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In the era of big data, your privacy has been completely stripped away!
Today, in order to eliminate corruption, money laundering and other crimes, centralized digital currency is trying to replace traditional banknotes, but at the same time, centralized platforms such as WeChat, Alipay, and Meituan use artificial intelligence, big data and other technologies to regard personal privacy as a Nothingness, like a deep panopticon, is being watched by people all the time, but they don't know it.And privacy coins may be a good weapon for us to protect privacy.
The article first analyzes the dangers and disadvantages of centralized digital currency through various examples, and then introduces privacy currency projects such as Zcash, Grin and Monero. How do these projects protect our privacy? Will the privacy currency become the mainstream currency and become the next currency?
A Bull Catalyst?
The cashless society is coming!
In the next two decades, cash will gradually fade from the stage of history.
This is not sensational. In fact, as early as a few years ago, the great movement to promote a cashless society had begun to germinate. The invention of computers and information networks made a cashless society inevitable.
Cashless societies are already being quietly rolled out in countries like India.
At the end of 2016, Indian Prime Minister Narenda Modi suddenly announced the abolition of 500 and 1,000 rupee banknotes on the grounds of combating corruption, money laundering, and letting people develop tax habits. new rupee notes, then these old rupee notes will become a pile of waste paper.
According to data provided by relevant agencies, all 500-ruble and 1000-ruble banknotes combined accounted for 86% of the total currency circulation in India at that time. This unexpected move caused chaos throughout the country and surprised people all over the world. .
In India, corruption, money laundering and tax evasion have reached a level that directly threatens the lifeline of the country's economy. According to statistics, at that time, only about 2% of Indian citizens would pay taxes according to the law. And when a country cannot fill the treasury through taxation and other means, it is difficult for the huge national infrastructure to function normally.
Contrary to expectations, the drastic reforms of the Modi government did not solve these problems. Instead, they brought great suffering to the people and dealt a fatal blow to the poor at the bottom of the country. After the introduction of the New Deal, the Indian people lined up in front of the bank day and night because they were afraid that the money in their hands would become waste paper. Street vendors were also unable to sell their wares because of the chaotic monetary policy of the reform era.
The rich, who were supposed to be hit by the reform, were barely hit, and could still evade taxes by shifting wealth into easily tradeable luxuries such as diamonds.
In August 2017, India's reform campaign to abolish large-denomination legal tenders failed, and 99% of the abolished large-denomination rupees flowed back into banks again. The Modi government tried to combat corruption, money laundering and tax evasion by abolishing large-denomination currencies. The plan went bankrupt.
Modi's reforms are at the forefront of the world. Although the government is pushing hard, but because the reforms are too violent, they still end in failure.
But not without any impact. In this radical reform, most people saw the problems exposed by banknotes, and they threw themselves into the embrace of Internet payment. Since the implementation of the New Currency Policy, Paytm, India's largest Internet payment platform, has seen huge growth in both the number of users and profits.
After the reform failed, the Indian government turned its focus to the Aadhar project, the world's largest biometric database, and the supporting UPI unified electronic payment system, preparing to build a "cash-less society" from scratch, and then gradually transition to a "cashless society". The cashless society movement has taken a big step forward.
Outside of India, cashless social movements have blossomed across Asia.
Octopus cards were originally only used to take the subway, but because of the convenience of Octopus cards, all walks of life began to use them as a substitute for credit cards and cash, and supported Octopus card payments.
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In the next few years, more and more social activities will be carried out in this cashless way, and the centralized digital currency will extend its tentacles to all aspects of your life. In many ways, this is a good thing. A cashless society can make it easier for you to buy coffee and buy appliances.
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Panopticons and centralized digital currencies
But everything has two sides, and this great historical movement also has a bad side. Although the cashless society simplifies your life, it does not fundamentally change the characteristics of the currency, it is still a centralized and easily regulated currency.
Similar to the Internet's business model of spying on users and misusing data, holding a centralized digital currency in your hands will put you in a panopticon.
