CryptoURANUS Economics: Privacy-Token Economic-Review: Cryptocurrency


Tuesday, July 9, 2019

Privacy-Token Economic-Review: Cryptocurrency

Privacy-Token Economic-Review

Table of Contents:


Why Privacy Token?

Blockchain is a network allowing peer-2-peer transactions without centralized local bank exchanges keeping transaction counter-parties anonymous.

Privacy, the ability within an individual or group ghost their personal information invisible and selectively. Remember this that every transaction is broadcasted, and viewable to all on a public ledger, therefore not private as intended.

Privacy transaction patterns of certain wallets known as identity of the account owner can be profiled using social  / freaking / engineering hacking skill serts.

Privacy, translates into several meanings to different people. PRIVACY MATTERS in blockchain, but deeper research unveils there is never any privacy.
Remember The Key Things:
Sender Privacy [Wallet/Address Privacy]
Cryptographic Privacy [Transaction Privacy]
Balance Visibility [Data/Content Privacy]

Privacy Tokens Review:

There are a few privacy tokens with different technology address ing privacy concerns mentioned already.

DASH was founded after the Bitcoin fork in 2014.
AltCoins: Dash, Monera, Zcash, and including PIVX, Grin, Verge, NavCoin, and traditional tokens, such as LTC all contemplate adding privacy features into their token gaining some comparative advantages, but still lacking note-worthy privacy; as with most coins. 

Dash (DASH AltCoin):
DASH s not cryptographically private.
DASH guarantees security through Mixing, using an adjusted variant of CoinJoin — a strategy at first made to “anonymize” Bitcoins.
DASH is a Proof-of-Work framework that has two kinds of hubs on the system; masternodes and diggers.
DASH Masternodes give moment send and private send capacities.

CoinJoin is a technique to anonymize exchanges proposed by Gregory Maxwell.
CoinJoin depends on the standard of collection together exchanges to make joint installments.
CoinJoin based blending techniques increment security for all clients since it is never again likely that all contributions to an exchange originate from a solitary wallet, and can never again be dependably connected with another solitary client.

Monero (XMR):

Monero was launched April 2014.

XMR was a fair, pre-announced launch of the CryptoNote reference code.

There was no premine or instamine AltCoin, and no portion of the block reward goes to development. Know what Bitcointalk really is.

The founder proposed controversial changes to the cryptocoin that the community disagreed with.

A fallout ensued with the centralizing cryptocoin double talk community, and the Monero Core Team forked a new project within the community following this new Core Team breakaway, as a CryptoCoin-Civilization.

This Core Team has provided oversight since within common and controlled.

Monero has made several very large privacy improvements since it's conceptional launch of decentralization in opposition to the, (IRS), government snitch database exchanges.

The blockchain migrates constantly morphing into a highly privatized database structure to provide greater efficiency and flexibility centered in privacy from bankster centralization.

This highly privatized database structure maintains minimum ring signature sizes set into place so that all transactions are private by Monero Core Team Mandates; unconditionally.

RingCT,  (Ring Confidential Transactions), was implemented to hide the transaction amounts. Nearly all improvements have provided improvements to security or privacy, or they have facilitated use.

Monero is adamant about their coin develop with goals of privacy and security always first in opposition to terrorist networks working with centralization agencies, ease of use and efficiency second.

Monero is the #1 only privacy cryptocurrencies of all the cryptocurrencies upon earth.

The Monero AltCoin is created from a hard fork by Bytecoin in 2014, and still improving it's worth each day.

Monero uses encoded transactions that hide the addresses and the quantities transferred, also adding fraudulent, (fake), transactions that make it impossible to know the contents of the operations -i.e. Monero is a real Crypto-AltCoin-Currency, because it is truly cryptographic, unlike the other AltCoins that are no wheres near.

This Monero uses Ring CT to maintain an anonymous transaction and tighten security wallet.

The Monero team also integrated the powerful Linux-Tails-OS, an operating system passing transactions through the TOR, (most extreme privacy), network, to further protect from government and civilian hackers adding an umbrella of absolute privacy.

