Who is better at on-chain transaction privacy: Zcash, Monero or Grin?

In the early 1990s, two enormous forces were spreading that would shape developments for decades to come: the Internet and strong cryptography.

In a manifesto written in 1993, Eric Hughes advocated the use of cryptography to protect individual privacy in the Internet age: personal privacy should be protected, and privacy is a fundamental right.

"We cypherpunks are committed to building anonymous systems. We use cryptography, anonymous mail forwarding systems, digital signatures, and electronic currencies to protect our privacy."

15 years later, Satoshi Nakamoto gave Bitcoin to the cypherpunks. After it, many other anonymous electronic money systems were created incorporating the latest developments in cryptography.

In this article, we explore whether current anonymous transaction systems (i.e., cryptocurrencies) satisfy the quest for privacy of the cypherpunk forebears.

"Privacy is the power to selectively expose oneself to the world." - The Cypherpunk Manifesto

Exclusive｜The transaction volume on the Bitcoin chain increased by 74.18% month-on-month: Golden Finance News, according to OKLink chain data, the number of active-ethexc addresses on the Bitcoin 24h chain exceeded 914,000, a month-on-month increase of 9.77%; the transaction volume on the chain was nearly 673,100 BTC, an increase of 74.18% month-on-month; the number of transactions on the chain exceeded 300,200, an increase of 11.29% month-on-month.

As of 10:00 a.m., the BTC network difficulty is 17.56T, the network computing power is 123.15EH/s, an increase of 0.45EH/s from the previous day, and the number of unconfirmed transactions is about 32,400. [2020/9/1]

Cryptocurrencies offer a lot of privacy compared to traditional transaction systems involving fiat currencies. Freed from the need to prove the identity of those involved, as well as the source and purpose of funds, cryptocurrencies require their participants to disclose very little, if any, information. Over time, however, even this has proven to be too much, as numerous attacks on the deanonymization of Bitcoin transactions have been discovered.

Some of these disadvantages are foreseen by its creators, such as never needing to reuse public keys, or sending multiple transactions from one address reveals the holder's information, which makes it possible for many public keys to be associated with the same wallet holder .

Within 24 hours, the gas fee for transactions on the Uniswap chain exceeded 410,000 US dollars: according to the data of OKLink, the recommended gas fee exceeded 95.87Gwei, and the number of unconfirmed transactions was nearly 130,000. Among them, the decentralized exchange Uniswap within 24 hours Gas fees for on-chain transactions accounted for 16.36%, more than 1,000 ETH (totaling about $410,000). [2020/8/10]

Over time, techniques were developed to improve the privacy of Bitcoin users, most notably CoinJoin, which allows users to "mix" their Bitcoins together, making it nearly impossible to trace their transaction histories.

It's not easy to figure out what CoinJoin does because it helps users hide their transactions, but so far its use is far from widespread.

The problems that make Bitcoin a good enough but not ideal system for anonymous transactions have led some cypherpunks to do what they do best: write code. Over the years, many new cryptocurrencies focused on better privacy have been created. In this article, we will focus on three.

Analysis | The transaction volume on the BTC chain continues to decline and popularity slowly recovers: According to TokenInsight data, the TI index, which reflects the overall performance of the blockchain industry, reported 747.42 points at 8:00 on July 24, Beijing time, a drop of 31.69 points or 4.07% from the same period yesterday . In addition, among the 28 sub-sectors closely watched by TokenInsight, the governance agreement industry had the highest increase within 24 hours, with an increase of 1.52%; the entertainment and game platform industry had the highest decrease within 24 hours, with a decrease of 7.66%.

According to monitoring, the BTC 24h transaction volume was $18.3 billion, the number of active-ethexc addresses increased by 2.32% from the previous day, and the number of transfers decreased by 3.07%. BCtrend analyst Jeffrey believes that the transaction volume on the BTC chain continues to decline, and the popularity slowly recovers, and the consolidation may continue in the short term.

