Technologies Related to Privacy Coins - Part 1

We are all familiar with digital currencies such as Bitcoin, Ethereum, and EOS. The development of digital currency to the present has gone through a special development stage, during which the prices of various digital currencies have skyrocketed and attracted countless people.

This stage is marked by the emergence of a computer virus in 2017. That virus is the one that still exists, and still has the power to wreak havoc: the ransomware virus. Unlike previous viruses, this virus encrypts users’ data and documents, and the ransom demanded is no longer US dollars, but Bitcoin (provided the Bitcoin payment address).

With Bitcoin, virus writers no longer need to provide bank card numbers that involve personal information and are completely anonymous. Anyone who offers a ransom is paid into the bitcoin account of the virus writers. Virus writers can then use bitcoin to make transactions, redeem goods and merchandise on the black market.

However, there is still a big problem with Bitcoin’s anonymity. The anonymity of bitcoin addresses is only a pseudonym (or alias). Since all Bitcoin transactions are published on the bitcoin blockchain, anyone can view and verify them. In this way, special marks can be made for an account address, and the account address can be tracked and verified.

Once the real-name information of an account address is obtained (in general, the exchange requires the user to provide the real name, once the exchange information is mastered, the identity information of the actual holder can be obtained). Based on this real-name information, go back one step at a time, and you can get all the relevant transaction information personnel information. The problem is what we call the avalanche effect of personal information.

Back on February 24, 2014, Mt.Gox, the world’s largest operator of bitcoin exchanges at that time, declared bankruptcy after announcing that 650,000 bitcoins had been stolen from its exchange. Later, an investigation by law enforcement authorities found that of the so-called “stolen 650,000 bitcoins”, only 7,000 bitcoins were actually missing due to hacking, and the rest were taken away by insiders of the platform, which is a typical inside job.

In order to solve the problem of the anonymity of bitcoin, many technologies have been introduced into the blockchain to enhance the anonymity of blockchain accounts. There is a very simple and effective way to deal with it, although some people have put forward different opinions, this technology is the most widely used, and the most effective.