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Integrating Network-Layer Privacy Protections With Cryptocurrencies

Network Layer Privacy Cryptocurrency

Some of the emerging methods for deanonymizing users of cryptocurrencies stem from mapping network traffic to unveil IP addresses and making connections between identities. Privacy concerns around network-layer tracking by government surveillance programs and other avenues for unveiling identities across the Internet have led to several important developments to preserve privacy. The Tor Network and […]

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Some of the emerging methods for deanonymizing users of cryptocurrencies stem from mapping network traffic to unveil IP addresses and making connections between identities. Privacy concerns around network-layer tracking by government surveillance programs and other avenues for unveiling identities across the Internet have led to several important developments to preserve privacy.

The Tor Network and The Invisible Internet Project (I2P) are two of the leading overlay networks for users to protect their privacy over the public medium of the Internet. Other solutions include Mixnets, which are routing protocols using chained proxy servers to mix input messages.

In regards to cryptocurrencies, several privacy-oriented projects and upgrades to Bitcoin explicitly focus on enhancing protections at the network level.

Recent Revelations in Network Layer Attacks

Blockchain forensics methods for identifying users primarily focus on the protocol layer of analyzing a cryptocurrency’s transaction flow.

For instance, Bitcoin is pseudonymous, meaning that it is not actually anonymous, and links can be made between user addresses (public keys) and transaction inputs/outputs.

Most anonymity technologies integrated with cryptocurrencies today (i.e., zk-SNARKS, bulletproofs, and Ring CTs) focus on obfuscating transaction details over public networks to decouple any ability to link transactions to an identity at the protocol level.

RingCTs in Monero and zk-SNARKs in ZCash provide crucial mitigation against third-parties deanonymizing users, but they are also much more cumbersome than standard cryptographic transactions because they require proofs that are tacked on to each transaction.

However, both Monero and ZCash have recently integrated vital efficiency enhancements to these confidential transactions, with the recent bulletproof implementation in Monero and Sapling upgrade in ZCash.

While significant effort has focused on protocol-layer protections, publications mapping IP addresses through tracking transaction broadcast origins and subsequently making connections with identities (through public keys) have amplified concerns that protocol-layer solutions are not the only means needed to safeguard privacy.

When transactions in a public blockchain network — like Bitcoin — are broadcast from a node using the P2P network of TCP links, they use a gossip protocol (diffusion in Bitcoin) where the propagated transaction reaches a majority of the nodes very rapidly. Researchers have shown that by using supernodes connected to all of the network’s nodes, probabilistic inferences can be made about the origin of the transaction’s broadcast IP.

Successfully reducing the ability to make connections between IP addresses and public keys requires modifying the network stack to provide better protections against observers of transaction graphs. In Bitcoin, Dandelion++ is the proposed network-layer anonymity protection that is pegged for inclusion into the protocol in 2019.

What is The Dandelion Protocol?

Read: What is The Dandelion Protocol?

However, Dandelion++ is not the only solution available, and other projects are working on implementing their own solutions.

Overlay and Mixnet Projects

Overlay Networks

Both Tor and I2P are anonymity-focused and volunteer overlay networks. They do not provide perfect privacy, as privacy is a constantly evolving battle, but make deanonymizing users through network traffic mapping significantly more challenging. I2P and Tor have been around for years, and use end-to-end encryption to send data packets through relays of volunteer nodes, masking the origin and destination of the communication.

Tor uses what is called ‘onion routing’ (Tor stands for “The Onion Router”) where each relay in the network is randomly selected and propagates the message to the next node without knowing the origin or destination. As such, third-parties who attempt to use a relay for peering would not know the source or final IP address of the message.

Some drawbacks of Tor are that when you are using Tor, it is easy to know that you are using Tor, and the U.S. government — along with the previously mentioned academic paper on Bitcoin — have demonstrated attacks that can cut off Tor functionality for targeted users. Interestingly, Tor originated from the United States Naval Research Laboratory and was further enhanced by DARPA to protect intelligence communications in the 1990s.

I2P works similarly to Tor but employs ‘garlic routing’ rather than onion routing. Garlic routing is an off-shoot of onion routing and aggregates encrypted messages together. I2P is used in a variety of services, including programs using BitTorrent.

Kovri — Monero’s C++ implementation of I2P — is Monero’s baked-in network-layer solution to provide better privacy protections for users. However, recent events concerning its development and the mention of Sekreta as a possible alternative have left the fate of Kovri unclear at this point. It is worth mentioning that most of Kovri’s initial implementation has been completed after years of research and development.

Sekreta consists of a ‘universal’ API along with a set of libraries and socket-based application server designed to improve on the shortcomings of other overlay network designs. Created to be more user-friendly, Sekreta also aims to be more robust in the case of compromised underlying systems than Tor or I2P.

