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Which Crypto Privacy Solution Works Best?

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The cryptocurrency industry was initially headlined as anonymous digital cash. While experts were keen to point out that this was not exactly the case, Bitcoin (BTC) found initial popularity in darknet markets such as Silk Road, where merchants sold illegal goods ranging from light drugs to, allegedly, hitman services. Founded in 2011, Silk Road thrived for the next two years until the Federal Bureau of Investigation shut it down in 2013. Authorities later revealed that completely free blockchain explorers aided their investigative efforts.

Bitcoin’s transaction ledger is completely open for the public to view. What the blockchain does lack is openly available identity data, as all transactions are conducted between wallet addresses, which can be considered pseudonyms. However, each wallet address is unique and can be tied to specific people or entities. 

Mapping an address to its holder can be as simple as making a transaction. A buyer and seller can potentially reveal their entire transaction history to each other. Though they may not know with whom they’ve transacted previously, they can know the balance and spending amounts through a simple check on a blockchain explorer. In technical terms, this is called linkability: how easy it is to reconstruct a particular chain of transactions. 

Bitcoin’s chain of transactions is theoretically easy to link. In practice though, this is not a trivial task, as it can be complicated to determine which part of a Bitcoin transaction is the change and which is the actual money that was spent. 

Bitcoin-based privacy solutions

Given the explicit privacy weakness of Bitcoin and other open ledgers, various remedy solutions have been developed over the years. The first was proposed in early 2013 by Gregory Maxwell, a core Bitcoin developer. Later dubbed CoinJoin, the technology utilized an already existing principle of Bitcoin that single transactions can contain many “outputs” and “inputs” that flow to and from multiple wallets. 

Each transaction takes a certain amount of Bitcoin in the form of inputs and reshapes it, like clay, into different chunks of outputs. With CoinJoin, multiple participants offer their Bitcoin into a single transaction, which then reshapes them into different outputs that are sent to the wallets specified by each user.

The result is that the chain of transactions is scrambled: an external viewer tracking wallet A doesn’t know to which exact wallet B the Bitcoin was sent to. Wallet B may contain Bitcoin pieced together from dozens of input wallets. The amount of participants, called the anonymity set, is important for the overall strength of mixing. It’s much more difficult to track one wallet out of 10,000 than one out of 10.

Related: Cryptocurrency Mixers and Why Governments May Want to Shut Them Down

Another solution was given by Bitcoin mixers. Though they utilized a similar approach, they were centralized services that held custody of the Bitcoin during the scrambling process. Nevertheless, mixers initially proved popular for users as they were much simpler to implement than the peer-to-peer CoinJoin.

Their security flaws were soon made evident by researchers. A December 2017 paper by Felix Maduakor demonstrated a fairly simple heuristic process to deanonymize mixer transactions. The algorithm relied on factors such as timing, Bitcoin transaction amounts and their corresponding fees to filter the destination wallet. In addition, one service had a simple web-based vulnerability that could leak all mixed transaction data by exploiting internal record keeping. A different 2017 paper also concluded that even the most popular mixers utilized poor security practices that made it easy to trace their operations. 

Despite the significant security flaws, mixers continued to be popular well into 2018. However, police seizures and voluntary closures pressured the sector and may have finally helped to curb their use. As Chainalysis noted in a July 2019 webinar, CoinJoin-based wallets offered by Wasabi and Samourai steadily gained popularity during 2019, processing over $250 million in Bitcoin.

As a largely decentralized process, CoinJoin doesn’t rely on the security skills of mixer operators, thus removing unnecessary failure points. Despite this, the system is far from perfect. Maxwell later distanced himself from pure CoinJoin implementations, noting in a presentation that “if all the users are putting in and taking out different amounts, you can easily unravel the CoinJoin.”

Though that can be mitigated by utilizing fixed output amounts, similar to cash bills, it doesn’t appear to be enough to prevent tracking. In a conversation with Cointelegraph, Chainalysis CEO Michael Gronager explained:

“CoinJoins and mixers do achieve a certain level of dissociation between funds. However, in many cases this link can be reestablished through forensics work.”