Monero uses a network of stealth, (false), addresses, (much like a fake browser cache, but more perfected), to allow users to hide their wallet address from criminals.

Our Monero stealth address is a one-time use address-only that is created for each and every transaction ounce.

That is right, only once unlike other CryptoCoins that are far more centralized into less privacy allowing hackers to steal your wealth.

Noted; Monero users also have a public address that is published on the blockchain, but most (if not all) of their transactions will be passed through unique stealth protective addresses system only if they desire being entirely ghosted.

Basically, The Dash-AltCoin groups up small transactions while Monero breaks down into small transactions for privacy and protection of decentralization, again, unlike the others.

Remember, Monero heavily relies on network resources unless you create your own local node from your downloaded "blockchain" in order to generate your own Monero currency.

They are different from Bitcoin in that regular PC can run Monero’s node service as local and across the internet.

Zcash (ZEC):

Shielded Zcash transactions are completely private(?).

Like Bitcoin, Zcash transaction data is posted to a public blockchain; but unlike Bitcoin, Zcash ensures your personal and transaction data remain completely confidential. Zero-knowledge proofs allow transactions to be verified without revealing the sender, receiver or transaction amount. Selective disclosure features within Zcash allow a user to share some transaction details, for purposes of compliance or audit.

Zcash also allows for transparent transactions, to accommodate for wallets and exchanges that don’t support private transactions.

Zcash is another Bitcoin-forked privacy coin with privacy features using zk-SNARKs. zk-Snarks, aka Zero-Knowledge Succinct Non-Interactive Argument of Knowledge, is a technology to allow miners to verify transactions without knowing who sent/received the coins.

The protocol team has implemented zk-Snarks on Quorum for JP Morgan, which is an enterprise-focused version of Ethereum. The team has worked with other teams to add the privacy feature to their project/platforms.


PIVX is a re-brand of the Darknet Coin, and stands for private instant verified transaction. PIVX is a fork from Dash, implementing Bitcoin Improvement Proposals (BIP), and utilizing PoS to secure the network.
PIVX users are allowed to run master nodes with at least a stake of 10,000 tokens (while Dash only requires 1,000 DASH).

About PIVX

PIVX (PIVX), which stands for Private Instant Verified Transaction is an MIT licensed anonymity-based, community-governed fork of DASH. It is a Proof of Stake cryptocurrency with Zerocoin protocol implementation. PIVX has 2-tier currency: a regular coin for ordinary transactions, and an anonymous zPIV (which can be staked) for private transactions. Similar to Dash, PIVX supports quick and private transactions, along with masternodes. The decentralized network of masternodes facilitates treasury management and community governance.

PIVX: Private – Instant – Verified – Transaction(Tx) is an MIT licensed, open source, decentralized blockchain-based cryptocurrency focused on achieving fungibility, transaction privacy, community governance, network salability, and real-world utilization to become one of the most technically advanced globally-accepted online digital currency. NOTE: New Privacy Protocol is in development.

What is PIVX?

PIVX is  a form of digital online money using blockchain technology that can be easily transferred all around the world in a blink of an eye with nearly non-existent transaction fees with market leading security & privacy.

Launch Date: January 31st, 2016
Block Time:
60 seconds
Block Size: 2mb
Total Coin Supply To Date: 55 million
Circulating Supply: < 30 million.  This is due to masternode collateral (10,000 PIV per masternode) being locked in escrow as well as any staking wallets holding PIV off exchanges.

PIVX Transaction Fee: < $0.001 (for Normal sends), < $0.01 (for Private sends)

*********** 09D-07M-19Y ***********

PIVX is a multifaceted community-centric effort in the blockchain tech and cryptocurrency realms.  In translation here:  There is many components of what PIVX is and why PIVX was manifested.

PIVX is the fastest and lowest cost privacy-focused digital currency, using a Proof of Stake (PoS) consensus system algorithm allowing owners of PIVX to participate in earning block rewards while securing the network with full node wallets.

