Dero: A new blockchain technology that brings CryptoNote privacy together with smart contracts.

As blockchain technology continues to advance at an accelerating pace we’ve never had a stronger general consensus regarding the need for privacy. We’re starting to see what can be described as a growing degree of balkanization in the area of cryptocurrency, so as one can imagine, a consensus in the field is increasingly rare.

For those following blockchain news, you may have heard that it’s the next big thing for secure data storage. Julio Faura, Chair of the Enterprise Ethereum Alliance said “one of the key features we need for a blockchain to be used in enterprise settings is privacy.”. J.P.Morgan, one of the largest banks in the world published that quote directly to their own website which helps to publicly acknowledge and convey the dire need for real privacy on the blockchain before enterprise scale solutions can be utilized.

A brief introduction to Dero:

Dero aims to bring working solutions to issues that cryptocurrencies are facing today. Starting at the most basic level, the code and concept, Dero was created with global real world applications in mind. Privacy based problems at every level from enterprise to individuals were thoroughly considered when developing Dero’s new blockchain technology.

Our team is working quietly to bring what we genuinely believe to be a number of new innovations on the blockchain, such as full SSL across the entire network and truly private smart contracts for the first time on a blockchain with no need for second layer solutions.

Privacy and smart contracts on one blockchain

To that end, the Dero Project has built a new blockchain technology that brings privacy together with smart contracts on one blockchain with no need for second layer or off-chain solutions. This keeps all data truly decentralized, which in turn plays a key role in maintaining end-to-end privacy by negating the need for trusted computations on an otherwise trustless network.

Dero is a new and ambitious project that launched in December 2017 with the goal of bringing CryptoNote privacy together with smart contracts on one blockchain. To achieve this end the Dero development team have written a brand new blockchain technology based on the CryptoNote protocol and written in golang. This has allowed the Dero team to start development work on smart contracts that have no need for second layer or off-chain solutions.

Dero is not simply a privacy coin, but an asset, or even the fuel if you prefer that powers a privacy based blockchain. With the advent of Dero, anyone may take advantage of truly private smart contracts that protect the privacy of all parties involved. Privacy is enabled by default on the Dero network and individuals are able to choose how much or little information is shared in a smart contract with participants of the contract.

Complete SSL implementation: a first on the blockchain?

We’ve implemented complete SSL across the Dero network using automatically created self signed certificates. To the best of our knowledge, this is a first on the blockchain. This encrypts the entirety of our network traffic, which greatly reduces our attack surface, while simultaneously preventing ISPs from analyzing Dero’s network traffic or sniffing out any data.

Imagine for a moment that you’re trying to make use of a blockchain network in a country or area where the use of this technology is restricted; for those who know what to look for, they only need to analyze your network traffic to get a clear idea of what you’re up to and how to prevent it. By utilizing a complete SSL implementation across Dero’s entire network this is effectively mitigated.

An introduction to Dero’s key features:

*CryptoNote privacy: CryptoNote currencies use a distributed public ledger that records all balances and transactions of its in-built currency like Bitcoin. Unlike Bitcoin, CryptoNote’s transactions cannot be followed through the blockchain in a way that reveals who sent or received coins. Dero utilizes all aspects of the CryptoNote protocol’s privacy features in its new blockchain technology to protect the identities of all parties involved in a transaction.

*Smart contracts: A smart contract is a digital self-executing contract that is capable of enforcing the terms laid out by all participants in the contract. The goal of smart contracts is to significantly increase contract security while simultaneously reducing costs associated with traditional contracts.

*Atomic swaps: Atomic swaps make the exchange of one cryptocurrency for another possible without the need for a trusted third-party. To prevent one party from failing to send their coins, atomic swaps use something called hash time-locked contacts (HTLCs) to enable a trustless trading system.

*Mobile and offline wallets: As with any currency, multiple forms of storage and varying degrees of financial availability are required. Dero is bringing a complete spectrum of wallet storage options to users by providing solutions that range from mobile wallets on mobile devices to offline 2FA (Two Factor Authentication) biometric identification protected hardware wallets.

*Lightweight wallet: Instead of downloading the entire blockchain, a lightweight wallet connects to randomly selected decentralized nodes to utilize the data stored there. This dramatically reduces the amount of data required to transact on the network while maintaining the security of your private keys on your device, not the node the device is connected to.

*Subaddresses: This technology allows for the creation of additional public addresses for one wallet. This allows a user to differentiate where payments are coming from while preventing privacy loss caused by linking transactions to one public address.

*Escrow services on the blockchain: Escrow services may take advantage of Dero’s blockchain technology by using it as the trusted third party. In this instance, a financial instrument or an asset is recorded on the blockchain and held until the appropriate instructions are given, or contractual obligations have been fulfilled.

*Address signing and certifying: Comparable to the way a certifying authority may issue a passport or driver’s license, an individual may receive digital signatures and pre-authorizations that are stored on their individual wallet on the blockchain.

