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What Are Privacy Coins? Monero, Zcash, and Dash Explained

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In brief

  • Some cryptocurrencies, called privacy coins, shield potentially identifying information using an array of cryptographic techniques.
  • Privacy coins can be popular for ransomware and other illicit uses, and have come under increased scrutiny from regulators and government agencies.

The pseudonymous nature of Bitcoin addresses enables transactions without identifying personal information, but that doesn’t make it a completely anonymous cryptocurrency. Because the entire transaction history lives in public view on a blockchain, it can be possible for investigators and firms to piece together people’s identities based on the movement of coins and details held within addresses.

That’s where so-called privacy coins come in. Cryptocurrencies like Monero (XMR), Zcash (ZEC), and Dash (DASH) use varying cryptographic techniques to obscure details around transactions and better shield users from prying eyes.

Advocates of privacy coins argue that they can be used for perfectly legal purposes by anyone eager to avoid potential oversight by external parties, enabling the user to control what information they choose to share with companies and organizations. Furthermore, privacy coins bring the level of transactional privacy already enjoyed by users of physical cash to the digital economy.

However, the flip side is that privacy coins have become popular for ransomware payments, criminal transactions on the dark web, and money laundering. As a result, they’ve attracted significant attention from law enforcement and regulators. Here’s a look at how privacy coins work and the most popular coins today.

How do privacy coins work?

Varying privacy coins work in different ways, but the end goal is the same: they’re all designed to hide details like addresses and amounts transacted, so that it is extremely difficult if not impossible to piece together which parties participated in a transaction.

Some privacy coins create a new, single-use address for each transaction called a “stealth address,” so that there is no apparent way to link multiple transactions to a single source. Another technique called zk-SNARK (Zero-Knowledge Succinct Non-Interactive Argument of Knowledge) uses advanced cryptography to encrypt identifying information. You can read much more about zk-SNARKs here.

Ring signatures are used by some coins, including Monero. They link together multiple user addresses to anonymously sign transactions without revealing which address ultimately signed it. Meanwhile, Mimblewimble—which, yes, really is named after a Harry Potter spell—is a streamlined blockchain design approach that keeps a more compact history than traditional blockchains, and does not reveal identifying information to the public.

Some coins also use a process called “CoinJoin” that mixes together transactions from various senders and then disburses the funds across recipients. CoinJoin is also available as an optional mixing service for Bitcoin, which helps obfuscate transactions.

Did you know?

Litecoin, which is not currently a privacy coin, may implement MimbleWimble as an opt-in privacy feature. As of March 2021, the proposed upgrade was code-complete and ready for auditing.

What are the main privacy coins?

Monero: Monero is the best-known privacy coin and has the largest market cap of the bunch, as of this writing. Forked from an earlier coin called Bytecoin in 2014, Monero anonymizes critical details such as both the sender and recipient, as well as the amount of the transaction, using techniques such as ring signatures and single-use addresses. Each coin is also fungible, unlike with Bitcoin, because they are indistinguishable and have no traceable history.

Monero is a favorite of hackers and is often used for ransomware demands, plus it thrives on the dark web: the popular White House market only accepts Monero, for example.

Zcash: Heavily influenced by Bitcoin (and featuring the same 21 million coin cap), Zcash implements zk-SNARKs to ensure that all needed conditions are met for a valid transaction without exposing any personal, confidential data. Zcash offers multiple transaction types ranging from fully public to fully private, so it’s potentially more regulatory-friendly than Monero, and fully shielded transactions can include private memos, as well. Zcash development is led by the for-profit Electric Coin Company.

Dash: Forked from Bitcoin with the aim of improving upon the original cryptocurrency, Dash can mix multiple transactions with CoinJoin (called PrivateSend) to obscure potentially identifying details. Dash similarly makes its privacy features optional, and also has an InstantSend option for rapid transactions that are confirmed within two seconds. Dash has found popularity in countries that have seen enormous inflation with their respective fiat currencies.

Did you know?

Dash was previously called Darkcoin. Given the name’s association with dark web marketplaces and other nefarious purposes, it was unsurprisingly renamed to Dash in 2015.

Are privacy coins legal?

Coins that enable anonymity, like the privacy coins mentioned in this article, have been banned in Japan and South Korea. They are currently legal in other jurisdictions where cryptocurrency is more broadly legal, but some exchanges are wary of potential battles with regulators ahead.

In June 2020, Coinbase founder CEO Brian Armstrong admitted that he personally wanted to list Monero, but that “behind-the-scenes conversations” with regulators convinced him that it wasn’t a battle worth waging right now. “We don’t know if this is a hill we want to die on, and we have to make a lot of tough calls like that,” he said. However, Armstrong believes that regulators will become more comfortable with privacy coins over time.

