Bitcoin Rhodium’s Path Towards Digital Freedom: Making Transactions Private
As developers of Bitcoin Rhodium (XRC), our passion is to develop a cryptocurrency that is primarily held by investors for the long-term. We want XRC to be a niche savings account accepted by many, because of both its scarcity, but also because of its community of investors who see the long-term potential in holding a very scarce coin.
Since XRC is a niche savings account, we think that our development should focus on those properties. Being a customized bitcoin-like coin allows us to build on top of it as a base to really focus on that goal. Unlike Bitcoin, we are small and nimble enough to make big decisions and encourage good practices at the very start.
Our passion is to develop a cryptocurrency that is primarily held by investors for the long-term — Tweet this
Looking back to what we have now, everything we have done was a conscious choice and a deliberate step towards introducing our coin and to excite interest. Even as we release more of the software we have worked on, we want to approach each step with same attention to these details, considering where we are right now and where we should be going. So, when it comes to thinking about this very big topic of achieving digital freedom (through the implementation of private transactions), we have to make some choices.
The fact is, one can do a lot right now to improve their digital freedom via different privacy measures. Using new addresses for each transaction, running under Tor or even buying from Bisq is possible and can obscure the link between your personal identity and the source of your funds to some degree. Even for XRC, all these can be done now, but it hasn’t been explicitly promoted or stressed. You can use Tor, for example, and set up Electrum-XRC to run through a Tor proxy. Putting up ElectrumX nodes on the Tor network is something that can of course be done. For the official servers, we really never look at the source of addresses, but putting those nodes on Tor will give a little peace-of-mind to those who might not trust the official server maintainers (which are also the developers right now.)
What people are really interested in when it comes to private transactions is fungibility, which is an important aspect to digital freedom. When I hand cash to a store clerk, no one except me and the store clerk knows the source and amount of those funds. If I use my debit card, in general, no one except the store clerk, myself and the bank knows the source of the funds. This is not necessarily the case on either Bitcoin or Bitcoin Rhodium. The original source of funds through the airdrop is one thing (to be clear: we don’t maintain records on who requested what or do we care), the source of funds through exchanges is another. But for Bitcoin Rhodium investors, this might or not be a concern. Bitcoin Rhodium is made to be a scarce, investable coin first, not necessarily a decentralized cash alternative. If decentralized cash is something that someone wants, the cryptocurrency market is filled with those. (The Crypto Trinity has two excellent solutions for that.)
However, despite the properties that we wish to pursue for Bitcoin Rhodium, as a niche savings account, fungibility is still quite valuable, probably on a number of fronts. To note, the blockchain is actually young (around 20000 blocks as of this writing), the community is small and growing and the story is getting out, even while we are deep in the crypto bear market. The compelling alternative for Bitcoin Rhodium is probably not to just copy someone else’s roadmap, but to do something that both promotes fungibility while promoting the core premise of this coin.
There are in fact loads of wonderful, well-thought out solutions that have and are still being researched. We do not have to come up with something new and novel, that could potentially take years of effort. Instead, we can use our position as a young project to make a big splash. But, regardless of what we pursue, people investing in Bitcoin Rhodium know that first and foremost they are buying into both the scarcity and the network effects that come from the interest in the coin.
When we look out at the space, we find some solutions that are actually quite interesting. The big ones are CoinJoin, Confidential Transactions and MimbleWimble. Below we are summarizing it to explain what they mean for investors who might be familiar with the ideas:
CoinJoin: the approach involves getting multiple parties to transact within a single transaction with the intent to obfuscate the source and destination of the coins. This approach in reality must be done a lot and with many participants to show its effectiveness as a method on a chain. Protocols that do this, such as ZeroLink or JoinMarket are most effective when a large percentage of users use this. What makes this interesting for Bitcoin Rhodium, though, is that it is young enough to have a CoinJoin-like solution make a big impact. Right now, we are looking into ZeroLink (Wasabi wallet, Breeze, etc.) and JoinMarket as both equally valid approaches, but with different trade-offs and possibly opportunities.
Confidential Transactions: Mixing CoinJoin and a Confidential Transaction will get us very far in terms of privacy. Confidential Transactions (CT) is a consensus-level change (possibly through a soft fork) that will encrypt the transaction amounts, making it harder to associate addresses on the chain with the amounts that are being sent. This has become a popular consideration as of late with some cryptocurrencies who are seeking to address the issue of fungibility with their coin.
MimbleWimble: Bitcoin Rhodium right now cannot implement this as the primary solution because MW is intended to not be backwards compatible (it removes fundamental Bitcoin-type features.) We could consider what Litecoin is starting to consider, by using extension blocks, but possibly a side-chain would make sense if this is something we wanted to do. However, we would also have to consider how this type of change would relate to wallets.
Towards Building Digital Freedom Thought Leadership — Tweet this
Each approach is not a technical panacea and have lots of tradeoffs in each method. However, with these in mind, what would be the best path to take? All can help towards one’s digital freedom when using Bitcoin Rhodium. We think it should, at least, be approached one step at a time. Each one is actually a big job to handle. Introducing something like this should not have to involve copy someone’s roadmap. No one is investing in XRC because of the private transaction feature, they invest because of the long-term potential, the community and the network effects, and something like this can only help the fundamental value of the coin. While plenty of things can certainly happen in parallel, particularly as we grow the development team, in terms of priority, getting CoinJoin (through a ZeroLink or JoinMarket solution) seems to be very interesting to start off with. As we see it, our issue is to make this as approachable so it doesn’t seem like something out-of-the-way for users to participate in. The concepts will not familiar to the layperson who simply wants to invest in XRC. For CoinJoin to be effective, particularly on our “quiet” chain, we need this to be done a lot. Of course, the reality is going to be similar to Zcash: not everyone is going to use it. That’s fine because our primary offering is scarcity, encouraging saving and income opportunities.
If the second step is confidential transactions, it will surely complement a very active CoinJoin network because it will provide the final bit to the fungibility puzzle, particularly if the CoinJoin experiment works out very well.
Any second-layer solution, like a ZeroLink wallet, will require SegWit activation, primarily to address the “transaction mallebility” problem, which is necessary to ensure that second-layer solutions can rely on the transaction ids of transactions being handled on-chain.
We are very open to suggestions, advice, development, etc. that will push forward the goal of achieving complete digital freedom for our users, particularly as we move ahead with our roadmap, which includes source release and other related developments.
In conclusion, Bitcoin Rhodium’s future is very bright, because each feature we build in strengthens the investing thesis: scarce and soon, more fungible cryptoassets.