Privacy: the next step in Blockchain technology

Blockchains, innovative layers of peer-to-peer transaction settlement, are the beating heart behind the growing cryptocurrency ecosystem. Every day, new cryptocurrency projects are developed and more people rely on blockchain technology to transfer value.

Many find blockchains preferable to centralized payment processors, citing blockchain enablement of cryptocurrency networks to achieve consensus of transactions without a central authority, a benefit that hypothetically allows people to transact anonymously and privately. .

However, driven by modern developments in blockchain forensic science, cryptocurrency experts question the true degree of privacy of blockchain.

Blockchains: not so private after all

When transactions are sent over a cryptocurrency network, they are permanently recorded on that network’s blockchain. This recording includes critical transaction data, such as user wallet addresses and transaction amounts, which could be used to track transactions between senders and receivers, and identify individuals by association. Bitcoin.org describes this risk:

“All Bitcoin transactions are public, traceable, and permanently stored on the Bitcoin network. Bitcoin addresses are the only information used to define where bitcoins are allocated and where they are sent. These addresses are created privately by the wallets of each user. However, once the addresses are used, they become contaminated with the history of all the transactions in which they are involved. Anyone can see the balance and all transactions from any address. “

Called tools block explorers make this information easily accessible to everyone. Still, manual transaction tracking is arduous, especially for transactions that have collapsed.

Tumbling refers to the process of transacting cryptocurrency through services that send coins through a multitude of random wallets on the way to their destination. This scrambles the path coins take between wallet addresses, trying to obfuscate the connections between senders and receivers.

However, modern blockchain analytics softwares have been tracking blockchain transactions, including those that have suffered a big drop, incredibly easy.

Additionally, most investors enter the cryptocurrency space through centralized exchanges, such as Binance and Coinbase, which often require members to pass KYC (Know Your Customer). KYC is the process by which exchanges use photo identification, proof of residency, and other personally identifiable information to verify the identity of their users. Together, the blockchain and KYC analytics softwares make it possible to trace any chain of transactions originating from centralized exchange wallets back to the members.

As it stands today, blockchain technology needs an update to offer the degree of privacy necessary to maintain the anonymity of users and therefore their freedoms.

There is no freedom without privacy

People need privacy because sometimes religious, political, professional, and social affiliations need to be protected. These affiliations can be used by others, governments and private interests, to discriminate and profile populations, negatively affecting the balance of power between people and the world around them.

Without individual power, people cannot function freely in a society. Instead, his speech and actions are indebted to the opinions of others. This is unproductive for all parties involved, as it hinders human progress by leaving social development in the hands of public opinion.

As part of the general privacy needs, financial privacy is very important. Transactions can reveal a great deal about a person, in addition to their religious, political, professional, and social affiliations, such as medical conditions, legal disputes, and financial status. People must be able to conduct transactions in private, without fear of being watched, judged or persecuted. Those who actively participate in political parties or movements, creators of controversial art or literature, political dissidents and whistleblowers are at particular risk.

Neither centralized payment networks nor blockchain-based decentralized traditional cryptocurrencies are equipped to provide the level of financial privacy necessary to support individual freedoms.

A promising solution

Whenever a problem comes up, the innovative crypto community always comes up with a solution: A handful of teams are building “privacy coins” in an attempt to fix the privacy gaps that are present in traditional blockchain architecture.

Badge It is the most popular privacy coin, with a market capitalization of more than USD 3 billion. When a transaction takes place, Monero’s “RingCT” privacy protocol aggregates the currencies of that transaction with the currencies of 11 potential senders, meanwhile, hides the transaction amounts and recipient addresses. While this provides more privacy than Bitcoin, there are better solutions, as the maximum of 11 senders does not sufficiently obfuscate the origins of transactions.

As an alternative, experts are turning to xNAV, a privacy coin developed by Navcoin. Like Monero, xNAV also hides transaction amounts and recipient addresses, adding coins from multiple senders before distributing them. However, xNAV has some key advantages:

  • The coins of all senders (not just 11) within a block are aggregated, greatly increasing the senders’ anonymity level.
  • xNAV supports encrypted messaging, allowing senders to enter a short message in transactions that only recipients can read.
  • xNAV supports pruning, which allows people to run full nodes with only a fraction of the entire blockchain, which in turn allows people with lower-spec equipment to join the network, increase the number of nodes, and increase the degree of decentralization of the network.
  • xNAV supports atomic swaps, which allow users to exchange xNAV for other currencies directly with each other, while enjoying all the benefits that come with Navcoin’s privacy-preserving properties.

All of this is possible thanks to Navcoin’s self-developed “blsCT” privacy protocol, which will soon be opened for use in other cryptocurrency projects. Navcoin will offer Privacy as a service through its evolving privacy platform, allowing other cryptocurrencies to use its privacy protocol. This will greatly increase the demand for Navcoin as all fees will be paid with it.

conclusion

Due to the transaction transparency that is inherent in most cryptocurrencies, Know Your Customer (KYC) regulations, and advancements in blockchain forensics, traditional blockchain implementations lack the level of privacy necessary to protect cryptocurrencies. individual liberties.

Privacy coins like xNAV protect user privacy by hiding transaction amounts along with sender and recipient addresses. Through xNAV, people can regain their privacy, bringing the world one step closer to a more just and equitable place.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial or other advice..


Source: https://cryptodaily.co.uk/2021/12/privacy-the-next-step-in-blockchain-tech

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