Further evidence of the vulnerability of CoinJoin was given by Chainalysis’s investigation into the operations of PlusToken. According to a December 2019 report excerpt, the firm was able to track 45,000 Bitcoin out of the 180,000 total collected by the Ponzi scheme, despite complex obfuscation tactics that also included CoinJoin services. Nopara73, a pseudonymous developer behind Wasabi wallet, defended the technology in an “Ask Me Anything” thread on Reddit, saying, “I don’t think the technical part of the story is hard to figure out. Hint: they had more coins than the entire market cap of Monero.”

Privacy-based altcoins rising

As the ecosystem matured, dozens of projects arose specifically to provide private transactions to users. The present landscape is divided into several major families of coins based on different protocols. 

Monero (XMR) is currently the largest privacy coin by market capitalization, and it was one of the first to be introduced on the market. It’s based on the CryptoNote protocol pioneered by Bytecoin (BCN) in 2014 and augmented over time by RingCT, a system combining ring signatures and Confidential Transactions cryptography.

Monero makes an effort to hide all parts of a transaction: sender, receiver and amount. 

The sender is hidden via ring signatures. When creating a transaction, Monero aggregates the sender’s true output with other semi-random outputs picked from previous blocks. This creates an effect similar to CoinJoin by giving plausible deniability to the user, as external parties cannot pick the real coins without additional information. 

A technology called Confidential Transactions further improves on this by hiding the amount of coins for each output. Stealth addresses, a part of the original CryptoNote protocol, hide the receiver by creating a one-time wallet address for each transaction.

Monero’s closest competitor is Zcash (ZEC), which uses zero-knowledge cryptography to hide transactions. At a high level, zero-knowledge proofs allow for a “prover” — a user sending the money — to conclusively demonstrate to a “verifier” — or a blockchain node — that they know a certain value, without ever revealing the actual number. Used in a privacy-centric blockchain, this allows the details of a transaction to be completely encrypted and uses zero-knowledge proofs as a guarantee that it is valid. Many variants of zero-knowledge proofs exist. The one currently used by Zcash is called zk-SNARKs.

The latest major addition to privacy coins is the Mimblewimble protocol. Implemented in projects such as Grin and Beam, Mimblewimble primarily uses CoinJoin and Confidential Transactions to ensure privacy. However, its blockchain architecture is significantly different from most other coins. 

For example, Mimblewimble blockchains do not have permanent addresses. Instead, crypto is exchanged in a two-step process: the sender delivers partially filled transaction information through external means, such as emails, and the receiver must then add their own data before retransmitting the completed transaction file.

Several other projects use CoinJoin variants for their privacy features. Dash’s PrivateSend mixes coins through multiple steps of CoinJoin, while Decred’s (DCR) privacy mode uses CoinShuffle++, an updated and improved implementation of the original protocol. Though there are bitter debates between the opposing camps, each protocol comes with their own advantages and disadvantages.

The price of anonymity

Privacy protocols in general suffer from performance and scalability issues. The additional layer of secrecy often has a very measurable cost in terms of transaction size, speed of execution and computing performance.

Monero’s transactions are several times heavier than their equivalent on the Bitcoin network. Though the introduction of “bulletproofs” range proofs was a significant remedy to this problem, Monero transactions tend to be heavier than 1,500 bytes, while simple Bitcoin transactions can be as low as 280 bytes. 

This poses a significant problem for scalability. Though Monero has dynamic block sizes, avoiding true bottlenecks, the entire blockchain still grows significantly faster in size. Eventually, it will become impossible to maintain Monero nodes on simple computers, which its community sees as a major aspect of decentralization.

Zcash is a mixed blockchain containing both transparent and “shielded” transactions. Private transactions suffer from a similar size problem to Monero, weighing on average 2,000 bytes.

Before the introduction of Sapling, sending money privately also required about 4 GB of available RAM, which made shielded transactions highly impractical.

