Do Truly Anonymous Cryptocurrencies Exist?
Cryptocurrencies continue to redefine the finance world by providing opportunities for people to make transactions using digital currency. One of the main advantages of using digital currency such as bitcoins is that the transactions are anonymous to a certain extent.
But, the questions that we need to ask ourselves are that do truly anonymous cryptocurrencies exist? People are keen on protecting their privacy and confidentiality especially in the current wake of numerous online threats such as spyware and malware.
As news.bicoin.com notes, Monero, one of the most popular cryptocurrencies in the world today is considered a privacy-centric alternative and this aspect gives it a higher cutting edge in the market in terms of monumental price gains. Just like bitcoins, it relies on a proof of work anonymous algorithm that covers up trails of transactions almost immediately they are made.
A number of studies whose reports have being posted on arxiv.org have shown that the renowned P2P bitcoin network has a number of loopholes that can be exploited to reveal the true identity of the users. This is because every transaction that is made through the network has unique public keys that are consequently liked to their respective IP addresses.
The effect of this is hard to predict since the broadcast is randomized. However, experts are of the idea that doing a task in a random manner does not mean that anyone who is prying on the network cannot be able to backtrack and know the source of a transaction recorded in the network.
The data analysts are also of the ideal that patterns of a random selection or generation of public keys are symmetrical. This means that anyone who understands how information is relayed in the network can collect and analyze the metadata and successfully identify the source of a transaction regardless of how expansive the P2P network is.
The only way to make cryptocurrencies completely anonymous is by coming up with a data structure in the P2P network notes that will discreetly forward connections in a structured manner to prevent formation of symmetrical patterns. For instance, bitcoin can come up with another layer of secure transaction structure and implement it in their network to change how the users are connected to each other. That is, every transaction should be relayed through several hops then broadcasted by a node that does not represent the true source of the transaction.
In conclusion, there are no truly anonymous cryptocurrencies in the world today since the randomly generated information can be reviewed and used to tell the real source of a transaction. More needs to be done to make sure that the peer-to-peer network is 100% anonymous.