Anonymous cryptocurrency PIVX makes a world-first tech breakthrough
The little-known PIVX coin is making progress in a unique direction.
Update 8/5/2018: This page was updated to include a (very) brief explainer of the Zerocoin protocl and PIVX cryptography.
Privacy coins are a burgeoning niche in cryptocurrency, allowing for the anonymous transfer of digital monetary value. It's naturally difficult to chart their transactions and gauge their activity next to transparent coins like bitcoin, but it's certain that they're seeing a lot of use. The best known is probably Monero, beloved by North Korea, online black markets and tech-inclined divorcees, but it's an increasingly competitive space with different technologies and systems coming into play.
Monero, for example, uses a system of "mixins" which essentially introduces false transactions among the real one. Others, such as Verge (which has never managed to achieve meaningfully private transactions), basically try to run bitcoin transactions across an encrypted network.
There's no shortage of coins that claim privacy, including Monero, Verge, PIVX, Zcash, Zcoin, DASH and countless forks thereof. But it's a messy and technically complex area. The technical complexity means broken privacy features are an easy sell for scammers, while even the best and most honest privacy elements also introduce a range of other problems.
This has made it extremely difficult to bring advanced elements of cryptocurrencies, such as better scalability or governing features, to privacy coins. To date, most anonymous coins are relatively basic, closely resembling bitcoin and being hampered with scaling difficulties, relatively high transaction fees and other inefficiencies.
This is what makes PIVX's status as an anonymous proof-of-stake coin so interesting.
- What's proof of stake? Proof of stake is like cryptocurrency mining without the expensive machines and huge energy consumption. It essentially uses online wallets to secure and power the network.
The first private PoS cryptocurrency
PIVX became the world's first private proof-of-stake coin in October 2017. It essentially did this by creating private "zPIV" and standard "PIV" coins which could be interchanged with each other. This allowed for an efficient proof-of-stake network, but meant that users had to choose between earning staking rewards on the network and maintaining anonymity.
In many cases, people would opt for the anonymity over the money. With a recent spate of physical attacks on cryptocurrency millionaires, in which they're physically accosted and forced to transfer funds, this could be a wise move.
The next step for PIVX was the creation of the "zPoS" staking system. This is a wallet upgrade that allows for anonymity and hidden balances in staking addresses. Initial plans called for a launch around the start of April, but it was pushed back a month while work continues. New dates have been announced though, with zPoS coming pre-loaded into the PIVX 3.1 wallet update, set to be rolled out once the network achieves stability following the update.
This is estimated to be around 8 May.
PIVX considers itself to be a very community focused coin, and it also introduces a range of voting elements and the ability to earn "interest" from staking. These have never been introduced to an anonymous coin before.
This raises some interesting ideas around the concept of a completely anonymous decentralised community, properly aligned through shared financial incentives as well as the idea of "storing value."
"zPoS is a major step forward for decentralised cryptocurrency technology at large because it allows for the freedom to maintain one's own private crypto balances (with zPIV), and to earn rewards privately and securely," explained PIVX Community Leader Bryan Doreian (aka Snappy). "It's akin to having your own personal growth account, outside the prying eyes of hackers, scammers, and other entities that would otherwise spy on your data and use it for their purposes."
Cryptocurrency interest strongly correlates with uncertainty over financial stability and with government mistrust, and there might be growing interest in the idea of a "storage" privacy coin, rather than purely transferable ones like Monero. Plus, using a staking system rather than energy intensive proof of work might bring an inherent dose of egalitarianism, and accessibility, to the network while making PIVX wealth that much more portable. If nothing else, it could be the gold standard of flight capital, bringing together anonymity, the stability of decentralisation, the liquidity and portability of digital assets and the ability to earn interest on one's store of value from anywhere in the world.
"Cryptocurrency by its very nature is a disrupting technology, disrupting how people view wealth and use banks, and it is challenging privacy and anonymity standards in a world where every bit of information seems shared. zPoS is yet another proud accomplishment in PIVX's privacy mission," Doreian said.
Technologically, fully functional anonymous staking is a brand new achievement. The fluffier and less-certain long-term implications of this, around the idea of anonymous accumulating wealth storage and decentralised faceless communities, might be equally interesting.
The problem might be that it's difficult to trust the privacy of any coin. The highly technical nature of the space and the difficulty of achieving 100% reliable anonymity mean explanations usually boil down to competing analogies.
Monero is widely regarded as the most reliable, but it's still possible to track a certain number of transactions made at a certain time with a relatively high degree of confidence. Meanwhile, Dash says it offers private transactions but others argue that it's not actually secure, Verge is quite clearly not private but is still widely trusted by its users and PIVX uses a completely unique and relatively unknown system.
Update 8/5/2018: How PIVX privacy works.
"PIVX's underlying ledger privacy is provided through the Zerocoin protocol, which is an academically vetted protocol out of Johns Hopkins," Doreian says. This has been heavily customised and updated to work with proof of stake for PIVX.
These updates, Doreian says, have also fixed some errors that still exist in the main Zerocoin repository, and in other coin implementations of the Zerocoin protocol.
All Zerocoin implementations use RSA numbers. The most commonly used is RSA-2048, which is regarded as the most secure. To date, no one -- as far as anyone knows -- has successfully factored it, even with a $200,000 cash prize for managing. It's expected to remain unsolved for years, until significant steps are made in mathematics or computing.
"That said, "trusting" in that still leaves many uneasy," Doreian says. That's why PIVX is working towards implementing "bulletproofs" and has brought on two of the cryptographers who originally worked on it.
As Monero core developer Riccardo Spagni said, "privacy isn't a thing you achieve, it's a constant cat-and-mouse battle."
By building on top of the heavily vetted Zerocoin protocol with its own heavily vetted systems, PIVX might be in a good position to stay ahead of the cats.
Promises of privacy in any coin are still much like anything else in cryptocurrency; there are no guarantees one way or another. But if it does work as promised, the technical achievements of PIVX might be very underappreciated. But maybe that's appropriate for an anonymous coin.
Disclosure: At the time of writing, the author holds ETH, IOTA, ICX, VEN, XLM, BTC and NANO.