Anonymous cryptocurrencies: why Edward Snowden supports the concept of proof with zero disclosure

Translated by Maria Ageeva, Binary District

On February 6, ZCash CEO Zuko Wilcox and Ergo Platform founder Alexander Chepurny will discuss the basic principles of the protocol with zero disclosure, as well as the specifics of ZCash, Bitcoin, Ethereum and other cryptocurrencies on the blockchain-mitap Zero knowledge proof protocols .
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The problem of the lack of confidentiality of transaction data is relevant for the vast majority of public blockchains, measures to solve it are proposed by the creators of anonymous cryptocurrencies.

Bitcoin, Ripple, Ethereum, Bitcoin Cash and Litecoin are the 5 largest in terms of market value and cryptocurrency capitalization. Each of them is potentially vulnerable to a variety of attacks, which increases their attractiveness to fraudsters. Using blockchain explorer, you can easily track the origin and purpose of transactions, amounts, hashes, etc.

Riccardo Spagni, chief developer of Monero, the first multi-billion dollar cryptocurrency exchange, emphasized the importance of measures to ensure the confidentiality of transactions.

He is convinced that the guarantee of personal data security is important for all cryptocurrency users, and not only for those who, for whatever reason, often associated with criminal activities, are forced to act with extreme caution.

“Insufficiency of measures to protect information about transactions can have certain consequences - from pursuing targeted advertising to you, which is fueled by information about your consumer habits, to a threat to your life and health. I paid with Bitcoins - and now the seller already knows the amount of funds available in your account, or even worse - you are threatened with a knife, ”Spagni said.

On December 28th, one of the concerns of FluffyPony was confirmed. According to the BBC, Pavel Lerner, CEO of the Exmo cryptocurrency exchange, was attacked in Kiev. "Men in Balaclava" threatened Lerner with a knife, and then forcibly put him in a black Mercedes Benz. There is an assumption that the kidnappers intended through Lerner to get access to large amounts of funds in the cryptocurrencies that are on the exchange.

Exmo spokesman Anatoly Larin noted that user funds remained safe, as Lerner’s job duties do not imply that he has access to them: “Despite this incident, the stock exchange is operating normally. Pavel’s activities in our company do not include work with storages or personal data of users. All customer funds are safe. ”

Anonymous cryptocurrencies: Zcash, Dash, Monero, Verge

Zcash is the first cryptocurrency developed on the basis of a probabilistic proof protocol with zero knowledge proof protocol. This protocol potentially allows processing confidential and anonymous transactions in cryptocurrencies of any blockchain network.

Cryptocurrency Monero gained fame thanks to the activity of the developer community and the proposed technological solution, which is quite interesting. But despite this, it was not possible to achieve the popularity of a wide range of cryptocurrency users due to the incomplete wallet interface and a number of other functional difficulties. Last year, Jaxx representatives canceled Monero integration for technical reasons.

The founder and president of Jaxx, Etoni Iorio, (Anthony Di Iorio) said that until the technical problems impeding the integration of Monero are resolved, Monero will not be able to compete with currencies such as Dash and Zcash, even though it uses a fairly progressive technology.

“We have been discussing the integration of Monero for over a year. For several months, we thoroughly studied Monero, developed integration scenarios, ”Di Iorio said. - We also identified critical drawbacks of cryptocurrency, which can significantly complicate its further development. Until these shortcomings are eliminated, you should not count on a wider use of cryptocurrency. ”

High hopes for ensuring security and privacy of transactions are pinned on Zcash. Anonymity of transactions is achieved by hiding confidential information, such as entry and exit points of a transaction, as well as data about the sender and recipient.

Blockchains that use the zk-SNARK protocol, the underlying cryptocurrency, can immediately proceed to anonymous transactions. Several projects with a multi-billion dollar capitalization, in particular, Ethereum, have already begun active study and implementation of the protocol.

In July, Christian Reitwiessner, lead development team at Ethereum Solidity and C ++ Implementation, said that the first anonymous transaction Zcash was registered on the Ethereum test network.



Transaction Zcash to EtherScan. As you can see, there is no information about the entry point and exit point, as well as the data of the sender and receiver.

“For authentication, only one component of the real transaction taking place on the Zcash network is used - the zk-SNARK protocol. Apparently, the transaction was conducted in January. I don’t know who created the transaction, what amount was sent, but the Ethereum network “knows” that the transaction is reliable, ”Reitweissner said.

On October 16, the zk-SNARK protocol was successfully integrated into the Ethereum network via the Byzantium hardfork. During the week, several developers - members of the Ethereum open community worked on a confidential transaction on the Ethereum test network, as a result of which it was found that an anonymous transaction of up to $ 72 billion could be conducted on the Ethereum network.

Why Snowden supports the concept of zero-disclosure evidence

Former employee of the National Security Agency Edward Snowden (Edward Snowden) explained that the integration of Zcash into the Ethereum network will have a positive effect on network users and on the development of decentralized applications.

Agreeing with the creator of Ethereum Vitalik Buterin, Snowden suggested that "the evidence with zero disclosure is the future of safe trading." He added: “Zcash privacy protection technology makes this currency the most interesting alternative to bitcoin. Bitcoin is good, but does not guarantee anonymity, and therefore is not safe. "

Snowden responded to critical reviews about the trusted setup used in Zcash, according to which 6 people were to take part in the installation procedure. One of them, by the way, was Peter Todd, the developer of Bitcoin Core. Each of the 6 participants had to remove their own part of the Zcash secret cryptographic key, otherwise the network would not be able to be activated.

“The procedure is designed in such a way that the chances of compromising each of its participants (which is the only way to harm the system) tends to zero. In this case, the emergence of a hidden flaw in modern cryptography seems to be a much more possible option, ”noted Snowden.