How Blockstream’s Technology Could Make Bitcoin Transactions Anonymous
How Blockstream’s Technology Could Make Bitcoin Transactions Anonymous
Adam Back, the CEO of blockchain technology and cryptographic systems development firm Blockstream, recently introduced a technology called “Confidential Transactions” as a part of the open source Elements blockchain platform.
Although Confidential Transactions (CT) was one of the many technologies featured on the Elements blockchain platform, the community and industry took interest in the CT technology which could in theory anonymize bitcoin transactions and offer increased privacy for users.
As of current, the public bitcoin blockchain is transparent and open to anyone within the bitcoin blockchain network. By utilizing the transparent and decentralized ledger of the bitcoin blockchain, anyone can view the balances of user accounts on blockchain explorers and follow the trails of payments.
However, Confidential Transactions eliminate the possibility of anyone surveilling on the amount of bitcoin or money stored in bitcoin wallets and accounts due to its ability to encrypt the amount in a bitcoin transaction.
In an interview, Back explained that Confidential Transactions is a technology which can be adopted by other cryptocurrencies, blockchain networks and even traditional database or accounting platforms.
“Confidential Transactions (CT) technology is something that other technology companies in the ecosystem have adopted – I think we started a trend. It's actually possible for people to use a Confidential Transactions library and integrate it into a database, even a conventional accounting system. There are lots of possible uses for it. At base it's a technology for having an encrypted ledger that you can check the consistency of without necessarily being able see all the transactions' values,” said Back.
There exists several privacy-focused anonymous cryptocurrencies such as Zcash and Monero that utilize technologies such as ZKsnarks and RingCT, developed by Bitcoin Core developer Greg Maxwell. Monero is unique in the sense that it took Maxwell’s RingCT technology to another level by implementing other technologies such as ring signatures, stealth addresses, and Kovri.
Zcash relies on a cryptographic technology called ZKsnarks and the Zcash development team was praised by the community for becoming the first team to use ZKsnarks for a large-scale cryptocurrency.
Yet, both Back and Samson Mow, the chief strategy officer at Blockstream, explained that the implementation of ZKsnarks by Zcash is less efficient in comparison to Confidential Transactions as it is more expensive computationally for CPUs to run.
"I think 90% of the transactions are not using the shielded transactions feature, they are just exposed and normal transactions because in practice it was too expensive,” explained Back.
Mow, who previously criticized the trusted setup of Zcash which required a group of seven developers to dispose keys that can be used against the Zcash network when exposed, also criticized the shielded transaction technology.
"Zcash is an inferior technology compared to CT. It's based on a trusted set-up; so you have to trust that when they did the setup, everyone was acting honestly and no one was compromised. Also, due to the time it takes to sign a shielded transaction, very few transactions are really private."
Author : Joseph Young