Note: The panopticon was first proposed by the British philosopher Bentham in 1785. Through such a design, only one person can monitor all the prisoners, and the prisoners do not know whether they are being monitored.
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panopticon
To give a simple example, before you pick up your phone, your phone will know where you are going, who your friends are, and what you want to buy. It can be said that the phone monitors every aspect of your life.
Centralized digital currency will let you leak more privacy.
To survive in this society, you cannot do without money.
You need money to buy breakfast, take a taxi, buy groceries on Amazon and go to a bar to relax...
In the cashless society of the future, those centralized institutions that issue digital currency will know all your transaction records. Through artificial intelligence to do data analysis, they can easily restore your every move. Your private data is not only on the Internet. Instead of running naked, he was directly exposed to the spotlight of the Panopticon.
Governments, companies, and hackers who have access to these transaction data will step into your life and "eavesdrop" on everything you have ever done, everything you have ever loved or hated, and all the places you have been.
In a cashless society, taxes will no longer be a headache for governments, as taxes will be automatically deducted every time you initiate a transaction.
As Vinay Gupta, CEO of blockchain project Mattereum, said in a blog post: “In a cashless society, taxes will be reduced to a single piece of code.”
All your transactions, from the convenience food for a dollar or two at the grocery store to your house and vehicles, the tax man will know.
The convenience of this kind of supervision is also a double-edged sword. The government no longer has to worry about how to shut down some illegal websites and loan sharks. The government can easily blacklist them and eliminate all transactions related to them , Put an end to these criminal activities from the source.
But is doing so a good thing? please consider it.
What if the government could blacklist you at will and prevent you from doing any transactions?
Or what if the government could arbitrarily freeze the transaction system in a street store, thereby closing a store?
Imagine such a scenario, in a formal dinner, after drinking and eating, you, as the host, pick up your credit card to pay the bill, but the waiter says there is a problem with your credit card. You also have to constantly explain to the guests in the meeting, does this scene scare you?
Imagine that in a cashless society, this fear will grow exponentially
This is how you feel in the future when the government can freeze your trading business at any time.
Now you have to call a government agency with poor service and long wait times like ATA to unfreeze your account or you can't buy any necessities. You can't pay your electric bill in the cold winter, you can't fill your car with gas to send the kids to school, you have to call and wait in line even if you have an emergency that needs money, and chances are you're "busy at the current human agent" and in the background After waiting for several hours while the music was interspersed, the sentence "The call has been disconnected" came.
It’s even quite possible that it’s not an aloof bureaucrat who’s condemning your trading account to death, but an artificially retarded artificial intelligence under the banner of fraud detection algorithms programmed into it.
"Sorry, our automatic fraud detection system detected abnormal behavior in your account, so it automatically triggered the freezing of your account transactions, and now we are assigning you a manual seat, please wait a moment, your call is very important to us."
To combat potential terrorism, governments create various automated detectors and blacklists in their systems.
Because these automatic detectors are designed by the government, the same people who designed the designers and the suffocating service attitude of the US Department of Transportation, so don't expect too much from them, their automatic detectors may even be better than The much-maligned credit card company's fraud detection system is even worse, with more false positives. It could just be that an algorithm in the automatic detection system didn't figure out why you suddenly started shopping online, or why you, who usually shop on Broadway, suddenly went to a gas station store next door on Market Street, to put it bluntly Yes, your account may be frozen all the time.
But what happens when a dictatorial government gets that power, we always say we keep it in a cage?
When you post something on social media that the government doesn't like, or you call out against corruption and graft, or you have a dissatisfaction with the government, you are likely to be in serious trouble: you come home from work When you find out that your trading account has been frozen, you can’t take the bus home, and the police drone is already waiting for you on your most frequent home route, ready to cast a net like an animal and use unfair Judgment treats you.
However, don't be too disappointed in the future, the emergence of privacy coins has brought us new hope.