*Voting: Through the use of blockchain technology any group or organization may create a safe and transparent voting system that also maintains complete anonymity among voters.

Some of Dero’s key challenges and goals include but are not limited to:

  • Identification and know-your-client (KYC): Having briefly touched upon the need for privacy on the blockchain we must also address the need for some degree of transparency in certain limited situations. Dero will allow thoroughly verified and publicly known certifying authorities to add their signature to individual wallets, and only for those who have applied. This signature serves as confirmation that your identity has been verified by a certifying authority such as a Government, Bank, telecom operator, Visa, Mastercard, or other organizations as required.

When a service provider require verification of your KYC details, similar to what we’ve seen with exchanges, the process can now be made as simple as using a wallet with the appropriate certification. The service provider, vendor, or payment gateway will only get to see a basic signature that confirms it is authorized to use their services. No personal details are available in these situations. Only certifying authorities will have personal information for individual wallets and only with those who have submitted an application.

In places where KYC compliance is at its most stringent levels, trades would not be possible without pre-authorization from the appropriate authorities. On an individual level, you can choose whom you certify your wallet with, at your discretion. Given the need for robust privacy and security, Dero’s blockchain has been designed to allow full integration of hardware wallets with biometric protection.

  • Voting using safe, secure, and transparent smart contracts: Any organization may use Dero’s blockchain for a safe, secure, and transparent voting process that also keeps the identities of all voters anonymous in the eyes of the public. This is achieved through a type of private “voting smart contract” that is only made possible today on Dero’s blockchain. Aside from Dero, current voting solutions to date operate on public ledgers with public smart contracts that don’t obfuscate or shroud your network traffic from identification. Some workaround solutions have been proposed, such as off-chain computations and second layer solutions; however, these solutions leave a number of fundamental flaws that needlessly complicate wide scale adoption of blockchain technology for private voting processes.

To register for the voting process, an individual must apply to the certifying authority with their public Dero address and documentation as required. In this instance, the authority in charge will validate your wallet and allow for one (1) vote or more as defined by the smart contract. The details of such a contract should theoretically be public, transparent, and fully available in any democratic process.

A smart contract of this nature will, of course, require flexibility, and the ability to be reprogrammed to suit the needs of any party that chooses to utilize a private smart voting contract. To that end, the Dero development team is working to keep as much flexibility in the system as possible.

  • Asset management: Private and auditable: With Dero, assets can be recorded, distributed, or traded on the blockchain. Perhaps the most critical issue today facing asset management on the blockchain is privacy. Consider for a moment how assets are recorded today. Most assets are recorded in a private or centralized database like you may find at the Department of Motor Vehicles. Organizations or departments often have limited hours, cumbersome access to information policies, and substantial overhead costs. Bringing asset management to Dero’s blockchain will allow individuals unrestricted use of their own data, by allowing 24/7 access to anything they have stored on Dero’s blockchain while simultaneously offering unparalleled privacy.

Any individual or organization that choose Dero’s blockchain for asset management will benefit from the highest levels of privacy by utilizing the CryptoNote protocol and complete SSL implementation across the entire network, among other critical features. For audits or tax purposes, all you have to do is provide a simple and convenient viewkey that will list all relevant history from the wallet. This view key can be easily programmed into tax software to reduce cost and human error, while insuring accuracy. It’s important to note that all details of wallets are entirely hidden from the rest of the network. As such, it is the individual wallet holders responsibility to make their relevant tax information known as required.

  • 2-Factor authentication: Secure password management and access: Dero plans to integrate one-time password (OTP) authenticators and passphrases. Subaddresses could be used as the username to keep public address information private, and, if required, a OTP password will appear in the wallet. An application programming interface (API) and software development kits (SDK) will be freely distributed to service providers to facilitate integration of their existing infrastructure with the Dero blockchain. This will create a significantly more secure environment for the users on a particular service or platform.
  • Integration with telecom gateways: Dero’s blockchain was built in such a way as to allow integration with telecommunication gateways, to send and receive short message service (SMS a.k.a. text) messages. Once your wallet is certified with a telecom operator, you will be able to send text messages that take advantage of the privacy features from the CryptoNote protocol. For example, ring CT signatures are just one of many features used to hide your data. One-time password verified SMS data will be relayed to the appropriate wallet and held completely privately for only the recipient.

Areas we will strive to refine constantly in the future

*Reducing energy consumption of the network 
*Reducing block times 
*Increasing transactions per second 
*Reducing blockchain sync times and resource utilization
*Reducing blockchain size
*Increasing reliability and security of the network
*Secure hardware wallet with biometrics.
*Regular audits and updates of the core cryptography to negate the benefits of quantum computations.

Relevant links:

Website

Bitcointalk announcement thread

Code repository (github)

Dero’s official Twitter

Dero’s official Reddit