Welcome to Part Three of  this three-part series on privacy coins. Here, I will make the concluding remarks of this series, proclaim my loyalties based on the analysis of Part Two, and plant my flag. This section gives some of my  clear opinions on privacy coins, and analyzes my favorite privacy coin,  Particl.

Overall Analysis

In  my opinion, the most important feature of a privacy coin is its  fungibility or its privacy features. In other words, can you send and  receive money without transaction history being recorded and transaction  amounts being known? This automatically writes off coins such as Dash  and Verge that use inferior technology compared to other privacy coins,  and do not provide full sender, receiver and transaction amount privacy.  There is an interesting video by Gregory Maxwell, the creator of  Coinjoin, with his opinions on Dash.[44] It is a must watch. I am also principled in the fact that a  privacy-focused cryptocurrency should require no trusted setup and so  this also writes of Zerocoin and Zerocash coins, until these coins  upgrade to a zero-knowledge proof system that has a trustless setup, something that is in the works. Zerocoin, I am still rooting for since implementation takes time. Zerocash's creator, however, has explicitly  stated that they are interested in making it possible for criminals to  be tracked while providing privacy for others.[45]That  is a minus for me but may be a plus for others. Leaving a backdoor for a  coin that already has a trusted setup as a given, means that anything  Zcash does in the future is tainted, for me. The knowledge that a  founder sees it as a benefit to have the power to selectively grant  privacy, is unsettling.

Other technical features such as a coin being based on Proof of Work or Proof of Stake consensus, or how the development began, are too specific to the individual user's preferences to make any broad statements about them. This also applies to many of a  coin's attributes as listed in the Privacy Coin Matrix. Here, disagreements can become political or situation-specific in nature. For  example, I prefer proof-of-stake, because a malicious actor has to go  directly against his self interest, to launch an attack. But there are  people who think that proof of stake is trash and that proof of work is  also trash. There are different consensus mechanisms beyond these two,  and you would have to do the research in order to understand them.  Beyond providing privacy itself, how much value a coin's other features  provide is up to you to decide. Some privacy coins have had specific issues in the past such as Monero having older transactions being  traceable [46] or Dash being very centralized at its start[47].  I also strongly prefer coins who have cryptographers that are  pioneering, described in Part Two as doing active research or  implementing code in new ways, rather than simply copying. This is important for security in the short and long term and rules out most  other privacy coins for me. Flaws in code implementation must also be  viewed within the context of how nascent the technology being developed  is, as projects figure out how to meet the practical needs of end users.  Most bugs can be fixed and the level of appropriate forgiveness or  scorn is up to the end user. In terms of ability to quickly adapt when  bugs are found, there may be some merit to looking at the development  team's ability to handle them. For the reasons stated above, other privacy coins such as Monero, and Grin and Beam that are working on Mimblewimble, I respect.

Introducing Particl

My  favorite privacy coin is the one I work with, Particl. The development  team provides consistently secure code that has novel implementations of  existing technology. They do not rush to release features when there  are the high stakes of affecting the intimate financial details of its  users. This core strength that I call 'good code' is the first reason  why I think the project is exemplary. I will provide evidence of this  'good code'. This strength is not necessarily to say that it is the only  project that has it, or that I think this is how the coin should market  itself, but one of the reasons why I believe it will be around in the  long term.

Strength #1 - Good Code and Innovation

Particl  is a privacy coin built on the Bitcoin codebase, using  ring-confidential transactions (Ring-Ct) and stealth addresses, while  building decentralized applications (dapps) on its blockchain. The first  of these decentralized applications is a marketplace. But let's look at  the currency itself as a privacy coin or privacy platform. The most  interesting aspect of the cryptography used in the project is that it  implements Ring-Ct on the Bitcoin codebase, and is the first project to  do so. This is unlike Monero which was based on Cryptonote that had its own codebase, as described in Part Two. But for Particl, this means that  the project follows the releases of Bitcoin, updating the added privacy  features of Particl each time as well.

This is a unique feature  of Particl, that will make it easier for other developers versed in  Bitcoin to work on the Particl codebase in the future when more decentralized apps are built. There are other features that are unique  to Particl as well and the project's technical achievements are  highlighted by how much they are imitated. Being an open source project,  the team is guided by its vision rather than profits. They are without  technical documentation or active marketing but with open source code  available on its Github. So, what began as a volunteer community  project, first known as ShadowCash, has been quietly working in the background while other teams, with permission, take inspiration. One of  Particl's core developers, Tecnovert (TV) is responsible for certain key  innovations when it comes to implementing privacy technology on the  most mature codebase, Bitcoin. These include that:

  • Any implementation of stealth addresses on Bitcoin core was most likely forked from Tecnovert's code
  • Any bitcoin core fork with ring signatures was most likely forked from Tecnovert's code.
  • The ability to import a wallet from a mnemonic (or seed phrase) on a bitcoin core fork was first implemented by Tecnovert.

Particl  was also the first coin to implement cold staking and hardware cold staking. Cold staking refers to that fact that stakers (who verify  transactions in a proof of stake coin) can stake funds from a secondary  wallet that stakes on behalf of the original wallet where coins are  stored. Hardware cold staking allows this to occur even when those coins  are stored in a hardware main wallet. This provides the highest  security available for a proof of stake coin. To clarify, Blackcoin and Bitbay are two other coins that also had features called cold staking,  but which were not actually the same as a second wallet staking on your  main wallet's behalf even when the man wallet was offline. There was  also another project called Stakenet simultaneously working on cold  storage staking, but Particl was the first to implement its version on  mainnet. Particl also consistently has some of the strongest development  according to ranking systems that look at code commits and project  development, such as one called Darpal Ratings that does a GitHub Code Audit[48].