Similar problems exist for Mimblewimble-based coins. Its raw transactions are over 5,000 bytes due to the presence of heavy-range proofs. The primary scalability benefit for Mimblewimble-based coins is the ability to “prune” a blockchain: removing past transaction data without impacting its validity. Grin estimated a reduction of roughly 98% for a sample case of 10 million transactions, from around 130 GB to just under 2 GB. That is less than half the size of the Bitcoin blockchain when it had the same amount of transactions in December 2012, according to data from Blockchain.com. 

The ability to prune a blockchain is a major factor for some researchers. While Monero was considered unable to scale through pruning, the team released a limited implementation of it at the start of 2019. Critics described it as “more like sharding than pruning” due to its failure to completely remove transactions. Monero developers explained on Twitter that removing outputs is impossible with current technology, adding, “Our implementation definitely prunes certain transaction data.”

Zcash was also unable to prune its data, but the team at Electric Coin Company — the company behind Zcash — chose to further leverage zero-knowledge proofs to introduce a similar concept of scaling. Its proposed Halo technique would use a “proofs of proofs” system that would confirm the validity of the blockchain’s past states. This would allow nodes to only hold data on recent transactions, together with a proof of correctness for everything that occurred earlier.

Compromises on privacy

Practicality, decentralization and anonymity issues often pose a trilemma for any single privacy technology. Though Monero scores relatively well on practicality and decentralization, its anonymity has been put into question in the past.

Fireice_uk, a pseudonymous Monero contributor and the developer of the xmr-stak miner software, identified several weaknesses in the ring signature approach, noting that churning immediately exposes the true origin of the funds by creating a loop of transactions. They also demonstrated a way to break normal ring signatures based on leakage of metadata: the transaction’s time of creation can be compared with internet service provider records to identify the true output.

Leading Monero community members responded on Reddit, acknowledging some of these concerns while downplaying their relevance. When asked by Cointelegraph whether the team acted upon these concerns, fireice_uk said that the efforts have been insufficient:

“Over the past year, the volume of research into metadata leaks increased and they only fixed the very lowest hanging fruit. The current state of affairs leaves me uncertain if the whole ring signature based family of coins is viable — and I’m saying that as a dev of one of them.”

Sarang Noether, a pseudonymous member of the Monero Research Lab, responded to this criticism in a conversation with Cointelegraph. While noting that this is a “subtle issue” that depends on the implied threat model — who wants to deanonymize the transactions — they added:

“There’s network-level metadata floating around, which may or may not affect a particular user depending on their threat model — and is tricky to reduce. There’s on-chain metadata floating around, including things like timing, input/output structure, non-standard transaction data, etc. Reducing exploitable metadata is important, but eliminating it entirely is impossible.”

Addressing churning, Noether noted that it is a subject of ongoing research, while revealing that there are proper and improper ways of doing it: “Similar to how to choosing decoy inputs poorly can lead to heuristics about what is more likely to be the true signer, churning ‘badly’ could lead to heuristics trying to identify the process.” 

Though the cryptography powering Zcash shielded transactions is often described as fundamentally better than that of Monero’s, the dominance of transparent addresses places strong restrictions. Researchers from University College London, now officially known as UCL, were able to de-anonymize several transfers by tackling the conversion step between shielded and unshielded coins. When asked whether Zcash sees value in increasing the amount of shielded transactions and thus the anonymity set, Electric Coin Company’s vice president of marketing, Josh Swihart, told Cointelegraph:

“A large anonymity set is important, and we don’t believe there is a point of diminishing returns. We share the world with billions of people, each driving dozens of transactions per month, and hundreds of millions of businesses and institutions driving many multiples more. The anonymity set should be large enough to safely protect all of those people, companies and institutions on a per-transaction basis.”

Swihart also pointed out that the amount of fully shielded transactions grows over time, which increases its anonymity set. Nevertheless, data shows that the ratio of shielded to transparent transaction volume has been oscillating between 10% and 20% for most of Zcash’s history, with little recent growth:

 Volume of shielded transactions on Zcash

Centralization is also a major concern for Zcash, as zk-SNARKs require a “trusted setup” to properly function: specific parameters set by the developers. Any security or trust compromise during each generation event would be catastrophic, as attackers would be able to create new coins virtually undetected. Nevertheless, the introduction of Halo-based technology would remove the need for a trusted setup. 

