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New bitcoin rival currency will offer more anonymity, say its creators
By Fast Company
The currency, now in alpha testing, will deploy mathematical techniques that let users keep transaction parties and amounts encrypted.
Digital currencies like bitcoin are touted for their anonymity. But in practice, it can be possible to trace transactions across the shared bitcoin ledger known as the blockchain and figure out who’s sending bitcoin to whom.
The creators of a new bitcoin alternative dubbed Zcash say that currency—currently in pre-release alpha testing—will make that identification effectively impossible. Zcash will rely on algorithms known as zero-knowledge proofs that will allow users to prove they actually have the money they’re sending, without needing to reveal their identities or how much they’re sending at any given time.
“Unlike bitcoin, Zcash transactions automatically hide the sender, recipient, and value of all transactions on the blockchain,” according to the Zcash website. “Only those with the correct view key can see the contents. Users have complete control and can opt in to provide others with their view key at their discretion.”
The currency’s creators first proposed the underlying concept in a 2014 academic paper by researchers from the Massachusetts Institute of Technology, Johns Hopkins University and Israel’s Technion and Tel Aviv University.
The Zcash team hopes to have a live version of the currency available in July, founder and CEO Zooko Wilcox said in a cryptocurrency forum AMA session last week. In the meantime, potential users and developers can experiment with the alpha version of the currency and its underlying open source software on a “testnet” network, though its creators emphasize that the test version of the currency has no value and holdings can be reset at any time until the actual network’s launch.
The added privacy could make Zcash a more viable choice for financial institutions and consumers than other cryptocurrencies, Wilcox wrote in a January blog post.
Other alternative cryptocurrencies, or altcoins, have sought to distinguish themselves by offering enhanced anonymity compared to bitcoin. A number of currencies based on the CryptoNote protocol support so-called ring signatures, intended to make it mathematically impossible to see which of a group, or ring, of users generated a particular transaction. Another currency, called Dash, aims to anonymize spending by bundling together unrelated transactions, so that observers can’t tell which of the transaction parties are sending money to each other.
But so far, no rival cryptocurrency, anonymous or not, has come close to gaining the widespread attention and acceptance of bitcoin.
Wilcox, who is also the CEO of encrypted file storage provider Least Authority, argued on the Zcash blog that concerns over the currency’s potential use by criminals are misplaced.
“Bad guys use cars, bad guys use the Internet, bad guys use cash, bad guys use the current banking system,” he wrote. “Our goal is not to invent something that bad guys can’t use, it is to invent something that can empower and uplift the billions of good people on this planet.”
This article was originally published by Fast Company.
Photo: Steve Jurvetson