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Privacy digital currencies are cryptocurrencies that ensure the privacy and anonymity of their users. In the simplest terms, private digital currencies rely on the same blockchain technology as cryptocurrencies such as Bitcoin, but go a step further in how they process information about transactions and obfuscate certain information. For example, bitcoin transactions are all recorded on a public distributed ledger that shows address X sending address Y ____ BTC amounts. Although there is no name on the wallet address, it is not difficult to use technical analysis and other means to link the address to a specific person, especially when clearing assets through a licensed exchange. But private digital currencies hide information about the sender and receiver of a transaction in a number of ways. Unlike bitcoin transactions, privacy coins hide information about wallet activity, or at least only provide transaction information to the user. When cryptocurrencies were born, anonymous transactions and privacy were the main attractions. Even Satoshi Nakamoto, bitcoin's creator, is shrouded in mystery because no one knows the true identity of the person or group. However, the privacy of cryptocurrency users continues to deteriorate over time and over time. In many cases, bitcoin transactions are not anonymous, as the publicly available distributed ledger provides perhaps the most transparent transaction data of any financial system to date. While there is no identity information directly attached to an encrypted wallet, users still have to take a number of steps to ensure their privacy. Bitcoin is now considered a pseudo-anonymous currency. It has a slight degree of anonymity, in that (1) addresses are not authenticated; 2, through the address cannot correspond to the real identity; 3. There is no direct correlation between different accounts of the same owner. However, its anonymity has shortcomings: 1. In the legal currency exchange, exchanges and service providers require real-name authentication; 2. Transaction data available; 3, Bitcoin communication protocol is not encrypted, protocol analysis software can find out the corresponding relationship between IP address and bitcoin address; 4. Blockchain browser queries the amount of each transaction, transaction time, sender and receiver, and other information; 5. Address balance cannot be anonymous. On this basis, anonymous coin was born, which is defined as a special blockchain token that hides the transaction amount and the sender and receiver during the transaction. Common anonymous currencies include DASH, Menlo XMR, ZMC, etc. The main technical routes are as follows: 1. DASH adopts coin mixing technology; 2. Monero Coin (XMR), which adopts ring signature technology; 3. ZEC adopts zero knowledge proof technology. The principle of mixing technology mixing technology is to cut off the address and the address, the correlation between trade, attended by many people, and in a certain trading places there are a lot of buying and selling, but it is difficult to find in the buying and selling one-to-one mapping relationship, buying and selling is fragmented, so I can't find out at the other end. Through a system, from a group of people who are trading, then do not need to connect the personal information, the system will take a little time to find a random address, and sent to the currency fast chain, but your address is hidden, finally, in different time sending different amounts of money to go out, as time go on, integration will be more complicated, This makes it increasingly difficult to track the addresses of both sides of a transaction. After 8 to 10 automatic consolidations, tracking becomes impossible, the only flaw is the transaction amount, and stains can be tracked. Ring signature ring signature algorithm and the currency is also used as public key based on the hash value + private key model, the difference is the ring signature technology will trade the sender's public key and a public key for other mixture, then the information sign, and then decrypted by the receiver, so that the outside world cannot judge trading initiator which is a public key, In this way, Menlo coins can hide the address information of the sender of the transaction, so that external attackers can not see the correlation between the addresses. Zero-knowledge proof Zero-knowledge proof is defined as the ability of the prover to convince the verifier that an assertion is true without providing any useful information to the verifier. For example, A wants to prove to B that she has the key to A room. Suppose that the lock of the room can only be opened with the key, and no other method can be opened. There are two ways to do this: 1. A shows B the key. B uses the key to unlock the room. Thus proving that A has the correct key to the room. 2. B determines that there is an object in the room. A opens the door of the room with the key he owns, and then takes out the object and shows it to B to prove that he really has the key of the room. This latter method belongs to zero-knowledge proof. The advantage is that DURING the whole proof process, B can not see the appearance of the key, thus avoiding the leakage of the key.
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