Designed to be used as a viable currency that preserves individuals privacy and security, PIVX has the most sustainable supply model, is not susceptible to 51% attacks, is already globally distributed without centralization of coins to select few, is supported by thousands of passionate individuals in a Decentralized Autonomous Organization (DAO), and is already being accepted and used by merchants (online and physical locations) around the world.

In support of our global reach, PIVX was the first cryptocurrency project to translate it’s website and materials into over 30+ native languages, providing unparalleled access to information about cryptocurrency and PIVX in individuals most familiar language.

PIVX is the first proof of stake coin with the zerocoin protocol (called zPIV) and zerocoin staking (named zPOS); a completely new Proof of Stake algorithm providing unparalleled privacy, speed of transactions, and low transaction costs.
PIVX employs a second-tier decentralized network of masternodes providing additional services such as community voting governance, self-funded treasury system and instant transactions.

It’s easy to implement and setup a PIVX wallet, be it desktop, mobile, raspberry Pi, etc, allowing for simple merchant adoption.

Additionally, PIVX has one of the most stable designed economic models in cryptocurrency. PIVX has implemented a Dynamic Supply System governing its coin supply; block rewards are static and inflation is reduced whenever a transaction is included in a block by burning transaction & zerocoin fees. At a certain threshold combination of transactions per minute, PIVX will become deflationary.

*********** 09D-07M-19Y ***********


Mimblewimble is a new privacy-focused blockchain project that is based on Bitcoin’s design. On July 19, 2016, “Tom Elvis Jedusor” dropped the whitepaper into a Bitcoin research channel and disappeared. Later, “Ignotus Peverell” started a Github project called Grin and began turning the Mimblewimble paper into a real implementation.

Mimblewimble refers to the tongue-tying curse in Harry Potter. Tom Elvis Jedusor is Lord Voldemort’s French name and Ignotus Peverell is the original owner of the invisibility cloak.

Mimblewimble/Grin is an improvement upon confidential transactions and CoinJoin from Bitcoin. Key features include no public addresses, complete privacy, and a compact blockchain.

There has been a lot of excitement around Grin mining lately since Grin coins, like Bitcoin, can only be created through PoW mining.

Grin uses the Cuckoo Cycle PoW algorithm, which was originally designed to be ASIC-resistant but is now considered to be ASIC-friendly.

Key Features of Grin:

  • Complete privacy as its default
  • Scalable transactions
  • Tried and tested cryptography
  • Easy design for person to person transaction
  • Community-driven — aimed at decentralized advancement and mining
Other interesting privacy coins that are relatively early in their development include MobileCoin and BEAM.

Verge (XVG):

Verge Coin started its journey as DogeCoinDark in 2014, named after the world’s most popular meme cryptocurrency. In 2016, the coin was rebranded to Verge Cryptocurrency, and has since been gaining enormous traction in technology and investment communities.
  • Verge coin is mineable. But Verge miners can choose one of three mining methods to get their Verge, rather than the expensive and limited options afforded to Bitcoin miners.
  • Verge allows for everyday payments. But where Bitcoin payments are not anonymous, Verge coin transactions are masked with TOR and i2P, for fully private transaction.
  • Verge is decentralized money. But Verge is also in the process of adding smart contract functionality, allowing it to develop for the needs of the world better than Bitcoin.
  • Verge has several key partnerships, including porn industry giant MindGeek, whose subsidiaries include Pornhub and Brazzers.

Litecoin (LTC):

Litecoin is getting tired of standing in Bitcoin’s shadow. After many years as Bitcoin’s second fiddle, Litecoin core developers are getting more interested in following the likes of privacy coins such as Monero (XMR) and Zcash (ZEC).

Charlie Lee opened a discussion on fungibility and hinted at the addition of Confidential Transactions in a “future release of the full-node implementation” in 2019. This will let LTC gain more comparative advantage as media of transaction and payment.