Apart  from stating these facts, there are multiple examples of projects using Particl's source code. Verge, a popular cryptocurrency that uses  stealth addresses and Tor in its Wraith Protocol, directly uses the code  from ShadowCash, Particl's source project, for its stealth addresses.[49] And based on their roadmap, they plan to implement Ring-Ct, but this is likely to be Particl's implementation of Ring-Ct. This  is a very popular cryptocurrency that does not offer true privacy and whose team has to wait to implement it's own privacy solutions.

Veil,  a newer project that combines Zerocoin and Ring-Ct technology on the Bitcoin codebase, also uses code for Ring-Ct from the Particl project.[50] Both Verge and Veil however do give credit to original development  teams. There are also coins that imitate the user interface of Particl  and Shadowcash, developed by Particl designers Gerlof Van Ek and Martin  Allien. These include Spectrecoin[51], Moin, and TokenPay who even copied promotional slides [52](see the PDF version for images).  This just seems lazy. There is also a new coin, which probably won't be  around for long, that has copied Particl's code, imagery, and verbiage  without giving credit and without leaving its project as open source, as  stipulated in the license. I won't name it but it is important to note  the volume of intellectual interest in Particl.

Strengths #2 and #3 - Accessibility and Development

Apart  from the high quality of the code itself, another one of Particl's core strength is its accessibility due to its being built on Bitcoin. This is a primary advantage over Monero, which also has 'good code' and an  innovative development team that gave us Ring-Ct. Particl being built on Bitcoin means that it can take advantage of any new features that the  arguably most stable and developed blockchain offers. This will also  allow new developers to onboard with more ease in the future to build  decentralized apps once the software development kit is released.  Another feature of the Particl project that stands out is that its first decentralized application, a marketplace, is a real use-case scenario.  There is currently no other marketplace like it, and it is a privacy  coin first that acts as a platform, so a core feature of the marketplace  is privacy. Furthermore, it is one of the few projects in the entire  crypto space to actually have a product that can be tested, beyond  simply being a currency. The marketplace is now in its alpha testnet  stage.

These strengths are important but many people do not care  about the background of a project, and do not want to or need to know  the ins and out of a technology to use it. They want to know how it will  benefit them and only want to hear about it when it is actually ready  to be used. This brings me to the first issue that I can identify with  the team.

Vulnerability #1 - Marketing

Because  my content is about authenticity, there are also some not as strong  parts of the project that I like. I believe that, being an open source  project, the core value provided by the Particl development team of  steady innovation may not carry its appeal through in the long run when  the time comes to introduce it to the broader masses. Particl is very  big on development and just a little bit into marketing. Because it is  open source, but lacking marketing, the value of the work done by the  developers will not necessarily be clear to those who are most likely to  benefit from it, even when the product is being used. This is because  anyone can copy it, as seen above, and market it, perhaps before that  other project's users even hears of the original source. One way I think  this could resolve itself in the long run, is that the marketplace as a  first application is very effective for a business model that will  attract newcomers to using the coin. This can create volume relative to a  limited supply, and so more funds for marketing. The marketplace will  provide practical solutions to e-commerce such as a trustless escrow  system, reducing barriers to entry for online e-commerce, and allowing sellers to keep their sales data private so they do not have to compete  with the platform (as is the case with Amazon). For these reasons, I  think that Particl has hit a home run with its first dapp idea. Most  other competition in the privacy coin space offers the privacy features  of a currency alone. This eventually sounds like noise to many users,  when so many coins provide transactional privacy. But even if the  Particl marketplace is only adopted by a small niche market, and is an example for future marketplaces, that's enough of a user base to affect  volume and bring awareness to keep the project around despite a focus on  building alone. Due to this, I think Particl is a highly underrated  project.

Vulnerability #2 - Governance

Another  concern is governance. This concerns the marketplace, and not the  entire project, however, since the marketplace is only the first decentralized application. The community understands the economic incentives that will allow volume to come in the future. The community  also understands the good that the marketplace can bring to the world, and its practical advantages from a business perspective. But I am not  convinced that the community understands the full legal implications of  opening a marketplace. Fortunately, the project team is very aware of  these implications and is doing everything in its power to bring its  vision to full actualization, while accounting for known regulatory  guidelines. The initial version of the marketplace will also support  public transactions as well. Nonetheless, it is only a concern, and I am  in full support of the project and its first decentralized application.  Future dapps could also bring success to the project as well.

I won't say that Particl is the best privacy coin, as I've stated in Part  Two, but it is my favorite. Why? I work with them. In this context, I  know what I'm talking about. It has a solid development team. It  provides both a currency and a platform that's positioned for adoption  since it's built on Bitcoin. And it has a great first product that will  appeal to many different target markets, whichever the team decides to  officially pursue. I highly recommend checking out the marketplace beta or looking into the GitHub repositories if you are more technically  inclined.[53] I also respect Monero, am looking forward to Mimblewimble  implementations like Grin and Beam, Bitcoin's dandelion protocol  implementation, if Zcoin does do it's Sigma protocol upgrade so that it  no longer requires a trusted setup, and I follow coins like PIVX, a  strategic partner of Particl's.


To conclude, I am personally fascinated by this space of emerging  technology. I proudly work with the Particl Project and humbly submit to  where privacy technologies lead in terms of which ones work best, and  which ones stand the tests of quantum computing, FUD, regulation, and  time.

You can watch the video version of Part 3 here.

If  you enjoyed this guide, don't forget to Subscribe or follow. If there  are things you think should have been included, or you want others to  know, leave a comment. You can connect with me on Twitter @cryptoramble  as well as read the article versions, with references included and  ongoing updates, at cryptoramble.com/guide. So long. Until next time.

Originally published at cryptoramble.com on January 31, 2019.

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