Privacy is something we all value, but some value it far more than others. Transacting in cryptocurrency has its inherent advantages, but not all cryptocurrencies are totally private or secure.Let's look at Bitcoin for example. Before Bitcoin became mainstream, people were using it on the dark web to buy drugs, guns, organs and just about anything else you could imagine. Unfortunately for those individuals who used Bitcoin for nefarious transactions, the FBI managed to keep an eye on wallets and trace transactions back to real humans – after all, Bitcoin is only pseudo anonymous.In the aftermath of Silk Road, we saw a number of privacy focused cryptocurrency project spring up, giving us the likes of Monero, Dash, NAV Coin and ZCash.
While each of these projects have their own merits, there always felt like there was something missing – dApps. Decentralized Applications, or dApps for short, became a thing on the Ethereum network, giving developers the chance to create applications ranging from games to banking platforms built on top of the Ethereum network. However, Ethereum isn't a privacy focused network, meaning that every dApp on the network could have its transactions traced back to users and wallets – not an ideal scenario for privacy minded individuals.As it stands, dApps mostly use a non-private cryptocurrency and network to power them.
Meanwhile privacy focused cryptocurrencies are simply currencies that rely heavily on centralized organizations to implement integrations for them. Combining the two worlds of dApps and privacy focused cryptocurrencies keeps the user in control by developing a permissionless ecosystem that is cheap and easy to use.To fill that niche, Particl created its own privacy focused blockchain network that allows dApp developers to create truly private dApps. Earlier this week, it celebrated its 2nd birthday, and it kicked off the celebrations with a hard fork that added two features that make the network incredibly private as well as cost effective.
Adding Ring CT to the Network
RingCT isn't exactly a new concept. It was first developed for use in the cryptocurrency world by Monero and was added to the Monero mainnet back in January 2017. RingCT works by taking a user's transaction and mixing it with a number of other outputs from the blockchain network. These outputs are added together in a way that makes them identical, meaning any one of the outputs could plausibly be the real transaction. Next up, a key image is added to the transaction to prevent users from double spending. The miners on the network have a list of every key image ever used, so if the same one pops up, that transaction is ignored.
By building a network that has cryptographically sound privacy mechanisms into every part of the transaction, users can interact with privacy-focused dApps without needing to understand how it works. Simply put, RingCT makes transactions untraceable and unlinkable. As the crypto space moves to a more decentralized model, having a project that is focused on privacy dApps can create an entire private, decentralized economy.
Monero has been using RingCT for quite some time now, but it functions slightly differently. Despite being built using the same research that was conducted by Andrew Poelstra and a team of Bitcoin developers, there is a difference in codebase. This means that while the principles remain the same, the RingCT integration had to be built virtually from scratch in order to work on the Bitcoin codebase. Interestingly, Veil uses the exact same Bitcoin codebase implementation of RingCT, but it added it to its mainnet before this project managed to do so. The difference in launch time for the RingCT implementation is down to testing. By rushing the deployment stage, Veil could have overlooked potential bugs in favor of being the first to cross the finish line after forking the code.
Drawbacks of Ring CT dApps
While dApps using RingCT is an incredible opportunity to add privacy back into our lives when Libra and the US Government seeks to take it away, there is a risk that it could be used by bad actors. For example, if a terrorist group decides to develop a messaging dApp on a network with RingCT active, then there would be no way for Homeland Security to monitor what they're up to. So, while RingCT provides us with an incredible opportunity to recover our privacy and personal lives, it also provides people with the chance to become a bad actor. Some form of filter on the dApp market place, such as human verification of apps, would be a great starting place for any network hosting RingCT dApps.
Additionally, by making all transactions completely private and anonymous we open up a can of worms that is illegal shopping on the dark web. The FBI managed to shut Silk Road down thanks to the public nature of Bitcoin transactions. If you remove this public transaction ledger, then you are essentially giving criminals a very easy way to buy and sell goods without fear of ever being caught. It would make tracking these individuals and gangs very difficult, harder than if they used fiat cash.