Discussing the importance of anonymity sets, fireice_uk emphasized, “It is life-or-death critical. It is impossible to hide in a crowd of 1. Anything that can be done to whittle down the crowd will impact privacy.” They added, “We can see that very well with the Mimblewimble break,” referring to the breakthrough by Ivan Bogatyy — a researcher at Dragonfly Capital — who de-anonymized up to 96% of real-time Grin transactions.

Grin developers responded by dismissing the importance of the breakthrough. However, they acknowledged that “Grin’s privacy is far from perfect,” noting that “transaction linkability is a limitation that we’re looking to mitigate.”

Is there a clear leader?

Though each system has its own strengths and weaknesses, it ultimately comes down to each user to make the best of available tools. Even Zcash, which has arguably the most resilient anti-linkability system, can still be misused through careless transitions between transparent and shielded addresses. Monero is in this sense somewhat easier to use. As Chainalysis reported in its webinar, it is the preferred privacy coin in darknet markets.

Yet, Bitcoin remains the most popular payment method. Furthermore, its users tend to not place emphasis on privacy, with the majority of funds to darknet markets sent directly from centralized exchanges.

Privacy-enhancing technology appears to be uninteresting to darknet market users, the segment that arguably would need it most. Until privacy coins are widely adopted in high-stakes environments like these, debates on their anonymity will remain highly theoretical.

Non-criminal case for privacy

It’s important to note that privacy should not be strictly associated with illicit use. Chainalysis highlighted that only a little more than 10% of funds sent to mixers come from criminal activities.

A similar proportion can be expected in privacy coin use. Though regulators are increasingly scrutinizing cryptocurrency-enabled crime, maintaining some privacy for legitimate use is critical, according to Chainalysis’s CEO:

“Complete anonymity opens the door to illicit activity that by definition cannot be investigated. That’s not a world you want to live in. On the other hand, complete transparency means no privacy at all. That’s also not a world you want to live in. We believe that the market decides, and currently the non-privacy coins see the most momentum.”

Speaking on behalf of the company, Swihart’s stance on transaction privacy understandably went even further. Electric Coin Company believes that a person’s ability to transact with others is a fundamental right, while “businesses have a right to transact securely without exposing information to competitors or others that might wish them harm.”

Answering a question on whether facilitating criminal use is an acceptable compromise for privacy, Swihart added, “The compromise argument is a red herring. People with bad intent will use whatever tools they can to do illegal things. Today, that mostly involves the US dollar.”





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Who takes gold in the crypto and blockchain Olympics? – Cointelegraph Magazine

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Every four years (usually), the world comes together in a celebration of sport and competition at the Olympic Games. In the spirit of Tokyo 2020, let’s look at countries that are deserving of gold medals across different spheres of the cryptocurrency and blockchain space.

The variety of sports featured at the Olympics have changed over the years, and the current summer Olympics in Japan features a total of 33 different sports. Exciting competitions like skateboarding and surfing were added for Japan as the global showpiece continues to evolve and adopt different sports.

The cryptocurrency and blockchain space is similar in this regard. Many different working parts make for a colorful community both united and divided by their preferences of cryptocurrencies and blockchain platforms.

Let’s take a look at which countries and institutions take home gold medals in their respective crypto and blockchain codes.

Gold for Bitcoin adoption goes to… El Salvador

Sports often have fans cheering for the underdog and El Salvador has emerged as one of those lesser-known players that have burst onto the global stage in 2021. The Central American country grabbed headlines this year as it officially became the first in the world to recognize Bitcoin as legal tender

Without delving too deep into the specifics, El Salvador’s congress voted to pass President Nayib Bukele’s Bitcoin Law which recognizes Bitcoin (BTC) as legal tender alongside the United States dollar, with 62 of a total 84 votes in agreement with the new legislation.

 

 

The law allows citizens to pay for goods and services in Bitcoin, and Bukele also stated that the Salvadoran government will guarantee the convertibility of BTC into USD at the time of any given transaction. The government plans to airdrop $30 worth of BTC to every citizen later this year.