According to the quantitative analysis of Bituniverse intelligent AI, today's market can open TUSD/USDT stablecoin grid trading, the range is 0.9939-1.0056 USDT, and there is no fear of market decline. ​Note: The above content-ethexc is for reference only and does not constitute investment advice. [2019/7/24]

Zcash

Quotes | The number of active-ethexc addresses and on-chain transactions of BTC and ETH have risen sharply: monitoring data shows that as of June 26, the number of BTC active-ethexc addresses was 828,900, an increase of 17.52% from two weeks ago; the number of on-chain transactions was 36.28 million, up 16.02% from two weeks ago. The number of active-ethexc Ethereum addresses was 450,500, an increase of 15.84% from two weeks ago; the number of on-chain transactions was 932,200, an increase of 30.25% from two weeks ago. [2019/6/26]

Zcash was created by forking the original code of Bitcoin in 2016. It uses cryptography known as zk-SNARKs zero-knowledge proofs, which allow nodes to verify transactions without knowing their contents. Therefore, individual Zcash transactions do not reveal any information about who made the transaction or how much was transacted. However, the protocol allows for so-called transparent transactions, which are identical to those of Bitcoin. This makes Zcash's strong privacy features optional.

The supply of Zcash can be divided into two types: opaque and transparent. Transparent supply similar to Bitcoin, fully auditable. Zcash held in an opaque supply can be exchanged privately using zk-SNARKs. As of press time, only about 5% of the currently issued ZEC is opaque.

Since Zcash's privacy features are optional, we can also calculate what percentage of transactions take advantage of them:

Zcash transactions can be further divided into three categories:

• Transparent transactions, only with transparent supplies • Partially private transactions that exchange ZEC between opaque and transparent supplies • Fully private transactions only with opaque supplies

Fewer than 2% of deals fall into the last category, despite a recent spike in deal volume.

Monero

Created in 2014, Monero uses CryptoNote technology built on ring signatures and confidential transactions. These features allow people to prove they belong to a group without revealing who they are. Therefore, compared to Bitcoin, it is impossible to determine the sender of Monero transactions: the loophole of multiple input transaction information is solved. In 2017, Monero also adopted Bulletproof technology, a newer encryption technique that hides the amount received.

Grin

Grin is the youngest of these new cryptocurrencies. It is the result of a 2016 innovation called MimbleWimble, which leverages new advances in cryptography to allow its users not only to hide the amount and public key used, but also to confuse transactions: if Alice sends money to Bob , Bob sends money to Charlie, then the transaction can be rewritten as Alice -> Charlie, and Bob's behavior is invisible on the chain.

In theory, these alternatives offer greater privacy than Bitcoin, yet their combined daily transaction volume only amounts to about 6% of Bitcoin’s. For every transaction on these privacy assets, 16 were done on Bitcoin, and countless more were done on assets that offer less privacy.

"In order for privacy to prevail, it must be part of the social contract." - The Cypherpunk Manifesto

Users' indifference to privacy may be the biggest shortcoming of the current anonymous transaction system. Despite great technological advancements in cryptocurrency privacy, adoption of privacy features and privacy assets has been slow. As cryptocurrencies continue to be adopted by a wider public, their original privacy-oriented ethos must be passed on for it to survive.

Failure to do so could lead to the gradual disappearance of the original idea of an anonymous transaction system, replaced by other uses for cryptocurrencies.

On the bright side, the advent of Bitcoin has revived research interest in the topic of cryptography, resulting in new innovations such as Bulletproof bombs and Mimblewimble. We've also noticed renewed interest in CoinJoin from providers such as Wasabi and Samurai's Whirlpool, and while they account for a small percentage of Bitcoin's transaction volume, it's growing rapidly.

Original source: https://coinmetrics.substack.com/p/coin-metrics-state-of-the-network-3dc

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