NavCoin (NAV):

NavCoin is a decentralized cryptocurrency that was forked from Bitcoin. It aims to solve 2 problems that are typically found in blockchain platforms:
  • Data is made public on the blockchain, leaving it vulnerable to malicious attacks by illicit users.
  • Most blockchains use “roll backs” as the solution to data vulnerability. They reset the blockchain to a backed-up point after a data breach, meaning transactions made leading up to the roll back are erased.
The NavTech system is a combination of the traditional Bitcoin blockchain and a NAV subchain. Using two chains allows users to send transactions with complete anonymity.


Cloak is a veteran privacy coin that is growing slowly, although it has been active in the privacy niche for approximately 4 years. The blockchain is operated using a Proof-of-Stake consensus protocol. It has relatively short blocktimes and quickly processes transactions.

The platform also offers 2 different methods of making your transactions untraceable. First is their onion-routing privacy protocol. Onion routing involves encrypting messages with many layers (similar to an onion).
It also offers the Enigma process to provide additional privacy cloaking on transactions. Enigma cloaking is applied when a user requests a cloaked enigma transaction.

Enigma (ENG):

The Enigma project is entirely separate from the Enigma cloaking process used in CloakCoin transactions. Enigma is not a cryptocurrency nor a blockchain; instead, it is a privacy protocol that can be deployed on blockchains and decentralized applications.

Therefore its token, ENG, is a distinct addition to the list of top privacy coins.
The Enigma network provides privacy by making nodes unable to see the data that they compute. Although they are unable to clearly see exactly what they are working on, these nodes are still capable of verifying that their computations have been run correctly.

With the data masked like this, Enigma hopes to open the door for what they call a new type of smart contracts — “secret contracts” — wherein the underlying data processed in a smart contract remains encrypted at all times.


DeepOnion is a new privacy coin project that is generating some interest in the community. Like a few of the other coins in this list, DeepOnion uses TOR to send untraceable transactions. It also uses a mix of Proof-of-Stake and Proof-of-Work protocols to offer fast confirmation times.

DeepOnion also employs stealth addresses to keep transactions private. The DeepOnion team is currently working on DeepSend and DeepVault. DeepSend will use a multi-signature method to prevent payments from being traced.

DeepVault is an information storage service that allows users to store data in the blockchain forever. In order to verify the integrity of a file, a user only needs to compare their current version of the file with the backup. This can be beneficial for the purpose of verifying the integrity of important documents.


Zencash is more than a privacy cryptocurrency because it also contains a messaging platform, a Distributed Autonomous Organization (DAO). Users can send tokens anonymously (“Z” address) or pseudonym (“T” address). Even Zencash, a hard fork by Zcoin, wants to make an exchange with the same degree of privacy.


Zcoin also uses the Zerocoin protocol. Zcoin is burned in a Zcoin transaction and Zerocoin are created and transferred, but since they have no history, they are not traceable. This costs a 0.01 Zcoin fee. Those who receive money only know that they have received them.

Bytecoin (BCN):

Bytecoin is probably the oldest cryptocurrency to deal with privacy problem, given that its birth dates back to 2012, but has recently had a flashback. As a security system, it combines a Stealth system for addresses joined to the Ring CT, with a protocol called Cryptonote. This privacy token is the father of Monero.

Bitcoin Private:

Bitcoin Private comes from a hard fork and a fusion, i.e. a hard fork of Bitcoin and then a merger with Zclassic, in turn, hard fork of Zcash in which the prize for creators was canceled. Bitcoin Private also implements the zk- Snarks.

SpectreCoin (XSPEC):

Spectrecoin (XSPEC) was created in December 2016 as a fork of ShadowCash (SDC), with its initial difference being that it ran over the tor network for added privacy. Since then, it has continued to make strides, developing into an even more user-friendly and anonymous cryptocurrency.

These advancements include OBFS4 Bridges, Wallet UI improvements, improved stealth addresses, updated tor, and better syncing. At just over a year old, the project has come a long way and has big plans for the future, such as stealth staking (a first for any crypto) and the implementation of Android and iOS mobile wallets.