As the name suggests, privacy coins are anonymous, decentralized cryptocurrencies that share some of the properties of cash.
No one knows how or where you spend your cash. You can withdraw cash from an ATM, use the cash to buy some chewing gum at a nearby convenience store, or buy an unused desk lamp from a neighbor’s house, all transactions have no records, and every penny will not be recorded like a credit card Clearly.
Privacy-oriented cryptocurrencies may be our only hope in a cashless society. Of course, you can also choose to go back to the ancient times of bartering.
if i have nothing to hide
Before we officially start discussing these privacy-oriented cryptocurrencies, it is important to understand:
Why do we need privacy?
Don't we want all transactions to be transparent and traceable? Maybe you're thinking "I'm not a suspect, I have nothing to hide."
Glenn Greenwald, the Guardian reporter who exposed the Snowden case, told us in his TED talk "Why privacy matters", ""I have nothing to hide" is the classic defense of those who don't care about privacy and don't understand the meaning of privacy .”
In the speech, Greenwald said, if you have nothing to hide, fine, then please give me the password of your private e-mail, the next three months, I will help you check your e-mail every day, if you come across anything interesting , It is better to be happy alone than to be happy together. I will share it with netizens on social media.
If you still have nothing to hide, here's what you need to know: Privacy has nothing to do with crime.
None of us want to broadcast our private lives live to the world. We don't want our neighbors to see us changing clothes at home through the window, we don't want someone to eavesdrop on our sweet conversations with our loved ones, and we don't want some ruthless bureaucratic government or corporations to secretly monitor every minute of our lives. Second.
We all have our own views, and no matter what your view of life is, there will always be someone who holds the opposite view. Maybe you are conservative in your behavior, and there will always be people who are more open-minded than you in society, and vice versa; maybe you are an environmentalist, and some people in society think climate change is a joke; maybe you actively advocate for the protection of animals rights, and there will be people in the society who don't care whether the cow is happy or not every day, but only care about whether the beef is good or not.
No one wants to receive "patient greetings" from hostile forces with different views. But what about criminals who abuse their right to privacy to conceal their ill-gotten gains? Shouldn't law enforcement have the power to punish criminals?
These days, nightclubs are often used by criminals to launder money. The illegal proceeds may come from drugs or murder, but criminals usually use some means to disguise these ill-gotten gains as legitimate income from nightclubs. Shouldn't we give law enforcement the privilege to punish these violations?
Should not! Law enforcement has other options.
You may doubt my point.
Money Laundering (Third Edition) A Study Guide to Financial Crime Investigations
It's a book for financial crimes enforcement, and it's up to date with all the tricks people use to try to hide their ill-gotten gains, and it's now in its third edition.
A close friend of mine is a white-collar crime investigator. He doesn't need a bunch of new tools to find clues to a suspect's stash of ill-gotten gains. Years of experience in crime has taught him where to start.
Note: White-collar crimes refer to crimes committed by white-collar personnel. Also known as gentleman crime and gentle crime. Most white-collar criminals have high social and economic status, and usually use their positions to commit crimes, such as short-buying and short-selling, false balance sheet reporting, stock market manipulation, corruption, fraud, fraud, bribery, personal income tax evasion, and selling economic information, etc. . White-collar crimes in the United States are very serious, and the economic losses caused by them far exceed the economic losses caused by property crimes such as robbery and theft in blue-collar crimes.
The tools we've added to stop money laundering just create more problems, not solve them.
Speaking of KYC (know your customer) rules, when you apply to register with an exchange, the exchange requires you to upload your ID and photo, and they need your various private information such as your place of residence and phone number. But centralized institutions have proven time and time again that they cannot keep data safe.
Centralized institutions are leaking our information almost every day. In July 2017, Equifax, one of the three major personal credit rating agencies in the United States, leaked the private data of nearly half of the American population, and this is just the tip of the iceberg of information leaks.
Almost every major organization on the planet leaks data every single day.
Security is hard for an institution of this size, hard.