Fellow exchange ShapeShift delisted Monero and Dash in November 2020, while Bittrex delisted Monero, Zcash, and Dash in January 2021. The latter cited “evolving regulatory standards and other compliance issues” as part of its reasoning for delisting privacy coins. As of this writing, popular exchanges Binance and Kraken both list all three leading privacy coins.

The future of privacy coins

Along with the perceived threat of additional regulation, government agencies and analytics firms are also stepping up their attempts to crack privacy coins. In September 2020, the United States Internal Revenue Service (IRS) confirmed that it had awarded a pair of contracts worth as much as $1.25 million in total to firms attempting to develop Monero tracing tools.

In November 2020, blockchain forensics firm CipherTrace—which works with the US Department of Homeland Security—filed patent applications for Monero tracing tools. And in May 2021, Norway’s National CyberCrime Center revealed that it was trying to crack both Monero and Dash in a missing persons case. Whether any of these efforts produce reliable tracing tools remains to be seen, but there’s a lot of government interest in finding ways to break open privacy coins.

All the while, these coins are gaining popularity. Monero’s price soared 30% in May 2021 after the U.S. government announced a proposal to make businesses report high-value crypto transactions. Many crypto traders seemingly want to keep their transactions truly private, even amidst seeming regulatory and compliance challenges ahead.

Where can I go to find out more?

To learn more about the technologies underpinning privacy coins, and the coins themselves, check out:

Source: https://decrypt.co/72352/what-are-privacy-coins-monero-zcash-and-dash-explained

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El Salvador to airdrop $30 in Bitcoin to every adult citizen

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The president of El Salvador  has announced the government will airdrop $30 worth of Bitcon (BTC) to every adult citizen of the country.

The announcement was welcomed by Bitcoiners, with influencers speculating El Salvador’s government wil need to purchase the required BTC it intends to distribute adding more than $100 million in buying pressure on markets.

Quickly googled estimates of the adult population of El Salvador varied, with onchain analyst Willy Woo tweeting that Bitcoin’s global user base will grow by 2.5% thanks to the influx of 4.5 million Salvadorians.

Others placed the Salvadoran adult population as high as 6.5 million (which is actually the total population), with Yahoo Finance anchor Zack Guzman using the figure for some rough back of the envelope calculations suggesting that $195 million worth of Bitcoin will be airdropped across the country.

Exact figures are hard to find but Statista shows that in 2019 the population aged 15 and above was 4.72M.

However, crypto Twitter’s euphoria may be be slightly premature, as local publication Prensa Latina notes El Salvador’s citizens will only receive the free Bitcoin after downloading the government-issued cryptocurrency wallet application.

The news was announced during a June 25 press conference, with President Bukele stating the government’s “wallet app will even work anywhere with a cell connection, and you won’t have to have a cell plan for the app.”

President Bukele also stated that the country’s much-celebrated Bitcoin law recognizing BTC as legal currency nationwide will come into effect on September 7.

Related: Opposition poses constitutional challenge to El Salvador’s Bitcoin law

El Salvador’s Bitcoin law was passed roughly two weeks ago. While the move has been praised by the global crypto community, the legislation has faced opposition from a minority political party and the World Bank.

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Source: https://cointelegraph.com/news/el-salvador-to-airdrop-30-in-bitcoin-to-every-adult-citizen

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Ethereum London upgrade launches on testnet as 100K staked in a day on Eth2

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Ethereum’s forthcoming London upgrade, containing the highly-anticipated Ethereum Improvement Proposal (EIP) 1559, has been deployed on the Ropsten testnet.

Following the June 24 launch on Ropsten, London is now expected to progress through Ethereum’s Goerli, Rinkeby, and Kovan testnets at roughly weekly intervals — from which point the Ethereum community expects a date for mainnet deployment to firm up.

The new upgrade will see transaction fees burned. According EIP-1559 tracking website, Watch the Burn, roughly 88,500 testnet ETH nominally worth $177.6 million has been burned on Ropsten over the day since London’s deployment.

The high rate of Ether being burned on Ropsten has reignited discussion regarding whether EIP-1559 will render Ethereum deflationary — where more ETH is destroyed than new supply enters into circulation — and what this could mean for Ethereum’s price moving forward.

However, EIP-1559 is not the only upgrade that the community is looking forward to from London, with David Mihal of CryptoFees describing EIP-3074 as “fixing one of Ethereum’s most overlooked security issues” to do with approvals.