Key Features:

  • Tor to hide the location and make tracking more difficult
  • Stealth addresses to keep the receiver anonymous
  • Ring Signatures to keep the sender hidden

Privacy Token Economics:

Due to different technology stacks to realize the privacy features, the token economics designs can be different to incentivize various ecosystem stakeholders. In this section, we will discuss the different token economics design for DASH, and Enigma Protocol.
First, let’s summarize some techniques used by Privacy Token.
  • CoinJoin — Join multiple transactions a group so that the transaction cannot be linked to a single wallet/address. It is a Mixing-based privacy solution.
  • TOR Network— TOR make the transaction untraceable. Another way to understand TOR is VPN. It transacts using multiple layers of proxy to hide the identity behind the transaction counter-parties. [check the 2-min video here]
  • i2P — The Invisible Internet Project (I2P) is an anonymous network layer (implemented as a Mix Network) that allows for censorship-resistant, peer to peer communication. Anonymous connections are achieved by encrypting the user’s traffic (by using end-to-end encryption), and sending it through a volunteer-run network of roughly 55,000 computers distributed around the world.
  • RingCT — RingCT stands for Ring Confidential Transactions, makes transactions harder to trace by obscuring the output of the true sender in a set of n other outputs on the blockchain, indistinguishable with respect to their amounts. It is a Mixing-based privacy solution.
  • Stealth Address — Stealth Address means that the created stealth address will be used only once for the transaction. That being said, each transaction corresponds to one stealth address, which makes it impossible to link the transactions to single wallet/address.
  • zk-SNARKS— zk-SNARKS stands for Zero-Knowledge Succinct Non-Interactive Argument of Knowledge. It is a cryptography algorithm to verify the transaction without revealing the address and balance.
  • Mimblewimble — Mimblewimble uses elliptic-curve cryptography that requires smaller keys than other cryptography types. In a network that is using the Mimblewimble protocol, there are no addresses on the blockchain, and the network’s data storage is highly efficient.  
  • [A quick example by Crypto Potato Website]


Dash works a little differently from Bitcoin, however, because it has a two-tier network. The second tier is powered by masternodes (Full Nodes), which enable financial privacy (PrivateSend), instant transactions (InstantSend), and the decentralized governance and budget system.

Because this second tier is so important, masternodes are also rewarded when miners discover new blocks. The breakdown is as follows: 45% of the block reward goes to the miner, 45% goes to masternodes, and 10% is reserved for the budget system (created by superblocks every month).

As of February 2019, the holders of DASH that run a masternode receive ~ 7% annual block rewards. is a great resource for real-time DASH network metrics.

The current block reward is 3.35 DASH, or 1.5075 for miners, 1.5075 for masternodes, and .335 DASH for the DAO per block. Dash features a block interval of ~ 2.5 minutes and ~ 550 blocks per day.

Each masternode requires 1,000 DASH as collateral. The 1,000 DASH are used as bonded collateral and required to earn the inflation funded block rewards. The collateral is always safe and never forfeited during masternode operation.
Since masternode rewards are fixed at 45% of the block reward, or 1.5075 DASH per block, and the number of active masternodes on the network is dynamic, expected masternode rewards will vary according to current total count of active masternodes. Masternodes are currently yielding ~ 7.01%.
The average Dash masternode reward frequency is just shy of nine days.


Enigma is a protocol related to process information securely. Its token must be purchased in order to run a node on their network. After buying the Enigma token, you can receive rewards for processing data. But in order to process data, each node must make a security deposit. If the data is tampered during the verification process, the deposit will be split between any nodes that processed the data without error.

In effect, owning ENG allows people to get started using the network. ENG also serves as a reward for participation in the network.

Other factors affecting the Token Economics include: randomness of miner/node selection, front-cost of providing mining service (e.g., ASIC vs. PC) and also coin reward number and coin prices.

