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In this article I want to talk about the problem of privacy in cryptocurrencies world. It is a highly relevant topic for cryptocurrencies these days. There are situations where neither companies nor individuals want all of their information being publicly visible on a blockchain, in a way that it can be read without any restrictions by governments, family members, friends, or business competitors.
BLOCKCHAIN
A blockchain is a shared database that records transactions between two parties in an immutable ledger. Blockchains document and confirm pseudonymous ownership of all existing coins within a cryptocurrency ecosystem at any given time through cryptography. After a transaction is validated and cryptographically verified by other participants or nodes in the network, it is made into a "block" on the blockchain. A block contains information about the time the transaction occurred, previous transactions, and details about the transaction. Once recorded as a block, transactions are ordered chronologically and cannot be altered. This technology rose to popularity after the creation of Bitcoin, the first application of blockchain technology, which has since catalyzed other cryptocurrencies and applications.
GDPR
With the recent adoption of the General Data Protection Regulation in the European Union, questions regarding blockchain's compliance with the act have arisen. GDPR applies to those who process data in the EU and those who process data outside the EU for people inside the EU. Personal data is "any information relating to an identified or identifiable natural person". Because identities on a blockchain are associated with an individual's public and private keys, this may fall under the category of personal data because public and private keys enable pseudonymity and are not necessarily connected to an identity. A key part of the GDPR lies in a citizen's right to be forgotten, or data erasure. The GDPR allows individuals to request that data associated with them to be erased if it is no longer relevant. Due to the blockchain's nature of immutability, potential complications if an individual who made transactions on the blockchain requests their data to be deleted exist. Once a block is verified on the blockchain, it is impossible to delete it.
CONCERNS REGARDING BLOCKCHAIN PRIVACY
- Transparency
Although many advocate for the adoption of blockchain technology because it allows users to control their own data and exclude third parties, some believe certain characteristics of this technology infringe on user privacy. Because blockchains are decentralized and allow any node to access transactions, events and actions of users are transparent. Sceptics worry malicious users can trace public keys and addresses to specific users. If this was the case, a user's transaction history would be accessible to anyone, resulting in what some consider to be a lack of privacy.
- Decentralization
Due to blockchain's decentralized nature, a central authority is not checking for malicious users and attacks. Users might be able to hack the system anonymously and escape. Because public blockchains are not controlled by a third party, a false transaction enacted by a hacker who has a user's private key cannot be stopped. Because blockchain ledgers are shared and immutable, it is impossible to reverse a malicious transaction.
- Private keys
Private keys provide a way to prove ownership and control of cryptocurrency. If one has access to another's private key, one can access and spend these funds. Because private keys are crucial to accessing and protecting assets on the blockchain, users must store them safely. Storing the private key on a computer, flashdrive or telephone can pose potential security risks if the device is stolen or hacked. If such a device is lost, the user no longer have access to the cryptocurrency. Storing it on physical media, such as a piece of paper, also leaves the private key vulnerable to loss, theft or damage.
The future of private transactions could be YELLOW.. Ehm sorry, CAMO!
BANANO Privacy Layer: CAMO BANANO Light Wallet Released!
There’s currently a lot of experimentation about privacy features going on in the cryptocurrency world, and BANANO doesn’t only offer near instant and feeless transactions, but also is developing CAMO BANANO as privacy layer! After releasing CAMO BANANO Phase 1 before, they now release the CAMO BANANO Light Wallet which makes private potassium-rich transactions much easier!
What is Camo BANANO?
First of all, CAMO BANANO Phase 1 as described here and available for now allows for confidential transactions, but not for real privacy yet. At the current stage, Camo BANANO is the equivalent of opening 20 BANANO accounts on your BANANO Vault and using all 20 accounts to do transactions, meaning that any person you’d interact with only knows 1/20th of your stack. Camo BANANO allows to make this process easier (as kind of a manual mixer) and thereby in its Phase 1 adds confidentiality to BANANO transactions, and the CAMO BANANO Light Wallet makes usage at the current stage easier. However, CAMO BANANO is currently being developed further, and CAMO BANANO 1.19 will increase privacy further by masking the amounts.
How does Camo BANANO work?
Camo BANANO is a way for two parties to share an account and execute a transaction without sharing their own seed/private key, respectively. At the current stage, Camo BANANO for example allows both accounts (which can be operated by one or two parties) to send huge quantities of BANANO to each other, without them showing up on a rich list.
To use Camo BANANO, you need to have a public BANANO address that is represented by a specific address generated by the Camo BANANO website (and now you can also just use the CAMO BANANO Light Wallet of course, making the usage much easier). BANANO sent to this address in order to open it doesn’t have to be kept on this address. Basically both parties (sender and recipient) use a combination of a public BANANO address and its representative to generate a shared private key, and then any BANANO sent to the address behind the shared private key can be accessed by both parties, without showing up on neither of the “public” addresses of both parties. If using all of the 20 addresses generated by the shared secret key, the transaction can further be split between 20 different accounts to hide large transactions.
You can find more information about BANANO and the community here.
What do you think about Camo Banano and the private transactions?