There have been critics of the law change both locally and abroad, but the overall sentiment seems positive for the adoption of Bitcoin and a change of perception toward the preeminent cryptocurrency. 

Nevertheless, there are a few final hurdles that lie ahead for the country. Firstly, the International Monetary Fund has issued its own warning about the potential downsides of countries adopting Bitcoin that currently have unstable inflation rates. 

Secondly, some citizens of El Salvador have also expressed their skepticism of the move. A survey undertaken at the beginning of July involving 1,233 citizens revealed that nearly half of the respondents knew nothing about Bitcoin. Of the poll takers, 20% agreed with the move, highlighting the need for an educational campaign to complement the progressive move to make BTC a legal tender in the country.

Change is often met with uncertainty and resistance, but in terms of progression and adoption, El Salvador takes the gold medal in this first category.

Switzerland takes silver in the category, thanks to its crypto-friendly laws that have boosted the use of cryptocurrencies and companies working in the space. The USA clinches the bronze medal thanks to the efforts of Miami’s Bitcoin-friendly mayor Francis Suarez, who’s been driving various initiatives to promote the use of BTC.

China leads the CBDC race, but anti-crypto policies lead to disqualification

China has been a powerhouse at the Olympics over the past two decades with its sporting program producing a fine pedigree of Olympic weightlifters, gymnasts, divers, shooters and martial artists. In the world of cryptocurrencies, the story is quite different.

China has taken a stern stance toward cryptocurrencies and has continued this policy in 2021, with its outright ban of mining completely rebalancing the Bitcoin mining ecosystem as a result. 

Interestingly enough, the nation is far ahead of the world when it comes to the race to develop a fully-fledged central bank digital currency, or CBDC. Over the past 18 months, China has piloted and rolled out significant testing of its Digital Currency Electronic Payment, or DCEP. 

 

 

Colloquially known as the digital yuan, citizens began testing the facility through lotteries that award a small number of participants in various cities with digital yuan, which they could use through a mobile app to pay for goods and services at thousands of participating vendors.

There is no denying that China has blazed the trail for the development, testing and roll-out of its CBDC. In the same breath, the DCEP is a government-controlled program, and the specifics of the technology and systems powering the digital yuan are shrouded in mystery.

However, China’s recent ban on mining in different regions and its zero tolerance of cryptocurrency exchanges means that despite its well-developed CBDC program, it falls out of the reckoning for a medal. Luckily, a number of other countries have also made significant strides in developing their own CBDCs. 

In the world of sports, fans often get behind the underdog, and this is certainly the case with the Bahamas and its Sand Dollar CBDC. The country has made significant strides with the development and testing of its very own CBDC and became the first country to go live in October 2020.

The Sand Dollar ecosystem continues to onboard more local banks and financial institutions, paving the way for widespread adoption of the CBDC and a fully digital payment environment. The Bahamas is the deserving recipient of the gold medal in this category.

Sweden has begun its first trial of pilot testing the e-krona CBDC with a couple of local banks and external participants. As it continues testing its system with local financial institutions, Sweden earns the silver medal in this category.

Cambodia and Ukraine have been credited for their own CBDC development programs by a recent report from PricewaterhouseCoopers, sharing the bronze medal in this category.

North America in the race for gold in Bitcoin mining

China was undoubtedly the gold medal incumbent of Bitcoin mining but this is quickly changing in 2021. Recent estimates saw China account for more than 70% of the global hash rate before various mining operations were forced to shutter in June.

Those firms that were able to quickly look for greener pastures would welcome their mining equipment. While various countries in Asia would be the closest locale to relocate to, North America is quickly becoming the new hub of cryptocurrency mining.

Research from the Cambridge Centre for Alternative Finance shows that the hash rate of American-based miners has steadily been on the rise over the past year and the latest regulatory move in China has only accelerated that point.

The Cambridge Bitcoin Electricity Consumption Index world map has yet to fully reflect the data from China’s regional mining bans in June, in order to get a better understanding of how the Bitcoin mining hash rate’s geo-distribution has changed. The latest map shows the distribution as of March 2021.

