InstantDEX (iDEX) is a core service for SuperNET. It will allow near-real-time exchange of one cryptocurrency to another, in a decentralized way. It utilizes NXT’s decentralized asset exchange as well as BitcoinDark’s tradebot and privacy technology.
With InstantDEX in testing, people have been asking how anonymisation of coins will occur. (Side note: InstantDEX needs as many testers as possible. There are bounties available for finding bugs — ask on Slack for details if you can help.)
BitcoinDark, of course, will have its own built-in anonymity. Broadly speaking, Teleport provides on-blockchain anonymity, and Telepathy provides the off-blockchain privacy. (Note the choice of words: on the blockchain, everyone can see what is going on; just not who is doing it. Off-blockchain communication will be private, since Telepathy prevents anyone from knowing even who is communicating with whom.) But how will other coins leverage this?
It’s probably best to use an example of how this will work in practice. There are various methods; this is one. I have 1 BTC that I want to anonymise. I use it to purchase a given number of BitcoinDark telepods. Due to the nature of BitcoinDark, I gain control of these but no one knows that they are now in my possession. I can keep them for as long as I want before spending them, or trading them back into BTC or another currency. If I want to be extra safe, I will use Boolberry or another anon coin as the ‘off ramp’ to obscure the point at which funds come back into sight. (The same method can be used to obscure my initial purchase of BitcoinDark, too.) Using tradebots to make a series of transactions over a period of time not only allows me to achieve the price I want, but also to make it even harder to trace what is going on.
Remember that the BitcoinDark telepods can only ever be traced back to the account from which they were issued. On the blockchain, when they are transferred to a new owner, it simply looks like they have been swept to a new address that has never been used before. They could change hands hundreds or thousands of times, and it would never be clear whether the same person held them and was moving them around, or whether there were multiple owners. In reality, it’s likely that many telepods will just stay in this anon form, circulating indefinitely, and will never be ‘cashed out’ by sending them to an address that has been used before.
The security of an old telepod that has been used over and over raises the possibility that these might trade at a premium over newer telepods or regular, non-anon BitcoinDark coins. If there’s a genuine benefit to that, the market will reach its own conclusions.
Author: Cassius