Related: A London tour guide: What the EIP-1559 hard fork promises for Ethereum

Coincidentally or not, crypto data aggregator, CryptoQuant, identified that 100,000 Ether had been deposited into Eth2’s staking contract around the same time as the launch, worth roughly $200 million.

CryptoQuant also noted that more than 5% of ETH’s supply is currently locked in staking worth approximately $11.75 billion.

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Source: https://cointelegraph.com/news/ethereum-london-upgrade-launches-on-testnet-as-100k-staked-in-a-day-on-eth2

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Crypto Companies Innovate to Serve Their Users Better

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The quest to leverage the crypto and DeFi boom means crypto companies must constantly be innovative to serve their users. If company “A” doesn’t do it, there is every certainty that company “B” will fill in that gap. TrustToken, Phemex, and Kryll are among the many crypto companies constantly innovating and launching new features on their platform. In this article, we shall look at some of the ways these companies are evolving in order to meet the demands of their users, and serve them better.

New $USDT lending pool by TrustToken

On June 18, 2021, TrueFi launched a new USDT lending pool for collateral-free loans. According to Head of Strategy Ryan Rodenbaugh, USDT remains one of the most demanded assets by crypto borrowers – and the new pool has grown rapidly in both size and utilization.

Growing these lending pools was helped by lucrative incentives: depositors enjoyed loan interest and generous TRU token rewards totaling more than 40-50% APY. In lending, utilization is key: with much of the capital sitting unallocated, are TrueFi users “overpaying” for stablecoins deposits?

TrueFi governance was quick to respond: a new proposal adjusting pool incentives based on utilization, pegging incentives for given lending pools (of TUSD, USDC and USDT today) to their rate of borrowing – dynamically – helping TrueFi reward the most productive assets.

The pools add a new way for crypto holders to earn returns while sitting in the safe haven of stablecoins during the market’s swings. In fact, TrueFi pools may offer some of the highest earning opportunities on stablecoins – and are free of impermanent loss.

Phemex launches Learn and Earn on its platform

Since its launch in 2019, Phemex crypto and futures trading exchange has been making giant strides in the crypto space. The platform offers spot trading, contract trading, and futures trading. It seeks to position itself as the most trusted in the industry.

In its bid to educate beginners on the crypto and blockchain industry, Phemex has recently launched its “learn & earn” program. The purpose of the new feature is strictly to incentivize new crypto users.

The new feature comes with interactive videos and other intuitive lessons designed for beginners. To motivate these learners, the crypto exchange has come with a way for learners to earn rewards while they learn. At the end of each lesson, users will be presented with a short quiz for them to provide the right answers. If a user answers all the questions correctly, the user will receive a reward from the platform. This becomes a good motivation for learners to pay attention and be serious throughout the learning process.

No more struggle to understand jargon-filled information

The “learn & earn” program is designed to be beginner-friendly and offers learners a fun and easy way to understand cryptocurrency basics. Users will first learn about Phemex’s essential features and how each feature works. The program also explained how cryptocurrency works and how beginners can trade cryptos on exchanges.

Kryll allows users to create their own crypto trading strategies

Krill is a crypto trading marketplace where users can create and own trading bots. There are currently more than 270 active trading strategies on the platform. Users can also publish their trading strategies for other users to use, and the publisher makes good profit in the process. In its bid to offer efficient services to users, Kryll developed tools that allow its users to create powerful trading bots for Binance, Kraken, and Bittrex. The interesting thing is that users don’t need to have prior coding skills to use this new feature on Kryll. Creating your trading bots on the platform is as easy as drawing on a whiteboard.

Users no longer have to constantly stay in front of their computers to trade. These bots are hosted in the cloud and operate 24/7. As a user of Kryll, you can now leverage the trading bots to save time and optimize your profits.

The platform also has a marketplace which gives users access to a community of experienced crypto traders who automate their trades on Binance, Kraken, Bittrex, and HitBit. Users can test, rent and offer automated trading strategies with each other.

Building better interaction with users

The innovative approach of crypto companies like TrustToken, Phemex, and Kryll is the tip of the iceberg, considering the high number of features introduced in the crypto space every day. It is an indicator that the cryptocurrency industry is still growing, and there are still more grounds to cover. TrustToken, Phemex, Kryll, and other crypto platforms are persistently leveraging the crypto boom to interact better with their users.

Image by Arek Socha from Pixabay

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Source: https://bitcoinist.com/crypto-companies-innovate-to-serve-their-users-better/?utm_source=rss&utm_medium=rss&utm_campaign=crypto-companies-innovate-to-serve-their-users-better

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