Cryptocurrency anonymity, an in depth explanation of the basics of cryptocurrency personal privacy protection
Following the whole industry has heatedly discussed and started to solve the "scalability" issue of blockchain public chain projects, we believe that the next important issue worthy of the complete industry's attention will undoubtedly be how blockchain technology can perform "privacy protection". A difficult problem. Several technology-driven projects that have emerged this year have got regarded "personal privacy protection" as the core direction and also have started to explore in depth with this field.
This can be a huge and complex topic. Actually, many fallacies are widespread. Thanks to two youthful scholars in the United States for writing an article on the basics of blockchain and cryptocurrency "personal privacy protection". Link Wen recommends it to visitors, hoping to help visitors clarify and realize the basic information with this industry. For advanced visitors, it is strongly recommended to learn another in-depth write-up previously published by Lianwen: "Go through the blockchain personal privacy protection technology and the panorama of related projects." Even though article introduces popular knowledge, it is still a "hardcore" technical article that requires time to think and understand. The ultimate way to read is to "collect" first and read meticulously. And, you are invited to ahead it to spread valuable info to more folks. Enjoy reading! Within the description of the media, cryptocurrency often has its own "anonymity" attribute, but other articles pointed out that cryptocurrency transaction activities could be effortlessly traced, a lot more effortlessly than fiat currency transactions. To reach agreement between these two statements, you should understand: What exactly does the personal privacy protection of cryptocurrency suggest? This question isn't as easy to answer since it seems, because "privacy protection" also offers many levels of meaning within the blockchain world. To become developer, an investor, or perhaps a participant of cryptocurrency well versed in blockchain technology, you should know very well what "privacy protection" actually means within the encryption system. We write this short article to share a few of our own encounter and skills in this respect. Imagine that Alice opens a Venmo account, a little payment portable app in the United States that is acquired by Paypal. She must supply and verify her real name. Because Venmo understands her real name and could share this information with others, Alice manages to lose part of the personal privacy of her identity. If Bob transfers $20 to Alice through Venmo and gives the transaction in her info stream, after that Alice's transaction info has been produced public, but just Venmo knows how much money she has on her behalf personal account up to now. do not know. Imagine Alice creates a Bitcoin deal with and asks Bob to exchange her $20 value of Bitcoin. Compared with the Venmo transaction, Alice has acquired certain personal privacy protection in terms of her real identity, because her Bitcoin deal with is not associated with her real name. However, the fact that Bitcoin is transferred from Bob's deal with to Alice's deal with and the total amount of Bitcoin after Alice receives the Bitcoin exchange are transparent info to everyone within the Bitcoin blockchain. Therefore, we can understand that using Bitcoin, Alice provides achieved privacy protection in some elements, but lost privacy in other aspects. This situation is commonplace when using different cryptocurrencies for transactions. Within the cryptocurrency world, we believe that privacy protection mainly includes three amounts:
* The identity information of an individual who uses cryptocurrency to perform certain operations
* The specific transaction data within the user's corresponding operation
* The overall condition of the blockchain that gathers all transaction information The blockchain protocol can use cryptography, making it impossible or extremely problematic for outsiders to know or calculate the various parts of each of the above links. At exactly the same time, attackers who want to mine the features of the blockchain can synthesize various pieces of info to guess as well as directly summarize the information they want. The method of personal privacy protection is to expose as little info as you possibly can to possible attackers in specific attribute places through protocol style. The important thing is that whether a particular attribute belongs to the category of privacy protection isn't so monochrome. By way of example, it is transparent info to some external observers, but additional external observers are not clear, or external observers might be able to guess by chance, however, not always. This ambiguity means that easy statements such as for example "XX foreign currency can ensure personal privacy" or "A foreign currency is preferable to B foreign currency in privacy protection" tend to be untenable. And sometimes the wording isn't cautious, this sort of statement could cause dilemma and misunderstanding, therefore some people meticulously arrange such a statement to mislead others. We recommend a far more careful statement, such as for example "Monero's transaction amount is protected as privacy" as well as "Because of certain anonymity environment of ZCash, the sender's deal with is protected as privacy". Later in this specific article, we shall discuss: In some cases, cryptographic tools such as for example zero-knowledge proofs can help us quantitatively analyze such promises, and even provide strict proof. First, let us start with the privacy protection related to cryptocurrency. Identity information personal privacy, that is, anonymity When individuals hear the term privacy, the very first thing that comes to mind is often anonymity, meaning user behavior isn't related to their real-world identity information. One way to achieve this privacy protection may be the easy "pseudo-name" method; in fact, we are familiar with making use of pseudonyms when getting various network services, such as the registered email name [email protected] instead of using real names. . In cases like this, in most interactions in this network protocol, the real/legal name of the owner of [email protected], assuming the name Alice Jones, will never be exposed. Generally in most cryptocurrency systems, such as for