AltcoinsBusiness & Finance

Privacy Coins to be Game Changer – U.S. Biggest Crypto Exchange’s CEO

Brian Armstrong, CEO of Coinbase which is one of the leading cryptocurrency exchanges of the world, recently tweeted showing his support towards coins and blockchains that supported private transactions. He tweeted:

This tweet was followed by a thread of tweets in which he clearly supported the agenda of private transactions and their mode of operations. According to him, since we’ve moved to an era where one of the main concerns is privacy and preservation of private data, messages have moved to end-to-end encryptions where through complex encryption the data is sent in such a way that only the receiver side can decode it reducing security risks.

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In his aforementioned tweet, he also talks about a scalable blockchain that can take care of the privacy too. With another layer of zero-knowledge proofs attached to the transaction and with highly encrypted puzzles and other complex proofs for decoding the puzzles, this might actually be a dilemma or a point to prioritize as we’re not yet close to the point of providing a blockchain that provides both.

Putting forward his privacy concerns and how every transaction should be safer and more private, Brian tweeted further:

He even linked to the news of Electronic Coin Company (ECC), the makers of Zcash, who intend to make the Zcash blockchain more scalable while keeping the privacy intact. According to the article that he cited, Zcash is moving towards huge updates that might split the coin but would make the platform more scalable and resultantly, would become a means of transactions for cross-border payments rather than a store of value . They aim to use “sharding” to solve the scalability issue.

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Sharding is a concept where a database is designed in such a way that it improves the speeds of transactions for a blockchain. Much like how sharding operates on conventional databases, in blockchain, shards of the blockchain are kept on nodes and not the entire blockchains. Each node would contain a part of the blockchain and would maintain it in a shared manner so as to maintain the decentralization of the network. This significant decrease in data storage would help with scalability.

The real question is: even if the privacy and zero-knowledge algorithm solving the financial privacy concerns for people, would it not open new doors for illicit activities like money laundering and dark web drug dealing, for instance? And since the criminal activities are booming in cypto, would it be a good step for making the transactions untraceable?

Arpit Aggarwal, from the team of zkDai, a stablecoin with zero-knowledge proofs layered on it, explained his views regarding zero-knowledge proofs and their negative use stating,

Everything has 2 sides to it – you can use a screwdriver to poke someone’s eye but you can’t use that to stop producing screwdrivers.

With institutions trying to bring crypto to mass adoption, can zero-knowledge once again bring a hurdle in regulations? Zero-knowledge proofs have somewhat contributed to the fraudulent activities. For example, Monero (zk-SNARKs) has become one of the most prominent currencies used on the dark web because of its anonymity and lack of traceability. The question is: are zero-knowledge proofs contributing to the already present hurdles in regulation?

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Shehryar Hasan

Performing artist, guitarist and sub-editor at BlockPublisher. Shehryar is an electrical engineer and blockchain enthusiast. He holds investments in bitcoin, ethereum, OST, TRX and Ripple. Email: shehryar@blockpublisher.com or contact the editor at editor.news@blockpublisher.com

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