A talk about privacy and cryptocurrencies.

1. Crypto and Privacy
A problem we all share
2014

2. Why is privacy
important in digital
currencies?
What services and
alternative coins exist
that introduce
privacy?
What can you do
armed with this
knowledge?
Why it matters Obtaining Privacy Takeaways
Digital Currency Entrepreneurship & Startups
What you will learn in 20 minutes

3. Privacy Matters
Why

4. 1
2
4
Political or religious causes you support
Are you a good target to scam?
Who you or your family does business with
Stolen coins you unintentionally own could
become disabled
Digital Currency Entrepreneurship & Startups
“I have nothing to hide“
3

5. Digital Currency Entrepreneurship & Startups
1. You list a laptop on Craigslist
2. A Bitcoin thief buys it from you
3. You are now marked as a thief
Trackable money is not good
Slippery Slope

6. THE BLOCKCHAIN
IS PERMANENT
Every sale
Anything you buy from
anybody
Every donation
Any cause you supported,
ever
Every loan
Any friend you helped
out, ever

7. Digital Currency Entrepreneurship & Startups
Your identity can leak
Exchanges Public QRC Recipients

8. Obtaining Privacy
Solutions

9. Digital Currency Entrepreneurship & Startups
Forwards coins through
dummy accounts1
Requires high trust in
operators to not steal2 A dying trend3
Tumblers Poor Man’s Privacy

10. Can be applied to any
crytpo-currency
NOT JUST BITCOIN
Achieves complete
anonymity for all
transactions (sender,
amount, and receiver)
ANONYMOUS
Sits on top of the “base”
coin as a second coin
PIGGYBACKS
Concerns that the
cryptographic proofs it uses
could be cracked later
TOO NEW
Digital Currency Entrepreneurship & Startups
CONCEPT: Zerocoin (zerocash)
http://zerocoin.org/

11. Digital Currency Entrepreneurship & Startups
Groups transactions
together into multi-output
transactions
1
Reduces fees since
transactions are merged2
Operators need to be
trusted to not keep logs
or expose data
3
CONCEPT: Coinjoin
Are the inputs of
Transaction 2 owned
by the same person?
https://bitcointalk.org/index.php?topic=279249.0

12. As a service As a Coin
Dark Wallet and
SharedCoin both
implement hosted
solutions for
“mixing” Bitcoin
transactions
Darkcoin ($30M
market cap;180s
block target). Uses
random master
nodes to obscure
transactions.
Digital Currency Entrepreneurship & Startups
Coinjoin in the wild
https://darkwallet.is/
https://sharedcoin.com/
http://darkcoin.io

13. Coinjoin Sudoku can
analyze transactions and
remove the anonymity
!
(www.coinjoinsudoku.com)
BUT…
It’s flawed

14. Digital Currency Entrepreneurship & Startups
Payments are sent to a
one-time address1
The funds are split into
pieces before being
spent again
2
No central nodes; no need
for other concurrent
transactions
3
CONCEPT: Cryptonote
https://cryptonote.org/

15. Digital Currency Entrepreneurship & Startups
• Monero
• $5.7M market cap, 60s
block target
• not a fork of Bitcoin;
• Receiver can de-cloak sender
with key.
• Bytecoin
• $5.8M market cap, 120s
block target
• Original code source for
Cryptonote in the wild
REVAMPED
http://monero.cc/
https://bytecoin.org/

16. Digital Currency Entrepreneurship & Startups
Honorable Mentions
• (incomplete) Cloakcoin ($3.0M market cap) - nodes act as tumblers; 60s block time; not coinjoin;
*POS = lower fees; http://www.cloakcoin.com/
• XCurrency ($4.8M market cap) - Custom method. Integrates Tor to mask sender IP. Splits transaction
across network. Uses nodes (like DRK) to process; all wallets are nodes; small trns size means less
risk.; *POS = lower fees; http://www.xc-official.com/
• Vericoin ($5.3M market cap) - Via service Verisend; *POS = lower fees; http://www.vericoin.info/
• More: https://bitcointalk.org/index.php?topic=568166.0;all

17. Takeaways
Privacy

18. - Privacy is an
obstacle to serious
adoption
- Services and coins:
Tumblers, Coinjoin,
Cryptonote, etc.
- Beware of identity
leaks
- Oldest privacy
coins are less than 4-
months old; many
problems unsolved
Why it matters Obtaining Privacy Takeaways
Digital Currency Entrepreneurship & Startups
What we learned

19. Thanks, Lab Zero
(our host)
Michi Kono
Visit our host at http://labzero.com
Visit the Meetup page at http://meetup.com/digital-currency/
Contact the author at michi.kono@coinposit.com