example Bitcoin, users get a pair of public/private key signatures. The public key is comparable to the username and the private key is comparable to the security password. The key point is that only when someone understands whether your accurate private key is acquired legally or illegally stolen, can you make the information "authorized" by you. Within this sense, anyone can use your public key to see the private key. Information sent by individuals. This feature allows users to utilize one of the public secrets or addresses they have to receive cryptocurrencies such as for example Bitcoin, and use their own private keys to deliver cryptocurrencies, all minus the intervention of a centralized authority. These ideas type the cornerstone of contemporary mathematical cryptography. Nevertheless, having a private/public key pair is just a way to "work with a pseudonym" to disguise your correct identity inside a decentralized environment. "Using pseudonyms" is generally a normal attribute of the process behind encrypted currencies, which makes the media and the public mistakenly believe that all encrypted currencies are "anonymous", or at least possess stronger anonymity than just using pseudonyms. And in addition, this misunderstanding pushes users to utilize cryptocurrency for illegal activities, such as for example online gaming or dark internet transactions. However, the real level of personal privacy protection may disappoint these users. They can certainly use public addresses to deliver or receive bitcoins, and their real names are not mixed up in transaction, but specific actions of users can link the public addresses making use of their real identities in real life. First of all, most users purchase bitcoins in fiat currencies within the swap. Fiat currency dealings usually need to be from the current bank operating system, which must verify the real identity of real life. Because all transaction data in Bitcoin is totally public. As mentioned in the previous section, this means that everyone can easily see the swap database and associate specific addresses with real identities in real life. Take a good example to illustrate: If Alice withdraws 0.1 Bitcoin from Coinbase to an deal with she controls, such as for example 36n452uGq1x4mK7bfyZR8wgE47AnBb2pzi, then Coinbase will link her real name to this deal with. If she withdraws 0.2 Bitcoin from an illegal online sports activities betting site, exterior observers might infer, and can provide non-tamperable open public evidence that Alice is involved in illegal online gaming activities. Companies such as for example Chainalysis have got adopted this sort of technology called blockchain analysis, linking open public addresses towards the identity of the owner behind them, and analyzing the direction of transactions.
The picture shows an early case of blockchain analysis from 2009 to 2012; data source: Subsequently, to conduct cryptocurrency transactions requires sending quite a few information via the web. In some cases, interactive metadata may be used to track the IP address used by an individual to initiate these transactions. Even if the user uses a so-called secure internet browser like "Onion Tor", the IP address may be tracked. The mix of the above two reasons means that the usage of metadata for anonymous transactions based on the characteristics of the "usage of pseudonyms" of cryptocurrency alone is an "impossible task." Privacy protection of transaction data When people discuss so-called "personal privacy coins," they usually mean that dealings in these currencies possess privacy protection in a few respects. Broadly speaking, a transaction is an action taken by way of a user to change the state of the blockchain. For example, Alice transmits X tokens from an deal with she controls to an deal with Bob controls. Through the perspective of Lord, this extremely simple example also includes multiple data:
* An deal with of Alice, such as for example 36n452uGq1x4mK7bfyZR8wgE47AnBb2pzi
* Link between Alice and Bob address
* An deal with of Bob
* The number of tokens sent More complex dealings will contain other styles of information, such as for example smart contract rules in Ethereum. Different blockchains display transaction data in various ways, a few of which enable certain links to be invisible to third parties, and third parties can only see the authentic data of the blockchain. Consequently, we called this area "Privacy Safety of Transaction Data" instead of "Privacy Safety of Transaction", because various kinds of transaction data can receive matching privacy protection to different degrees. Among the data that can be guarded by privacy, the main are the addresses of Alice and Bob. If they're guarded by privacy, they'll not be able to identify the real identities of the sender and recipient of the transaction, and can obstruct the blockchain analysis technology mentioned previously. For example, if Alice purchases Monero coins with such technical characteristics from the swap Binance and withdraws the coins, Binance cannot associate this withdrawal with how Alice will dispose of these Monero coins later on. Likewise, if Bob receives Monero from Alice, he'll not know that Alice bought these Monero from Binance.
But to help expand complicate the problem is whether the transaction data is secretive isn't a monochrome issue. For example, taking Alice's deal with for example, this is measured by how big is the anonymity place, which refers to the tiniest set of transaction sender addresses that can be identified predicated on blockchain data. The bigger the anonymity established, the less information about the sender within the blockchain transaction data. For example, the anonymity place dimension of Bitcoin is 1, while the anonymity group of Monero is a lot larger. State secrecy. Within the Bitcoin blockchain, all transaction data is public, meaning an external observer who sees all the blocks within the blockchain can restore the ledger and find out the account levels of these addresses despite these amounts May be designated to various "unused transaction output UTXO", which is what we should call the entire state of the blockchain. Nevertheless, if some parts of the transaction are secret, even if the information of the entire blockchain is learned, the user will never be able to understand the overall status. This information is shared among various users, and the blockchain warranties the persistence of user info.