Asaf Greiner, CEO of Protected Media, has stated that "over the past six years, identity thieves have stolen more than $107 billion in the United States." That said, identity theft costs more in the United States than all other types of property theft combined.
Know-your-customer rules and storing large amounts of private data in a centralized database leave opportunities for criminals to exploit and invite more crimes.
Knowing your customer rules won't stop criminals. Criminals know how to buy 100 people's identities for $25 on the dark web and then steal them with fake identities. These laws will put innocent people at risk.
Just as people usually think that bloody and violent computer games will induce young people to kill and set fire, people usually have such prejudices against young people born in the 80s and 90s. Especially after a mass shooting, the media will dig into the life of the suspect, and once he is found playing computer games, the rhythm will come: "Aha! I solved the case! These computer games must have induced him to commit a crime .”
These people are most likely insane.
People who are swayed by online public opinion will tend to store all identity data in a database, otherwise terrorism cannot be prevented! Even if this centralized supervision only catches one criminal, then the regulatory authorities will think it is worth it. But in fact, we have opened up entirely new avenues for transnational criminals to commit crimes.
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black market website silk road
In the future cashless society, the black market will be the only place to use cash?
Whether it's illegal drugs, guns, or banned books, there's always someone out there who will take the risk for profit, create a black market somewhere, and sell it to you.
Shouldn't we stop these illegal activities? Is this a good enough reason to kill cash? Not really.
Again, law enforcement doesn't need any new tools to take down the black market, just current technology.
Instead, the world needs a black market.
If you live in a healthy, stable first world country, where business and society are doing well, the police are serious about doing their job, and the government delivers what it promises...in this case, the black market is just A place where bad guys buy and sell drugs and provide paid sex services. This kind of black market needs to be banned.
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Venezuela Annual Inflation Rate
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Source: Steve Hanke, Professor of Applied Economics, Johns Hopkins University
I recently organized a research team for the Human Rights Foundation, and I interviewed a lot of people who had experienced hyperinflation. According to these interviewees, people might have to queue for hours to buy some white sugar, or it might cost a month's wages to buy a small loaf of bread. In this case, the black market is where people get their daily necessities.
Therefore, when talking about the essence of a thing, it cannot be separated from the environment in which it exists.
What about countries whose social systems have completely collapsed?
Let's say you live in a first world country with political views that match your left-leaning party comes to power and suspends all appropriation programs that support you. The new government can do all sorts of things to legitimize this process. They can just shut down three or four organizations that are using their money in violation of the grant plan. They can even say that they are taking over a pilot of these organizations and "studying" the problem in the pilot by shutting down all the organizations, but their real goal is not to study these organizations, but to shut them down completely.
At this time, you can no longer donate to human rights organizations that can check and balance government power and monitor government administration, and the government's power will snowball after a period of time. Soon, the government has no constraints.
This is not alarmist talk, this is happening in Turkey, and dictators around the world have similar routines.
In societies where the rule of law is absent or violated, we see those in power prosecute opposition groups, arrest them, or suspend the funding of opposition groups for whatever reason. To some extent, a centralized digital currency means the end of the separation of powers system that is the foundation of the United States.
The end of cash also means the end of free choice. And the defense of freedom is where privacy-oriented cryptocurrencies come in. Many people say that there is no killer app in the blockchain space, but they are all wrong.
Cryptocurrencies have figured out how to emulate the role of cash in an environment as utterly hostile to privacy as the internet.
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The Return of Privacy
The biggest feature of cash is that it is really difficult to trace, which is why criminals always ask victims to provide cash and do not want new banknotes in cop movies.
In other words, anonymity is the main characteristic of cash.
In the case of using cash, only the two parties to the transaction are aware of the transaction.
Bitcoin must be anonymous, right? Because I have heard that when nefarious bad guys buy illegal drugs on the black market website Silk Road, or people or groups that are not convenient to use cash like criminals and North Korea choose Bitcoin as a means of payment.
But in fact, Bitcoin is not anonymous at all!