Regulatory Surveillance vs. Privacy:

Recently, there have been different voices on SEC approving BTC ETF proposals. For people who don’t think it will come soon [Brian Kelly].
Over 2018, the SEC has received multiple Bitcoin ETF applications from various players, such as the Winklevoss twins, but is yet to approve any one of them. Expanding on his point of view, Kelly said that the agency is unlikely to change its opinion in the near future, as “there is too much that is unresolved.”

SEC officials have demanded better cryptocurrency surveillance and custody before approving BTC ETF applications for multiple reasons:
Concerns about hacking events and market manipulation
Concerns of money laundering without transaction traceability
Concerns of linking transaction with wallet/address for taxation reasons.
Here is the dilemma between regulatory surveillance vs. privacy. Until a balance/compromise is reached, the next bull market might be delayed as long as possible.

Blockchain Privacy Modeling

Given that blockchain transactions are pseudonymous, not anonymous, and that blockchains themselves are transparent, numerous protocols exist for the incorporation of greater privacy to protect individuals from those seeking to connect them with their transactions. It goes without saying that the motives behind this include facilitating protection from legal entities, but also the desire to grant individuals privacy from those who might wish to steal funds or identify those with large holdings for the purpose of solicitations or more serious crimes. With that in mind, not all privacy protocols are alike. There are different methods to achieve the goal at hand — namely obscuring transaction histories to the point where tracking someone’s balance history becomes prohibitively resource intensive, if not completely impossible. Here we discuss the three most common methods of achieving this, and their applications thus far.

Zero knowledge proof (ZCash, PIVX):

Last week we published an article going into detail on ZKPs, which can be read here. There is evidence to suggest this could be the most popular privacy technology moving forward, as it is promised in Ethereum, Cardano, Tron and others.

Ring signatures (Monero):

The earliest privacy coin, Bytecoin, uses a concept called ring signatures which had been theorized as far back as 2001 in a paper delivered to ASIACRYPT. The concept was proposed as a way to leak secrets with anonymity, for example in the White House or a Board of Directors, by having all members of the group in question sign the output even when it comes from only one individual. In cryptocurrencies, ring signatures send a transaction from a member of a group in which all members have their own account keys and sign the transaction. This creates a group of individual accounts which all could theoretically have sent a transaction, when only one has. Put more simply, it is not possible to say which of the group has actually sent the transaction.

Monero is a Bytecoin fork which maintained its employment of ring signatures, and in 2017 added “ring CT” (confidential transactions), which hide details of transactions from all but the sender and the recipient. Monero has a minimum of 7 signatures per transactions, and when combined with the range proofs introduced with its Bulletproofs update this year it is arguable that Monero remains the most comprehensive privacy blockchain platform (and indeed this is recognized by the market, where Monero stands at 13th on the top 100 coins by market cap, ahead of all other privacy tokens).

Coin mixing and change addresses (Dash):

In Bitcoin’s early days, coin mixing became popular for those trading on illicit activity websites to scramble their transaction histories and making tracing funds through the blockchain much more difficult. This was not a feature on Bitcoin’s blockchain, but rather a third party service which mixes coins for a fee of 1–3%. The concept is simple: swapping one denomination of Bitcoin for another of equal size, thereby obfuscating the trails of both and making identification much more difficult.
As discussed in our write up on Dash masternodes and their functions, Dash introduced a privacy feature initially called DarkSend (now PrivateSend), which facilitates a type of coin mixing directly into their blockchain using masternodes. When requested, these masternodes split a transaction into denominations, mixing them with the denominations of others using PrivateSend, before sending it back to a change address the user controls. At that point it is much more difficult to trace the transaction history.

Most notably, this is an elective feature which makes Dash a rare example of a currency with optional privacy or transparency, depending on the user’s goal and the demands of vendors — thereby avoiding the blacklisting problem which could devalue specific tokens devalued by privacy measures.
Article by Byron Murphy, Editor at Viewnodes. We help clients establish and maintain masternodes for the currencies which currently support them. To contact us for information on our masternode services, please submit this contact form.


All of the information of projects are sourced from online materials and do not necessarily reflect the current state of the projects. The information here does not constitute any advice on investment or consequence of any investment.


No comments: