The Blockchain that Brings Privacy to the Masses
December 20 2021 - 4:20AM
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In 2009, Satoshi Nakamoto released Bitcoin unto the world, and with
it, a technology with the potential to define the next century:
blockchain. As a default, blockchains secure transactions with a
level of privacy exceeding that which is achievable through
centralized payment networks. Consensus mechanisms such as Proof of
Work (PoW) and Proof of Stake (PoS) provide methods for
decentralized consensus, allowing cryptocurrency networks to settle
transactions without a centralized authority. However, experts
amongst the cryptocurrency community are expressing concern over
whether this level of privacy is enough given developments in
modern anti-privacy technologies. Blockchain: Private or Not? Banks
and centralized payment networks like Visa have no choice but to
record personal transaction data – sender and receiver names,
amounts, times, locations, and often the types of goods or services
purchased – in order to facilitate the movement of money and
protect users from fraud. While blockchains are advantaged in this
regard, the privacy they provide is not perfect. Sender and
receiver wallet addresses, as well as transaction amounts, are
stored permanently on blockchains for all to see. Bitcoin.org
describes how this applies to the Bitcoin network: “All Bitcoin
transactions are public, traceable, and permanently stored in 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 each user’s wallets. However,
once addresses are used, they become tainted by the history of all
transactions they are involved with. Anyone can see the balance and
all transactions of any address.” To combat this, many have turned
to tumbling services that send transactions through a plethora of
wallet addresses in an attempt to obfuscate transaction origins and
destinations. However, both researchers and adversaries have had 12
years to crack high-volume blockchain transaction tracing. Today,
blockchain analysis software makes it possible to rapidly trace
tumbled transactions and associate wallet addresses with each
other. Further, most people enter the cryptocurrency market through
centralized exchanges like Coinbase which require their members to
pass KYC (Know Your Customer), a process used to verify the
identities of individuals in accordance with regulations. This
means that all transaction chains originating from centralized
exchanges are traceable and easily tied to their members’ real
identities. Clearly, an upgrade is needed if our financial privacy,
and to an extent, our freedoms, are to survive modern blockchain
tracing techniques and encroaching regulations. Improving
Blockchain Privacy Some cryptocurrency projects, aptly named
“privacy coins”, have taken it upon themselves to solve the privacy
gaps in previous-generation blockchain protocols. Monero, Zcash,
and PIVX are popular options, but concern over whether they have
kept up with evolving privacy needs grows within the cryptocurrency
community. Many security experts are instead turning to Navcoin, a
future-oriented privacy project that supports public transactions
through its NAV token and completely private transactions through
its xNAV token. xNAV uses Navcoin’s self-developed privacy protocol
“blsCT” to protect transaction data from prying eyes. BlsCT does so
by combining all transactions within a block into one, then
distributing xNAV tokens to wallets without revealing their
addresses or balances to the public. This effectively breaks the
link between transaction inputs and outputs, making it impossible
to identify which wallets participated in which transactions. xNAV
takes user privacy even further by solving a threat factor that
most cryptocurrency users are not aware of: IP tracing. When a
transaction is sent through a cryptocurrency network, the sender’s
IP is revealed to neighboring nodes. This means that transactions
can be associated with IP addresses, making it possible to trace
the physical origination of transactions. xNAV solves this using
another innovative technology, Dandelion++. With it, sender IP
addresses are initially sent to a single node, which then connects
to a different node and acts as the original sender. This chain
continues a random number of times, obfuscating the original
sender’s IP address, making it impossible to correlate transactions
with IP addresses. A High Utility Privacy Platform While Navcoin’s
privacy protocols are impressive, they aren’t the only reasons
behind Navcoin’s recent attention. Navcoin will soon begin offering
privacy as a service, transitioning into a high utility privacy
platform that can be used by other cryptocurrencies to attain total
privacy. This will drastically increase the demand for Navcoin, as
all network fees will be paid with it. As part of its offerings,
Navcoin’s platform will support Private Tokens and NFTs, allowing
users to mint NFTs along with tokens pegged to the values of other
assets, all with the same privacy-preserving aspects used by xNAV.
The implications of this are broad – including the potential for
users to mint private versions of cryptocurrencies, and trade
privately, removing KYC from the process of gaining exposure to
mainstream cryptocurrencies like Bitcoin and Ethereum. As
revolutionary as it is, blockchain technology needs an upgrade if
it’s going to keep up with the anti-privacy tactics of institutions
and adversaries. Navcoin leads the way with xNAV, an innovative
privacy coin that solves today’s privacy concerns.
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