In the early days of Bitcoin, it seemed to be anonymous because it was not yet popular and governments ignored it, but today, the security that Bitcoin brings through pseudonymization is not really meaningful at all on security.
Early blockchains were easy to track, and Bitcoin makes every transaction stored on its blockchain public. The blockchain is the third component of the triple-entry accounting system in addition to the debits and credits, the budget indicator, which makes the financial history of the entire system open to everyone.
Note: Triple-entry bookkeeping is an academic concept conceived by Carnegie Mellon University professor Ijiri Yuji, which provides the framework for a new accounting approach that replaces the standard accounting formula with a more complex one (assets = liabilities + income)
Even though the currency mixing service used to hide bitcoin transaction information in the past few years (a service that disrupts the connection between the bitcoin sender's address and the receiver's address through a third party to hide transaction information) and other technologies have been launched one after another, Bitcoin transactions are still easy to trace.
As governments of various countries continue to strengthen their supervision in the field of blockchain, blockchain data analysis services have sprung up like mushrooms. In many ways, blockchain makes it easier to track the movement of money. Compared with previous methods of tracking international remittances or tracking funds transferred in offshore banks in the Cayman Islands, they look more like the work of cavemen in ancient times.
As governments and companies around the world eagerly hope to understand every aspect of our lives, their demand for this new technology of blockchain data analysis has also increased accordingly. It is foreseeable that in the next few years, the accuracy of blockchain data analysis services And speed will be a breakthrough improvement.
And privacy-oriented cryptocurrencies have directly pronounced a death sentence on blockchain data analysis services. Privacy-oriented cryptocurrencies have brought us true anonymity that rivals or even surpasses cash.
To do this, there is a catch-22 that privacy-oriented cryptocurrency projects must address.
Note: Catch-22 comes from the novel "Catch-22" written by American writer Joseph Heller, which means that there are problems in itself, rules that are illogical and difficult to implement, or rules that are in a dilemma. situation.
How do we prove the existence of a cryptocurrency transaction without storing the records on a central server or on a publicly visible blockchain?
In the real world, the problem has already been solved. I hand you the cash and you take the cash. Your eyes see the transaction process, and by counting the money you see that there is no problem with the amount, so you are sure that the transaction is completed.
To achieve cash-like anonymity, privacy coins employ many encryption techniques. For example, when two people or two entities conduct a transaction, each step of the transaction process is confused. The confused information includes where the money comes from, who are the two parties to the transaction, how much money each party has, and the transaction occurred. time and so on.
The "catch-22" mentioned above is a difficult problem facing every privacy-oriented cryptocurrency, that is, how can I prove that the transaction really happened without revealing the transaction information, which is also the science of cryptocurrency. cutting-edge issues in research.
Note: Ring signature refers to hiding the public key that owns the private key among the n public keys. The specific application is to hide the sender of the transaction on the blockchain.
Privacy coin projects include Monero (codenamed XMR), Zcash (codenamed ZEC), Zcoin (codenamed XZC) and cryptocurrencies based on the MimbleWimble protocol (Beam and Grin).
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Zcash
Let's start with Zcash first.
What is Zcash? Zcash’s official website pointed us in the right direction:
Zero-knowledge proofs allow the prover to prove to the verifier that a statement is true and valid without revealing any information beyond the validity of the statement.
Essentially, Zcash allows transactions to occur without being visible to third parties, while also allowing users to attest to certain details of transactions without revealing any information about them.
Imagine a scenario like this:
Suppose you have a colorblind friend and you hand him two balls, one green and one red. In his eyes the two balls are the same, he can't see any difference, while you can.
Actually, you don't want him to know which is green and which is red, but you do want to prove to yourself that you know. In other words, you have to prove to him that the two balls are different.
You can do this: you let him hold two balls in each hand and put them behind his back, and then choose whether to exchange the two balls.
Every time he shows you the balls in both hands, you can tell exactly if he just switched the two balls.
