2014-07-16 privacy and crypto
TRANSCRIPT
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Crypto and PrivacyA problem we all share
2014
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Why is privacy important in digital currencies?
What services and alternative coins exist that introduce privacy?
What can you do armed with this knowledge?
Why it matters Obtaining Privacy Takeaways
Digital Currency Entrepreneurship & Startups
What you will learn in 20 minutes
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Privacy Matters
Why
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1
2
4
Political or religious causes you support
Are you a good target to scam?
Who you or your family does business with
Stolen coins you unintentionally own could become disabled
Digital Currency Entrepreneurship & Startups
“I have nothing to hide“
3
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Digital Currency Entrepreneurship & Startups
1. You list a laptop on Craigslist
2. A Bitcoin thief buys it from you
3. You are now marked as a thief
Trackable money is not good
Slippery Slope
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THE BLOCKCHAIN IS PERMANENT
Every sale
Anything you buy from anybody
Every donation
Any cause you supported, ever
Every loan
Any friend you helped out, ever
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Digital Currency Entrepreneurship & Startups
Your identity can leak
Exchanges Public QRC Recipients
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Obtaining Privacy
Solutions
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Digital Currency Entrepreneurship & Startups
Forwards coins through dummy accounts1 Requires high trust in
operators to not steal2 A dying trend3
Tumblers Poor Man’s Privacy
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Can be applied to any crytpo-currency
NOT JUST BITCOIN
Achieves complete anonymity for all transactions (sender, amount, and receiver)
ANONYMOUS
Sits on top of the “base” coin as a second coin
PIGGYBACKS
Concerns that the cryptographic proofs it uses could be cracked later
TOO NEW
Digital Currency Entrepreneurship & Startups
CONCEPT: Zerocoin (zerocash)
http://zerocoin.org/
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Digital Currency Entrepreneurship & Startups
Groups transactions together into multi-output transactions
1 Reduces fees since transactions are merged2
Operators need to be trusted to not keep logs or expose data
3
CONCEPT: Coinjoin
Are the inputs of Transaction 2 owned by the same person?
https://bitcointalk.org/index.php?topic=279249.0
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As a service As a Coin
Dark Wallet and SharedCoin both implement hosted
solutions for “mixing” Bitcoin
transactions
Darkcoin ($30M market cap;180s
block target). Uses random master
nodes to obscure transactions.
Digital Currency Entrepreneurship & Startups
Coinjoin in the wild
https://darkwallet.is/https://sharedcoin.com/
http://darkcoin.io
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Coinjoin Sudoku can analyze transactions and remove the anonymity !(www.coinjoinsudoku.com)
BUT…
It’s flawed
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Digital Currency Entrepreneurship & Startups
Payments are sent to a one-time address1
The funds are split into pieces before being spent again
2No central nodes; no need for other concurrent transactions
3
CONCEPT: Cryptonote
https://cryptonote.org/
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Digital Currency Entrepreneurship & Startups
• Monero • $5.7M market cap, 60s
block target
• not a fork of Bitcoin;
• Receiver can de-cloak sender with key.
• Bytecoin • $5.8M market cap, 120s
block target
• Original code source for
Cryptonote in the wild
REVAMPED
http://monero.cc/
https://bytecoin.org/
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Digital Currency Entrepreneurship & Startups
Honorable Mentions
• (incomplete) Cloakcoin ($3.0M market cap) - nodes act as tumblers; 60s block time; not coinjoin; *POS = lower fees; http://www.cloakcoin.com/
• XCurrency ($4.8M market cap) - Custom method. Integrates Tor to mask sender IP. Splits transaction across network. Uses nodes (like DRK) to process; all wallets are nodes; small trns size means less risk.; *POS = lower fees; http://www.xc-official.com/
• Vericoin ($5.3M market cap) - Via service Verisend; *POS = lower fees; http://www.vericoin.info/
• More: https://bitcointalk.org/index.php?topic=568166.0;all
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Takeaways
Privacy
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- Privacy is an obstacle to serious adoption
- Services and coins: Tumblers, Coinjoin, Cryptonote, etc.
- Beware of identity leaks - Oldest privacy coins are less than 4-months old; many problems unsolved
Why it matters Obtaining Privacy Takeaways
Digital Currency Entrepreneurship & Startups
What we learned
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Thanks, Lab Zero (our host)
Michi Kono
Visit our host at http://labzero.com
Visit the Meetup page at http://meetup.com/digital-currency/
Contact the author at [email protected]