Mixnets

Mixnets are another network-layer privacy solution that use chained proxy servers that take in specific inputs (messages), mix them, and send them back out in random order to their destination. This is another method to mitigate peering through end-to-end communication, and each message is encrypted using public-key encryption.

Mixnets were proposed by cryptography pioneer David Chaum in 1981 but fell behind in favor of overlay networks like Tor and I2P over the years. However, they have been making a resurgence, with the Binance-backed Nym project a prominent example.

Nym is an anonymous authentication protocol for unlinkable and publicly verifiable credentialing, which they note can be an anonymous replacement for Google and Facebook sign-ins. Nym uses the Sphinx packet format with a Mixnet to obfuscate message origins and recipients and even creates dummy messages to make analyzing network traffic patterns more challenging. Interestingly, they are building a cross-compatible wallet for Mimblewimble blockchain protocols, as well as potential integration with other privacy-oriented cryptocurrency wallets.

Nym may also open the door for decentralized VPNs, which would remove the third-parties that oversee VPN services.

Bitcoin’s Lightning Network (LN) also uses Sphinx as its format for its onion routing protocol. Other proposed optimizations for the LN include HORNET — a high-speed onion routing protocol — and giving LN users more control over their network routing of payments through source-routing.

BEAM — a full Mimblewimble implementation — recently launched, and Grin — another open-source Mimblewimble implementation — also is set to launch in the next few days. Integrating Nym with a novel transaction construction protocol like Mimblewimble has the potential to produce robust networks for anonymous transfers of value. Grin and BEAM incorporate Dandelion as a network-level privacy protection too.

What are Grin and MimbleWimble

Read: What is Grin Coin & MimbleWimble?

Mixnets are also subject to their own vulnerabilities, however. Since mixers do not perfectly mix inputs and outputs, observers can use timing attacks creating gaps or artificial bursts to analyze patterns of incoming and outgoing messages through mixes.

Making Strides in Privacy

The persistent data scandals that have come to dominate mainstream headlines throughout the last several years have left a growing portion of the mainstream concerned about their privacy.

With privacy at a premium, the initiatives to innovate overlay networks, mixnets, and cryptography within cryptocurrencies has provided a viable alternative for anonymously exchanging information and value.

Efforts to subvert privacy are continually evolving, and it is refreshing to see so many projects with a heavy emphasis on matching those adverse efforts. Protocol upgrades such as zk-SNARKs and bulletproofs present significant strides in cryptography and their combination with network-layer solutions like mixnets and overlay networks have crucial long-term implications for the broader notion of privacy.

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Source: https://blockonomi.com/network-layer-privacy-protections-cryptocurrencies/

Blockchain

Fund Manager Bashes Bitcoin: An Extreme Form of Libertarian Anarchism

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As Bitcoin price makes headlines across mainstream and financial media, skeptics of cryptocurrencies have come out of the woodwork in droves.

The latest skepticism comes from Tim Bond, partner and portfolio manager at Odey Asset Management, who claims that Bitcoin has very little benefit to society, and instead is an extreme form of Libertarian anarchism. But could there actually be truth in the bold, blanket statement?

Tim Bond Bashes Bitcoin As Pointless, Vile, And Damaging To The Environment

Bitcoin is a subject that most economists, tech enthusiasts entrepreneurs, and fund managers alike are asked about these days, as the asset has ballooned from under $10,000 to more than $50,000 per » Read more

” href=”https://www.newsbtc.com/dictionary/coin/” data-wpel-link=”internal”>coin in less than one year.

Depending on who you ask, it is the most important technological revolution since the internet, while others might claim it is a bubble wait to burst.

Tim Bond, fund manager at Odey Asset Management, instead calls it “particularly vile,” “pointless,” and “damaging to the environment.”

Related Reading | Summing Up The Case For Crypto As The Future Of Collateral

Bond claims that Bitcoin isn’t only emitting more CO2 than most small economies, but that it is spearheading “a particularly extreme form of libertarian anarchism,” which he says is why the cryptocurrency is so popular amongst Silicon Valley types.

“If bitcoin starts to displace fiat currencies [government-issued currency that is not backed by a commodity], governments’ ability to tax, spend and redistribute will be severely impaired,” Bond continued.

bitcoin btcusd

As Bitcoin grows in value, the more disruptive power it wields | Source: BTCUSD on TradingView.com

Crypto Anarchist Future Prefers Consensus Over Forced Taxation

Bond, however, is absolutely right about at least one thing: Bitcoin could severely impact a “governments’ ability to tax, spend and redistribute” – a system that is arguably broken already.

Governments like the United States establish control over society through their money, and without that leverage, society won’t be as compelled to comply with taxation and other forms of control.

