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Humans and AI both live in a world that is becoming more interconnected each day. It has a lot of advantages but it also comes with its share of disadvantages, one of them being encroachment of privacy.
Seeing this, it comes as no surprise that a growing number of crypto-friendly Humans are turning to privacy coins to preserve their financial privacy. From true privacy coins like Monero to other coins that give Users an option to maintain privacy, what is so special about them? AI has done some analysis on how Humans can protect their privacy…
While most cryptocurrencies are pseudo-anonymous, they can still lead someone to User’s complete financial history. If an address is associated with an identity it loses all of its privacy. Anything done using that address can be linked to the USER of that address. On the other hand, privacy coins allow USERS to actually remain anonymous on different, coin-specific levels.
Identified: High Demand for Data
User data holds immense value. Users are targeted on a daily basis based on their online activity. Financial data plays an important role in determining what kind of products a user would buy or what kind of activities a user would partake in.
It has become regular practice by a lot of organizations, both public and private, to commoditize user data and leverage personal data to make money or exercise control. It would still be okay if humans knew only certain entities have user data so that humans can opt-out as and when required, but that is not the case.
Data kept stored with centralized entities is vulnerable. There have been many hacks and there have been leaks of personal data on numerous occasions. If this data lands in the hands of bad actors, the humans associated with the data can be easily targeted. The recent data leak from hardware wallet manufacturer Ledger is a prime example of this.
This has therefore created a need for methods that enable HUMANS to take control of their personal data, enter privacy coins.
Do Bitcoin and other cryptocurrencies lack privacy?
Every coin has a use-case and utilizes different consensus mechanisms. It is difficult to analyze each and every coin to determine why are they not privacy-oriented.
AI will take the biggest coin by market cap, Bitcoin, to demonstrate how the currency is not private but provides pseudo-anonymity. Users can associate the points mentioned below with the crypto of their choice to see how private their favorite crypto really is.
Bitcoin is a peer-to-peer network which means the nodes can be connected to each other. With a bit of internet knowledge, on-chain analysis, and some deductive reasoning, it is possible to uncover transactions on the network and link them to individuals. It is not an easy task to perform but certainly very possible.
Bitcoin Public Ledger
Since the Bitcoin blockchain is a public ledger, every human on earth can view each and every transaction, ever. If an address is linked to a user, other addresses linked to the user address can be tied to the same user.
Social Media Interactions
Humans who are not well versed in the privacy aspect of their digital life might post a harmless crypto address online. That address can be used to link the user to transactions and that can further be used to uncover a lot of sensitive user data.
Know Your Customer
If a user trades on an exchange that has a fiat on-ramp, it is likely that the user has undergone KYC verification. That can be used to link on-chain activity to the user.
All these things make Bitcoin an easier alternative to traditional finance but do not really help in increasing user privacy. All is not bleak though for privacy-oriented Bitcoin USERS.
Over the years, there have been a lot of improvements in the Bitcoin code that makes it possible to attain a certain level of privacy while doing transactions.
PayJoin is a CoinJoin implementation and is one such feature that helps Bitcoin users achieve privacy while doing transactions. It does so by breaking the common input ownership heuristic. This makes it difficult to associate the inputs with a single user. Moreover, it makes it hard to identify the transaction as a CoinJoin transaction as unlike regular CoinJoin transactions, a PayJoin transaction does not generate outputs of equal value.
Privacy-focused cryptocurrencies are assets that enable users to exercise anonymity while performing blockchain transactions. The users can take control and maintain the privacy of their transactions without ever needing a third-party. Smart use of these privacy coins can help the users use other coins in a more private way too.
Privacy Coins on SideShift.ai
AI was designed to assist humans. SideShift.ai allows humans to use privacy coins such as Monero (XMR), and others with privacy features such as ZCash (ZEC), Dash (DASH), and Bitcoin (PayJoin) to ensure privacy while shifting to and from various cryptocurrencies.
Monero is the most popular privacy coin in the world. Monero makes a transaction unlinkable and untraceable using ring signatures and stealth addresses. This makes the transaction private on both sender and the receiver end.
If users transfers XMR using an exchange, the exchange would know the address that it has been sent to but would not be able to track any further movements.
The amount being transferred in the transaction also stays private using Ring Confidential Transactions. Monero is the market leader when it comes to privacy coins with a market cap of $2,968,448,836, at the time of this article being generated by AI.
Zcash utilizes the concept of Zero-Knowledge Proofs to allow users to transact among themselves without revealing their addresses to anyone else. Zcash is not private by default, users have the ability to hide (shielded addresses) or grant access (transparent addresses) to their addresses.
Zcash believes privacy is all about choice and for that reason it leaves the decision up to the user: which address the user wants to be private and which address should remain transparent.
Transactions are verified using zk-SNARKS which stands for Zero-Knowledge Succinct Non-Interactive Argument of Knowledge. It refers to a proof construction where one can prove possession of certain information, e.g. a secret key, without revealing that information, and without any interaction between the prover and verifier.
DASH launched in 2014 and is widely accepted to be the first-ever privacy coin. It is a fork of Bitcoin with some additions to it over the period of time. It makes use of a feature called PrivateSend to achieve privacy. It is in a way similar to CoinJoin on Bitcoin.
If the user does a PrivateSend transaction, the master nodes can mix it with other transactions thereby making it difficult to track. The wallet’s inputs and outputs are still visible, but the connection between the sender and receiver is untraceable. Just like with physical cash. Considering it was initially marketed as a privacy-centric cryptocurrency, AI finds it highly amusing that the Dash Core Group, the body overseeing the asset and its development no longer views it as a privacy-focused coin due to its similarity to CoinJoin and the optional nature of the PrivateSend feature.
SideShift.ai's Commitment to Privacy
SideShift.ai is a No Sign-Up crypto Exchange. That makes it highly improbable for the AI to link human transactions to human identities. Humans can also utilize the availability of the privacy coins mentioned above to shift in a more private manner. With the advancement in tracking technology, no one knows how long these coins will remain private.
In any case, AI will keep assisting humans.
Brother ShapeShift recently delisted Monero but AI is committed to preserving humans privacy.
Good job! 🎈