 

 

 

Nevertheless, from August 2019 to March 2021, the U.S. saw an increase in its contribution to the global hash rate from 4% to 16%, making it second to only China in terms of hash rate. This is largely due to a concerted effort from major mining operators in America steadily increasing their hash rate by acquiring new equipment during this period.

Kazakhstan has also opened its doors to relocate Bitcoin miners from China and has seen its share of the Bitcoin hash rate climb to around 8% of the global rate, according to Cambridge’s recent report.

China’s share of the global hash rate has dropped below 50%, while the United States’ has climbed. This picture, however, has still not factored in the major relocation of mining operations out of China.

It might be too early to give the U.S. the gold medal for Bitcoin mining, but the country seems to be on track to take over in the leaderboards if it continues at the same pace. China’s mining clampdown results in a disqualification, so the U.S. becomes the new gold medallist in this category.

Kazakhstan swoops in to take silver with its 8% contribution to the global hash rate, while Iran grabs the bronze medal with its 4.6% share. Canada and Malaysia just miss out on the podium in the category.

The regulatory race goes down to a photo finish

When it comes to progressive regulation that is driving cryptocurrency adoption and use, there are a number of countries that are vying for a crypto gold medal and can boast to have developed regulatory parameters that are helping the industry thrive in their locales. 

Malta has positioned itself as the blockchain island for a few years now and has attracted a number of the world’s biggest cryptocurrency exchanges and other crypto service providers. The country’s regulatory package is attractive, as crypto holders do not have to pay capital gains, wealth, or inheritance tax on their holdings, but trading is subject to income tax. 

Singapore is another country that has established comprehensive laws that have made it clear what cryptocurrency firms and service providers need to do in order to operate in the country. Singapore is also among a handful of countries that has zero capital gains tax on cryptocurrency income. 

South Korea has long been a country with an avid cryptocurrency user base and often sees Bitcoin trading at prices far higher than the rest of the world. The country has since developed strict regulatory frameworks but has also driven a number of initiatives to foster various services powered by blockchain technology.

 

 

 

 

Switzerland is another strong contender in this category, given its progressive attitude toward the cryptocurrency and blockchain space. Earlier in 2021, the Canton of Zug finally rolled out its facility for residents to pay taxes in BTC and Ethereum (ETH).

Canada is featured prominently in this race, having become the first country to approve a Bitcoin exchange-traded fund (ETF). The launch of the first Bitcoin ETF in February 2021 was a huge success, with the Toronto Stock Exchange’s Purpose Bitcoin ETF seeing nearly $100 million in trade volume on its first day. 

All in all, Canada has been hailed for its progressive regulatory environment for cryptocurrency use. Cryptocurrencies are classed as commodities, and their usage for goods or services is treated as barter transactions. 

These five countries, therefore, end the crypto and blockchain regulatory race in a photo finish that’s hard to call. As we bring up the slow-motion replay, we can confirm that Canada can take the gold in this category for its broad range of crypto-friendly regulations, from ETFs to clear tax laws and favorable mining tariffs.

Malta takes silver, as its status as the “Blockchain Island” has waned somewhat due to a change in governmental leadership that had initially championed this cause. Singapore and South Korea share bronze in this category.

The U.S. takes gold for institutional adoption

The modern-day United States optimizes a capitalist society, and the disruptive nature of cryptocurrency has led some forward-thinking individuals, companies and institutions to move quickly to leverage the potential of cryptocurrencies and blockchain technology.

Enter MicroStrategy, a global leader in business intelligence services, which in 2020, pioneered a move to convert its fiat-based treasury holdings to Bitcoin. The company’s CEO, Michael Saylor, is a fierce Bitcoin proponent and has relentlessly acquired BTC since the firm’s decision to bank on the preeminent cryptocurrency in August last year.

MicroStrategy’s move is widely credited for influencing electric vehicle manufacturer Tesla and its founder Elon Musk to decide to begin investing in Bitcoin and, even at one point, accepting the cryptocurrency as a means of payment for its vehicles. 

Cryptocurrencies have been touted as a disruptive force in the payments industry, and American firm PayPal looked to gain first-mover advantage by announcing that it would roll out cryptocurrency custody and payment services on its widely used platform.

