitcoin, the block verification time of small coin will be 6 times that of bitcoin, depending on the block size between bitcoin and small coin. proportion."

Some implementations of the Zero Coin Agreement, such as the Pivx (Private Instant Verification Transaction), seem to have solved the problem, but its development work is still in progress.

MimbleWimble Protocol with Grin

Let's talk about the MimbleWimble protocol.

Voldemort wants you to use the Mimble Wimble protocol

The MimbleWimble protocol has a wonderful and somewhat whimsical history, but it has attracted a large number of core bitcoin extremists to participate, and in their view the MimbleWimble protocol is the biggest innovation in the cryptocurrency field since Bitcoin.

In August 2016, the MimbleWimble protocol first appeared in a chat room channel called ITC (a live chat via the web) called Bitcoin Wizard. A person named "Voldemort" "published" the paper in the chat room.

This paper caught the attention of some cryptographers, including Blockstream (the company developed the Bitcoin Lightning Network) genius researcher and developer Andrew Poelstra, who fixed some of the flaws in the original design of the MimbleWimble protocol and introduced it. An updated version of the paper.

By the end of November 2016, an anonymous poster appeared in the IRC chat room channel. This time the publisher used another pseudonym Ignotus Peverell (invisible cloak inventor) from the world of Harry Potter. Perverell introduced the first working implementation of the Mimblewimble protocol, bringing the Mimblewimble protocol code to run and opening the code to open source on Github.

This open source project is Grin.

The emergence of Grin excites the old-fashioned Bitcoin extremists, because unlike many new cryptocurrencies, Grin does not give tokens to the founders, nor does it do ICO. People have to get Grin by mining, no one has an early advantage, so it is more "fair" than other newly issued cryptocurrencies, and no one has brought a bunch of millionaires.

Most importantly, the MimbleWimble protocol offers many incredible breakthrough innovations.

Grin brings all the deals together and it's almost impossible to separate one of them from any other.

In this regard, the overseas media Cryptobriefing explained very well:

“The MimbleWimble protocol improves the bitcoin model by creating a multi-signature for all inputs and outputs. The parties involved in the transaction create a public multi-signature key that can be used to verify the transaction. There is no address in the blockchain to participate in the transaction. The two sides share a so-called “blinding factor”, and only the two parties know that they are trading, thus protecting the privacy of the blockchain network.

The blinding factor is a secret shared between the parties to the transaction. It encrypts the input and output of the transaction and the public and private keys of both parties. The MimbleWimble protocol uses the Pedersen commitment mechanism, in which the full node subtracts the amount of encryption on the sending side (input) of the transaction from the amount of encryption on the receiving side (output) of the transaction. "

In other words, due to the confidential trading mechanism of the MimbleWimble protocol, it seems to be doing some homomorphic encryption. In other words, these encrypted data can be used directly without decryption.

Note: Homomorphic encryption, an encryption form that allows people to perform specific algebraic operations on ciphertext to obtain the result of encryption, and the result of decrypting it is the same as that for plaintext. In other words, this technology allows people to perform operations such as retrieving and comparing in encrypted data to get the correct results without decrypting the data throughout the process.

There is no address in the MimbleWimble protocol, which is very beneficial to protect privacy. Maybe the law enforcement agency will ask you to register your address or public key registration, but if there is no address in the blockchain, then no one can force you to do this. Only through the private key can you know how much money is in the wallet. And when and in the past did you trade with whom?

The MimbleWimble protocol is extremely scalable, storing only a small fraction of the data needed for the Bitcoin blockchain. The same number of transactions may require 1GB of space in Bitcoin's blockchain, while the blockchain based on the MimbleWimble protocol requires only 1MB.

In addition, Grin has joined the counter-measure against the ASIC mining machine sweeping the mining ecology. The powerful computing power of the ASIC miner runs counter to the idea that the blockchain is safe to mine by mining. The huge ASIC mine brings a centralized danger to the cryptocurrency.

Counter ASIC mining means that people can run full nodes on the network using common commercial hardware, which makes Grin more decentralized.

As the Bitcoin blockchain grows larger in the coming years, only those with a PB (1PB=1024TB) Storage Area Network (SAN) cluster can run full nodes, which makes Bitcoin will become highly central in the future, unless the industry is able to emerge some kind of shared distributed database solution.

But Grin's blockchain is much smaller, which means we don't have to worry about the centralization tendency of the blockchain. Using a smaller blockchain means mining can be done using only normal commercial hardware, so more people can run a full node, making cryptocurrency safer and more risk-resistant.

The more complete backups a blockchain has, the more secure it will be in the long run. Just like your DNA, you have a complete backup of your DNA in every cell.

Privacy and freedom

Many people think that in a cashless society, it is a good thing to withdraw cash from the historical stage.

They are all wrong.

Those who want privacy are not all criminals who attempt to conceal crimes. Everyone deserves the right to privacy.

You don't want others to look at your window when you change clothes, or to sneak behind you to read the email you sent to your friends. You don't want a big company to secretly monitor how you spend your hard earned money, and thus more With your spending habits, it is better to recommend another sweater or a pair of shoes for you.

We must have the power to say no to those in power at any given moment, otherwise we are only slaves in the slave society. Now, we are moving towards a new society in which centralized digital currency will drive cash out of the historical arena. By then, nothing can help you stay away from a prying eye in a round prison.

The digital traces of your life will be preserved forever. Anyone who is good or evil can “browse” your life in great detail by rolling back time, looking for anything they want to know, when you are aware of danger, It will be too late.

The only hope now is that privacy can be popular in the real world. If we can build a real economy around decentralized cryptocurrencies, let ordinary people get used to using cryptocurrencies and trust it, then defend the free cryptocurrency. It will become a parallel economic operation system in the world.

The centralized digital currency will continue to exist, but it will slowly die.

But if the decentralized digital currency is not popular, then this means that the centralized digital currency will be in absolute control, and the uncontrolled power is a disaster. The founding fathers of the United States are very aware of this truth and thus established The separation of powers.

One of the signatories to the Declaration of Independence, John Adams, the second president of the United States, once said: "If you don't have supervision, don't trust power."

The death of cash is a free death, and the privacy-oriented cryptocurrency will bring freedom to rebirth.

Source | Hacker Noon

Translation | Kingdom

Editor | Page

Produced | blockchain base camp (blockchain_camp) original title "Big data killing era, privacy is light, you have no freedom, and privacy is your lifeline!"

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