Even though user's knowledge of a specific attribute within the blockchain state only depends upon the agreement and the transaction information that triggers the forming of this state, the connection between your two will trigger complex interactions. Consequently, the different features of the state can be guarded by privacy somewhat. Here are a few examples:
* List of all addresses
* The balance of a particular address, such as for example 0x2569C92345013F55CFb47C633c57F2f5756B9acA provides 1 ETH
* The clever contract code on a particular address, for example, the encrypted kitty contract within the address 0x06012c8cf97BEaD5deAe237070F9587f8E7A266d
* The specific condition of the agreement, such as the data stored in the encrypted kitty contract To give a straightforward deduction example: the number of each transaction in ZCoin is public, however the sender and receiver addresses are secret, meaning the user balance is still secret information. Alternatively, in the personal privacy protection blockchain format Mimblewimble, the specific level of each transaction is secret, however the sender and recipient are public, which gives another way to protect the personal privacy of user account balances. Customers in Mimblewimble must keep the information of their account balance, because the blockchain just stores limited info to make sure that users won't overspend. Generally, adding more privacy protection actions to transactions is effective to individual users, however, not necessarily good to the entire state of the blockchain. For example, if the full total issuance of a certain cryptocurrency is private, users cannot judge specific attributes such as the total supply schedule within the blockchain process; in addition, it is difficult to acquire attackers making use of algorithm vulnerabilities or process backdoors for unauthorized coinage . Privacy protection features in a few existing blockchain protocols Different personal privacy protection methods. Up to now, we have mainly focused on whether specific information is public or secret. Furthermore, it is helpful to straighten out the personal privacy protection methods of different blockchain technologies. We roughed out these various personal privacy protection methods. "Level 2" agreement "Layer 2" protocols built within the fundamental technology of the blockchain, such as for example Lightning Network, Condition Channel Technology, or Plasma, allow a small amount of users to carry out "off-chain" transactions with one another. This means that all intermediate states are saved between these users, and only regular state changes are written on the main blockchain. Therefore halfway states are unseen to external observers because they have never already been written to the main blockchain. Needless to say, the second coating protocol itself may also possess or choose not to supply different levels of personal privacy protection for the off-chain state for all users, so this is more dependant on the design idea as opposed to the personal privacy protection technology. Consequently, we will not further focus on the second coating protocol, although within the eyes of interested visitors, there's a vast selection of content that can be excavated. For specific details about the development of the "second-tier" process, it is strongly recommended to make reference to the article previously published from the chain: "Ethereum is not any longer the only option, the second-tier project is facing a battle for the new ecosystem. Mixed way The hybrid method is to adopt different privacy protection strategies on the input and output of the transaction and merge them right into a big transaction, deliberately obscuring the address of the sender and the receiver. This includes a number of the oldest personal privacy protection strategies within the crypto globe, such as for example tumblers, CoinJoin, Mimblewimble, and Monero. Zero-knowledge proof Once the agreement user supplies the zero-knowledge proof, there is privacy protection based on the zero-knowledge proof, for example, the data of a certain message is displayed based on not displaying the message itself. When applied properly, this encryption technology can at the same time protect the personal privacy of dealings/states and the complete functionality of the blockchain. Regarding "Zero-Knowledge Proof" related knowledge, it is strongly recommended to make reference to the article previously published by String Wen: "A tragedy due to Sudoku: What is Zero-Knowledge Proof" Guidelines for users Even if they use cryptocurrencies that do have no privacy protection features attached, users still have methods to reduce the chances of network security threats and blockchain analysis technology to a certain degree. In order to avoid malicious people from making use of network metadata to strike users anonymously, users can use Tor or I2P to cover up the initial IP of their transactions. In order to withstand blockchain analysis, it is usually recommended that users change to a fresh address for every payment obtained. Cryptocurrencies such as for example Monero and Verge supply this feature as a indigenous option. Needless to say, in a few cryptocurrencies, these addresses can be from the user's subsequent procedures. Trusted Execution Environment TEE A reliable execution environment is really a processor, such as for example Intel SGX, which promises in order to utilize cryptographic technology to safeguard the integrity and confidentiality of the data and code running on it. A number of agreements, which includes Ekiden's commercialization by Oasis Labs directed by Professor Melody Xiaodong, declare that they will adopt a reliable execution environment. For example, user account amounts could be encrypted by way of a private key and saved in a reliable execution environment. They are able to only be decrypted and improved within the "respected execution atmosphere". This actually delegates the responsibility of ensuring personal privacy protection towards the respected execution environment, and the respected execution atmosphere itself may have its weaknesses. For example, a side chain attack might be able to break the private key. Intel SGX broke such a vulnerability earlier. Furthermore, the existing respected execution environment may necessitate the manufacturer's permission or allow the producer to break the data confidentiality. Needless to say, Keystone Alternatives such as for example Gradient and Gradient try to solve this problem. Concerning the specific development of Oasis Labs, a blockchain project based on a reliable execution environment launched by Professor Song Xiaodong, it is strongly recommended to make reference to the previous document of the chain: "Demystifying Oasis Labs: The top fund platform, which claims to exceed Ethereum, what is it? In short, when contemplating the privacy protection of cryptocurrencies, usually do not use ambiguous statements such as for example "our coins tend to be more secretive than their coins". We suggest attempting to clarify the next questions whenever you can: What condition information about the world so when and what degree of personal privacy protection? Who is confidential? This allows us to investigate personal privacy protection technologies and the transactions they carry out more specifically.

