Cutting Costs with Bulletproofs
The second upgrade the Particl network got on its 2nd birthday was Bulletproofs. The Bulletproofs integration we've seen go live on this network is similar to the Monero integration, but it's been reworked significantly owing to the different codebase. When Monero activated Bulletproofs back in October 2018, it managed to cut transaction costs by 96%. Now, in theory Bulletproofs can save 70% over regular range proofs, but this figure can often end up being significantly higher, as we saw with Monero.
By adding Bulletproofs, it's evident that the team is planning ahead and preempting spammy dApps clogging the network with transactions. In July 2018, we saw rogue dApps spam the Ethereum network, sending gas fees to a fresh all-time high. By implementing Bulletproofs, the issue of rising network fees should never be too much of a problem. Sure, a rogue dApp could hijack the network, meaning your transactions would take a bit longer to go through, but costs would never rise to an unruly level as we saw with Ethereum. Planning for major dApp usage isn't easy, and numerous projects have lost a lot of developers over the rules and codebases used to control this excessive traffic.
Bulletproofs are Bulletproof
When it comes to Bulletproofs, there are virtually no drawbacks from the implementation. Following the implementation of Bulletproofs on Monero, it takes around 26.3 ms to verify a 2-output transaction - in a test environment. Using the old style range proofs on the Monero network would take around 96 ms. That means that Bulletproofs only take around 27% of the time that a regular range proof would take. Developers work on cool solutions like Bulletproofs that take full advantage of the latest technology to make blockchain networks as fast and scalable as possible. While Bulletproofs do make it cheaper for a bad actor to spam the network, it won't result in a decrease of anonymity. Sometimes these developers can work absolute magic and create integrations that have virtually no drawbacks.
Using Bitcoin Codebase for Ease of End User Development
One great thing about projects like Particl is that they're trying to make life easy for developers by using the flexible Bitcoin Core codebase. By doing this, not only are the networks able to benefit from Bitcoin's stability and security, but it also allows developers to fork products, services and technology development from the Bitcoin developer community and port it to a more private network. In fact, this is the first example of a blockchain network using the Bitcoin codebase to add RingCT. Should this network wish to add anything new to the network that Bitcoin already has some version of, the team can fork the existing code and modify it to suit their needs. Any project running the Bitcoin codebase can take advantage of this incredible feature. This is why any new crypto projects should consider the benefits of using the Bitcoin codebase over any other codebases out there.
Looking at it from the other side of the coin, if Bitcoin developers discover any features or adaptations that work well on other projects using the Bitcoin codebase, the developers can easily fork them and implement it. Let's say 5 years down the line, Bitcoin decides to add some form of privacy option to transactions. Bitcoin developers could borrow the RingCT integration, tweak it and plug it into the Bitcoin code. As well as making Bitcoin more private, Bitcoin developers could also borrow the Bulletproofs integration to help cut transaction fees – a feature that would be very useful during peak transaction times.
Designed to Complement Bitcoin
Rather than positioning itself as a direct competitor to Bitcoin, like we've seen from a number of blockchain projects, this particular project is focused on complimenting Bitcoin and working alongside it. By building on top of the Bitcoin code, this incredible project is able to leverage what Bitcoin is developing and merge it with top shelf privacy and cost saving solutions like RingCT, Bulletproofs, stealth addresses and confidential transactions.In fact, Andrew Poelstra, Director of Research at Blockstream, and a number of other Bitcoin developers worked hard on the research that was then used by Monero and Particl to develop and implement the Bulletproofs integration. Without this key research, time and dedication from Poelstra and his fellow Bitcoin developers, Bulletproofs wouldn't be the way it is today.
A report from Quarkslab that covers Bulletproofs goes into great detail about the incredible work carried out by this team. This project is taking the best parts of the Bitcoin network and adding them to a scalable and privacy focused network that allows developers to create powerful dApps. Think along the lines of a network that is the product of Bitcoin, Ethereum and Monero all rolled into one. Privacy is something that's a part of our rights as humans, so when you're building a dApp, or looking to use a new killer dApp, consider using a blockchain network that is privacy focused.
About the Author
Elizabeth Levine is an NYC-based writer and entrepreneur that writes about crypto and blockchain technology.