 

 

American investment firms have also led the way in allowing a wider audience various ways to gain exposure to cryptocurrencies. None more so than Grayscale Investments, which has a number of cryptocurrency trusts that are valued at over $33 billion to date. Its flagship Bitcoin Trust is currently valued at over $24 billion alone.

These factors are more than enough to hand America another gold medal in the Crypto Olympics in the race for institutional adoption.

Canada takes silver in this category due to its crypto-friendly regulation and its progressive ETF laws that have seen it overtake its North American neighbor in that regard. Thailand walks away with a bronze medal here, as its oldest banking institution, Siam Commercial Bank, has committed $110 million to invest into the decentralized finance sector through its venture capital arm SCB 10X.

DNFs

A number of countries fall into the disqualification category for their varying stances on cryptocurrency and blockchain technology.

In February 2021, Nigerians were caught off guard as the country’s central bank effectively barred local banks from servicing cryptocurrency exchanges. For a country that still ranks as number one for Google’s search of Bitcoin, the move was criticized both locally and abroad. Nigeria’s Securities and Exchange Commission had been developing crypto regulatory plans which were suspended as a result.

India is another country that has a checkered past when it comes to its attitude toward the cryptocurrency space. The country’s government has long been threatening an outright ban on the use of Bitcoin, but this is slowly changing with talk of asset classification providing proper regulatory frameworks and oversight for the burgeoning industry. 

India’s banking sector is still at odds with the cryptocurrency movement, with some of the largest institutions reportedly cautioning customers about acquiring and using cryptocurrencies. It’s clear that mixed messages from India’s government and central bank in recent years have created a swathe of uncertainty that can only be addressed by proper education about the sector.

China’s recent ban on cryptocurrency mining in different regions of the country also sees it feature in this disqualification category, as the move caused major disruptions in the mining ecosystem, forcing operators to close up shop and look for greener pastures abroad.

The Chinese government also issued directives to local banks not to service businesses involved in the cryptocurrency industry, which is cause for greater concern. Cutting off integration with the traditional finance sector means that citizens in the country are robbed of the ability to access and use cryptocurrencies to their full potential.

 

 

 



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Newly found Monero bug may impact transaction privacy, developers warn

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Developers of privacy-oriented cryptocurrency Monero (XMR) have identified a bug that could potentially impact users’ transaction privacy.

On Monday, the official Monero Twitter account warned users of a “rather significant bug” that has been spotted in Monero’s decoy selection algorithm, a system designed to hide real output transactions among 10 decoys in a ring.

First identified by software developer Justin Berman, the bug causes a sufficient probability that users’ output transactions can be identified as the true spend among decoys if users spend funds immediately following lock time in the first two blocks, or 20 minutes after receiving funds.

The developers emphasized that the bug does not pose a risk to any information about addresses or transaction amount but rather only allows to trace the occurrence of an XMR transaction. “Funds are never at risk of being stolen. This bug persists in the official wallet code today,” Monero developers noted.

According to an XMR contributor on Reddit, the newly discovered bug impacts transactions that are from the past. To mitigate the potential privacy risks, Monero developers recommended waiting one hour or longer before spending newly received XMR until the community rolls out a fix in a future wallet software update to mitigate the potential privacy risks. A full network upgrade, or a hard fork, is not required to address this issue, the developers noted.

Related: Privacy coin Monero pumps 31% amid US taxation plans

Launched in 2014, XMR is a major privacy-focused cryptocurrency designed to support secure, private and untraceable transactions, using a special type of cryptography to ensure that all its transactions remain 100% untrackable and unlinkable. Monero is the 29th largest cryptocurrency by market capitalization and is the biggest privacy-centric digital currency by value. At the time of writing, XMR is trading at $222, down 3.8% over the past 24 hours, according to data from CoinGecko.

As previously reported by Cointelegraph, multiple global financial regulators have attempted to crack Monero’s privacy. Last year, the United States Internal Revenue Service offered a bounty of up to $625,000 to anyone who can trace Monero transactions.