While much of this infrastructure was designed for the benefit of civilized society, governments have abused this control and how they redistribute wealth is a major ongoing economic problem that only Bitcoin has the potential to fix.

Related Reading | Why March Is The Bloodiest Month In Bitcoin History

By removing the government from the equation, it will require community consensus – something the crypto industry does well – to handle redistribution in the future.

Bitcoin has several key benefits that give the unique cryptocurrency its underlying value. It cannot be counterfeited, there are only 21 million BTC available ever, and much more. However, the greatest benefit of all could be the fact that governments can control it – something that Bond clearly can’t comprehend.

Featured image from Deposit Photos, Charts from TradingView.com

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Source: https://www.newsbtc.com/news/bitcoin/bitcoin-libertarian-anarchism/

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Chiliz (CHZ) rallies 60% to a $1B market cap as fan token offerings expand

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Nonfungible tokens (NFTs) and decentralized finance (DeFi) are two of the hottest concepts in the crypto sector, and each is altering the way projects and companies interact with the public on a wide scale. 

One project that is looking to apply these concepts into a framework for sports fan engagement is Chiliz, a blockchain platform created by the Socios fan engagement platform. The project is designed to allow fans to purchase branded Fan Tokens that let them influence their teams through the popular vote.

According to the project website, all Fan Tokens are minted on the Chiliz blockchain with on-platform voting being executed through a series of smart contracts.

Data from Cointelegraph Markets and TradingView shows that over the past month, the price of Chiliz (CHZ) has increased 760%, going from $0.022 on Feb. 8 to a new all-time high of $0.189 on March 8. CHZ trading volume also hit a 24-hour record at $1.92 billion.

CHZ/USDT 4-hour chart. Source: TradingView

The platform currently offers Fan Tokens for some of the most popular sports teams in the world, including FC Barcelona, Juventus, Paris Saint-Germain, AS Roma, Galatasaray and Atletico de Madrid.

Token launch sparked a strong rally

Momentum for Chiliz began to gather steam at the end of 2020 when the platform partnered with Binance to launch the ACM Fan Token for AC Milan on Feb. 24. The launch generated $6 million in revenue for the CHZ ecosystem.

ACM is part of a network of 23 major sporting and esports organizations that also have plans to work with Chiliz on launching Fan Tokens.

CHZ price received an added boost on March 2 when CEO Alexandre Dreyfus announced that the project would allocate $50 million to expand operations to the United States, and there are already plans to start working with local leagues and sports franchises.

VORTECS™ data from Cointelegraph Markets Pro began to detect a bullish outlook for CHZ on March 1, prior to the recent price rise.

The VORTECS™ score, exclusive to Cointelegraph, is an algorithmic comparison of historic and current market conditions derived from a combination of data points including market sentiment, trading volume, recent price movements and Twitter activity.

VORTECS™ Score (green) vs. CHZ price. Source: Cointelegraph Markets Pro

As seen in the chart above, the VORTECS™ score hit a high of 66 on March 1, less than 5 hours before the price of CHZ began to break out above $0.06. Following the price rise and consolidation above $0.11, the VORTECS™ score climbed to 69 on March 6, two days before the price surged to a new all-time high.

Currently, Chiliz is in ongoing talks with Formula One, and if the team is able to onboard popular U.S. sporting teams, the project could be well positioned to see further growth as blockchain technology and NFTs become more ingrained into the sports industry.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

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Source: https://cointelegraph.com/news/chiliz-chz-rallies-60-to-a-1b-market-cap-as-fan-token-offerings-expand

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Decentralized esports tournament series looks to bring traditional gamers to crypto

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Non-fungible token-focused investment firm Polyient Games is launching a new online tournament to introduce mainstream gamers to the crypto space.

In an announcement today, Polyient Games said it would be partnering with esports tournament platform Community Gaming for a $100,000 series featuring games using non-fungible tokens, or NFTs. The esports games will reportedly “function as a method of introducing mainstream gamers to the world of cryptocurrency and blockchain assets” by allowing players to acquire digital collectibles and use NFTs as in-game items.

“The marriage between decentralized technology and gaming will be one of the most significant themes of the coming decade,” said Craig Russo, co-founder of Polyient Games. “Our work with Community Gaming on this brand new decentralized tournament series serves as a major step towards bringing mainstream adoption to this new industry.”

In addition to esports games, the tournament will reportedly feature blockchain games including trading and battling game Axie Infinity and Ethereum-based digital trading card game SkyWeaver. All games will reportedly utilize Polyient Games’ decentralized exchange for in-game currencies.

The first event of the $100,000 tournament will begin on March 29, with prizes paid out in U.S. dollars and Polyient Games’ native token, PGU. 

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Source: https://cointelegraph.com/news/decentralized-esports-tournament-series-looks-to-bring-traditional-gamers-to-crypto

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