He repeated it so many times that it was probabilistically impossible to get the answer right every time. You will now be able to convince your friend that the two balls are actually different, but since it is a zero-knowledge proof, your friend still has no idea which ball is green and which is red.
This idea is useful if I want to prove that an amount of $10,000 was sent to a specific address without revealing who sent it.
Zero-knowledge proofs do not take up too much processing time, and proofs of things can be quickly calculated and tested.
But zero-knowledge proofs are not perfect. Its biggest disadvantage is that it requires a group of people to perform multi-party calculations in the initial stages of cryptocurrency creation. You need to trust that at least one member of this group is not a traitor, and you need to trust that there are no back doors in the system.
If the group of people in the founding stage didn't complete these tasks, you can also get a blockchain, but this blockchain is inherently flawed, and you can't roll back and fix it later.
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Monero
After talking about Zcash, let’s talk about Monero.
For those cypherpunks who are very privacy-conscious, Monero may be their first choice.
Just like the creator of Bitcoin, Satoshi Nakamoto, has remained anonymous, many of Monero's main developers have remained completely anonymous.
Monero has been touting its fungibility, why?
Investopedia defines fungibility as:
"Fungibility means that goods, securities or tools are identical and therefore interchangeable. In other words, they are products composed of many identical are sold by weight or quantity, which indicates that they are fungible.”
But what does this have to do with cryptocurrencies? What is fungibility in cryptocurrencies?
It can be explained in this way that if someone uses Bitcoin to engage in illegal activities, such as buying illegal drugs through the dark web, then these few Bitcoins used as a trading medium will receive the attention of the government, and the government will monitor the circulation path of these Bitcoins. Catch criminals. Since it is no longer convenient to use, its value may also plummet, so these few bitcoins will be difficult to spend in the future.
Cash is different, we have no idea what the money in our pockets was used for, which is actually a good thing. Like we always say, what happens in Vegas, stays in Vegas.
We don't know if the $100 bill in our hands was used to buy an ice cream cone or something illegal. I don't care if the bill was used illegally before it got to me, my hundred dollars are still worth a hundred dollars, it doesn't shrink like bitcoin. I can still use it for some legitimate deals, I can use it to buy a used book at a used bookstore or I can use it to buy some fresh veggies at the farmers market. It is not monitored by the government because of where it has been or who it is held by.
Since all transactions in Monero are anonymous, this means that we do not know where the Monero for these transactions comes from, which means that it, like cash, will not be monitored by the government because of the previous circulation process.
In addition to the interchangeability of Monero coins that can be interchanged at will, the biggest cryptographic foundation brought by Monero coins may be the ring signature mechanism.
The ring signature mechanism originated in France in the seventeenth century. When the ministers appealed to the king, they invented a ring signature method in order to prevent the king from finding out who signed the letter first. The circular arrangement hides the original order of signatures, making it impossible to trace the source.
Monero's ring signature mechanism combines this idea with Bitcoin's hash value-based public key + private key mode, mixes the public key of the transaction sender with another public key, and then processes the information Signed, and finally decrypted and verified by the receiver's private key, so that the outside world cannot judge which is the public key of the transaction initiator, so that Monero realizes the function of hiding the address information of the transaction sender, so that external attackers No correlation between addresses can be seen.
That is, when ring signing involves bringing a group of people together and having them sign a message or transaction together. As an outsider, I know that this group of people signed the deal, but I don't know which person in this group signed the transaction, he could be anyone in this group.
How do ring signature mechanisms work in privacy-oriented cryptocurrencies?
"The ring signature mechanism uses your account public key and many public keys (also called outputs) extracted from the blockchain through a triangular distribution method. Over time, past outputs can be Used multiple times to form possible signing participants. In a "ring" of possible signers, all ring members are equal and valid. An outside observer cannot tell which of the possible signers in the signing group belongs to your account .Therefore, the ring signature can ensure that the output of the transaction cannot be traced.”
