Energi — PrivateSend Explained
Users who use the Energi Core Wallet may have noticed a section with the buttons, “PrivateSend” and “Start Mixing” but had no idea what they do and are used for:
In this article, we will break down the basics of PrivateSend, what it is used for and why users who are staking Energi (NRG) should NOT use this feature.
PrivateSend gives you true financial privacy by obscuring the origins of your funds. All the Energi in your wallet is comprised of different “inputs” which you can think of as separate, discrete coins. PrivateSend uses an innovative process to mix your inputs with the inputs of two other people, without having your coins ever leave your wallet. You retain control of your Energi at all times. The purpose behind PrivateSend is to maintain the privacy of your Energi coins by removing its history from the Energi network.
The PrivateSend process can be broken down into these 5 steps:
- PrivateSend begins by breaking your transaction inputs down into standard denominations. These denominations are 0.01 NRG, 0.1 NRG, 1 NRG, and 10 NRG — sort of like how fiat money is used every day.
- Your wallet then sends requests to specially configured software nodes on the network, called “Masternodes.” These Masternodes are informed then that you are interested in mixing (Mixing involves exchanging a string of transactions with a Masternode so it can construct a mixing transaction with inputs from the clients in its mixing pool) a certain denomination. No identifiable information is sent to the Masternodes, so they never know “who” you are.
- When two other people send similar messages, indicating that they wish to mix the same denomination, a mixing session begins. The Masternode mixes up the inputs and instructs all three users’ wallets to pay the now-transformed input back to themselves. Your wallet pays that denomination directly to itself, but in a different address (called a change address).
- In order to fully obscure your funds, your wallet must repeat this process a number of times with each denomination. Each time the process is completed, it’s called a “round.” Each round of PrivateSend makes it exponentially more difficult to determine where your funds originated from.
- This mixing process happens in the background without any intervention on your part. When you wish to make a transaction, your funds will already be anonymized. No additional waiting is required.
One key component when using PrivateSend is your Energi Core Wallet only contains 1000 of these “change addresses.” Every time a mixing event happens, up to 9 of your addresses are used up. This means those 1000 addresses last for about 100 mixing events. When 900 of them are used, your wallet must create more addresses. It can only do this, however, if you have automatic backups enabled. Consequently, users who have backups disabled will also have PrivateSend disabled.
One thing to be clear of is that PrivateSend IS NOT related to Staking. PrivateSend and Staking are two completely different features and should not be used together. Some issues with using PrivateSend are:
- When using PrivateSend, staked Energi coins will lose their coin maturity due to the Unspent Transaction Output (UTXO) breaking. This will cause users to miss out on earning additional Energi coins
- Since PrivateSend creates send addresses (mentioned in Step 3 of the process), an enormously large amount of wallets are created due to new addresses being used every time. This may cause confusion to users who need to access their Energi coins and are not sure which address(es) they are currently in
- It creates a potential risk of users losing their Energi coins without properly backing up their Energi Core Wallet
- PrivateSend may cause interference with the Energi 3.0 Migration (more details on our migration can be found here)
- Users were eventually unable to use their wallets due to the amount of PrivateSend transactions. The reason why users were no longer able to use their wallets was that they did not have Automatic Backups enabled.
PrivateSend Disabling Steps
With the issues mentioned above, we highly recommend users to have PrivateSend disabled (if not already) in the Energi Core Wallet. Here are some steps to take to make sure PrivateSend is disabled:
1. Open your Energi Core Wallet
2. On a Mac, click on EnergiCore > Preferences:
On a PC, click on Settings > Options
3. Once in the Options > Wallet, verify the following Checkboxes are UNCHECKED:
Uncheck these boxes if they aren’t already unchecked/empty:
* ⃞ Enable advanced PrivateSend interface (UNCHECK)
* ⃞ Enable PrivateSend multi-session (UNCHECK)
Then press “OK”
4. Verify the “Start Mixing” button is present.
If you see “Stop Mixing” click on it to stop.
5. Additional Step to make Anonymized NRG Coins Stakeable again:
Since PrivateSend causes staked coins to become anonymized, we need to release the PrivateSend pool. In order to make them stakeable, open the Energi Debug Console by going to Tools > Debug Console (same steps for Mac and PC):
Once in the Debug Console, type the command privatesend reset and hit ENTER. This command will reset the PrivateSend operation. You may need to manually combine PrivateSend UTXOs by sending your coins to the Energi address you would like your coins to be staked on.
NOTE: If you are uncertain if you used PrivateSend in the past, please use the “privatesend reset” command
As recommended, please make sure the PrivateSend feature is disabled from the Energi Core Wallet so it does not interfere with your Staking and to avoid potentially losing your Energi coins.
Another recommendation is to make sure Mixing is not being used. Once Energi Core Wallet v2.3.0 is released, the PrivateSend feature will automatically be disabled for users.