In other words, Monero scrambles the outputs of a bunch of transactions so it's hard to tell which transactions belong to whom. If someone else can't be sure which deal is mine, I can find many legitimate reasons to deny that fact.
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Zcoin
Next, let’s talk about Zcoin, which is an implementation of the Zero Coin protocol.
Zcoin uses the onion network commonly used in the dark web and one of its implementations: onion routing (Tor, The Onion Router) to try to keep transactions private. But the use of onion routing is not a new technology. The US National Security Agency (NSA) and the US Federal Bureau of Investigation (FBI) already have considerable experience in controlling onion routing. They only need to instigate one or more nodes. So just using onion routing is not enough.
The Zerocoin protocol was originally proposed by Professor Matthew Green of Johns Hopkins University and some graduate students as a privacy extension of Bitcoin, but it was never adopted. The Zerocoin protocol provides anonymity by creating a coin mixing service. Essentially, it brings together a bunch of cryptocurrency transactions and mixes them up, with each transaction being mixed into a large batch of transactions, making it difficult to recover the inputs and outputs of the original transaction.
It sounds like money laundering, and yes, Professor Green came up with the idea inspired by money laundering pools.
Currently, there are currency mixing services in Bitcoin, but they are all operated by a third party, which means you have to trust this third party. If the third party providing the service is instigated, then the currency mixing service will lose its meaning of existence, and all your cryptocurrency transaction records will still be tracked. This is like marking cash with invisible ink, except that the Zerocoin protocol implements currency mixing services at the protocol level without trusting any third party at all.
The designers of the Zerocoin protocol and Zcoin both believe that protocol-level mixing services are superior to ring signatures in terms of anonymity.
One of the biggest advantages of a coin-mixing service seems to be that instead of mixing a few outputs like ring signatures do, it mixes together thousands of transactions, so large that it is hard to de-anonymize.
According to Zcash’s official website:
Zcash has an anonymity set, which stores all mined Zcash in a specific RSA accumulator (a data structure similar in function to a Merkle tree), and the RSA accumulator can be extended to Thousands.
“Because the verification process of Zcash is much more computationally intensive than Bitcoin, the block verification time of Zcash will be 6 times that of Bitcoin, depending on the block size difference between Bitcoin and Zcash Proportion."
Some implementations of the Zerocoin protocol such as Pivx (Private Instant Verified Transactions) seem to have solved this problem, but its development is still in progress.
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MimbleWimble protocol and Grin
Next let's talk about the MimbleWimble protocol.
The MimbleWimble protocol has a curious and somewhat whimsical history, but it has attracted a large number of the most hard-core Bitcoin maximalists to participate. In their view, the MimbleWimble protocol is the biggest innovation in the cryptocurrency field since Bitcoin.
In August 2016, the MimbleWimble protocol first appeared in an IRC (an instant chat over the web) chat room channel called Bitcoin Wizard. A man who goes by the pseudonym "Voldemort" "published" the paper in a chat room.
The paper caught the attention of some big names in cryptography, including Andrew Poelstra, a talented researcher and developer at Blockstream (the company that developed the Bitcoin Lightning Network), who fixed some flaws in the original design of the MimbleWimble protocol and launched the An updated version of the paper.
In late November 2016, an anonymous poster quietly surfaced in an IRC chat room channel, this time using another alias from the Harry Potter world, Ignotus Peverell (inventor of the invisibility cloak). Perverell launched the first working implementation of the Mimblewimble protocol, brought the working Mimblewimble protocol code, and made the code open source on Github.
This open source project is Grin.
The emergence of Grin excited those old-school Bitcoin maximalists because, unlike many newly issued cryptocurrencies, Grin did not issue token rewards to the founders and did not conduct an ICO. People all have to mine to get Grin, no one has an early advantage, so it's more "fair" than other newly released cryptocurrencies, and it doesn't create a bunch of millionaires right away.
On top of that, the MimbleWimble protocol offers many incredible breakthrough innovations.
Grin aggregates all transactions together, making it nearly impossible to separate one transaction from any other.
In this regard, the overseas media Cryptobriefing explained it well:
"The MimbleWimble protocol improves upon the Bitcoin model by creating a multi-signature for all inputs and outputs. Parties involved in a transaction create a public multi-signature key that can be used to verify the transaction. There are no addresses in the blockchain, Both parties share a so-called “blinding factor” whereby only the two parties to the transaction know they are transacting, thus preserving privacy in the blockchain network.
The blinding factor is a secret shared between the two parties of the transaction, which encrypts the input and output in this transaction, as well as the public and private keys of the two parties. The MimbleWimble protocol employs the Pedersen Commitment Mechanism, where full nodes subtract the encrypted amount on the send side (input) of a transaction from the encrypted amount on the receive side (output) of a transaction. "
In other words, the MimbleWimble protocol appears to be doing some homomorphic encryption due to its confidential transaction mechanism. In other words, these encrypted data can be used directly without decryption.
Note: Homomorphic encryption, a form of encryption, allows people to perform specific algebraic operations on ciphertext to obtain results that are still encrypted, and the results obtained by decrypting them are the same as those obtained by performing the same operations on plaintext. In other words, this technology allows people to perform operations such as retrieval and comparison on encrypted data and get correct results without decrypting the data during the entire process.
There are no addresses in the MimbleWimble protocol, which is very conducive to protecting privacy. Maybe in the future, law enforcement agencies will require you to register addresses, or public key registrations, but if there is no address in the blockchain, then no one can force you to do this, and only through the private key can you know how much money is in the wallet , and when and with whom you have traded in the past.
The MimbleWimble protocol is ultra-scalable, storing only a fraction of the data required by the Bitcoin blockchain. The same number of transactions may require 1GB of space in the Bitcoin blockchain, while the blockchain based on the MimbleWimble protocol only needs 1MB.
In addition, Grin has also added countermeasures against ASIC mining machines sweeping the mining ecosystem. The powerful computing power of ASIC mining machines runs counter to the assumption that the blockchain can ensure security through mining. Huge ASIC mining farms have brought hidden dangers of centralization to cryptocurrencies.
Anti-ASIC mining means that people can use common commodity hardware to run full nodes on the network, which makes Grin more decentralized.
However, Grin's blockchain is much smaller, which means we don't have to worry about the centralization tendency of the blockchain being too large. Using a smaller blockchain means mining can be done using only commodity hardware, so more people can run a full node, which makes cryptocurrencies more secure and risk-resistant.
The more complete backups a blockchain has, the more secure it will be in the long run. Just like your DNA, you have a complete copy of your DNA in each of your cells.
secondary title
privacy and freedom
Many people think that in a cashless society, the withdrawal of cash from the stage of history is a good thing.
They are all wrong.
Not all criminals who want privacy are criminals trying to hide their crimes, everyone deserves privacy.
You don’t want people looking out your window while you change your clothes, or standing behind you reading an email you sent a friend. Based on your spending habits, it can better recommend another sweater or pair of shoes for you.
We must have the power to say no to those in power at any given moment, otherwise we are nothing more than slaves in a slave society. Now, we are moving towards a new society in which centralized digital currencies will drive cash out of the historical stage. At that point, nothing will save you from the prying eyes of the Panopticon.
The digital trace of your life will be preserved forever, and anyone in power, good or evil, can "browse" your life in great detail by rolling back time, looking for anything they want to know, and when you perceive danger, will be too late.
The only hope right now is that privacy coins catch on in the real world, if we can build a real economy around decentralized cryptocurrencies and get ordinary people used to using cryptocurrencies and trusting it, then defending free cryptocurrencies It will become a parallel economic operating system in the world.
Centralized digital currencies are here to stay, but they are slowly dying.
But if the decentralized digital currency does not become popular, then this means that the centralized digital currency will be in absolute control, and uncontrolled power is a disaster. The founding fathers of the United States knew this very well, so they established the separation of powers system.
