In Japan, the arrest of 18 people recently made headlines around the world, with police tracking Monero transactions to catch those involved in money laundering activities that took place as early as 2021. This case shows that even highly secure cryptocurrencies such as Monero are not protected from prosecution. However, it is not known exactly how the identities of those involved were discovered.
Monero has become known for its data protection functions. Unlike Bitcoin or Ethereum, where transactions can be tracked in a public ledger, Monero hides transaction details and wallet balances. Privacy technologies such as ring signatures, stealth addresses and confidential transactions make it very difficult to track the flow of money. These features have made Monero a favorite among people who value the protection of their privacy.
When it comes to the privacy afforded by a system, it is important to consider what information is leaked through its use. No current blockchain system can hide the fact that a transaction has taken place. Therefore, information such as relative activity can be derived fairly accurately for all blockchains. As a rule, every blockchain records addresses, amounts, linked inputs and outputs and data embedded in transactions.
The method used by Monero with ring signatures, stealth addresses and confidential transactions stands in contrast to zero knowledge-based methods. While Monero encrypts the sensitive data and mixes it with other data, thereby concealing sensitive information, zero knowledge methods, such as those used by Zcash, use a mathematically very complex procedure that makes it possible to go through the verification process without disclosing sensitive data. A serious disadvantage here is the need for a “trusted setup” procedure, where it must be ensured that no one has knowledge of the parameters used.
Another zero knowledge method is the Mimblewimble protocol, used by EPIC Cash, where the sender and recipient must exchange data outside the blockchain and then send the transaction to the blockchain as Pedersen commitments for confirmation and further processing. The disadvantage of this direct contact is offset by the advantage of privacy protection without the need for elaborate, highly complex computing processes such as earlier snark-based zero-knowledge methods or additional storage-intensive obfuscation tactics such as ring signatures.
In order to remain the number one privacy-protecting blockchain, Monero will introduce so-called “Full Chain Membership Proofs” in a future update, which will expand the group of possible senders from 16 to millions and thus minimize the possible risk of deanonymization. Until then, however, the sword of Damocles of a later deanonymization of all transactions carried out up to that point will hang over Monero, especially since it is not known how the above-mentioned deanonymization was actually carried out in Japan.
In any case, Chainalysis claims to have found a method for deanonymizing Monero transactions. A leak reveals that a multiple approach is used by utilizing both on-chain and off-chain data. Poisoned nodes are used as well as the analysis of transaction patterns. This shows once again how important it is not to rely on third-party nodes, but to operate your own.
The smaller the blockchain, the easier it will be to operate a dedicated node. Assuming the same workload and transaction volume, EPIC Cash with full privacy protection and excellent scalability requires only 10% of the storage requirements of Bitcoin and even less than Monero in its current form. The higher the transaction volume, the higher the Cut-Through effect, which is the best prerequisite for a highly scalable payment system.
The question of whether the deanonymizations in Japan are merely due to user misconduct or whether an actual deanonymization has taken place remains unanswered, but leaves a certain amount of uncertainty for all Monero users.
AI and possible quantum computers will play an increasingly important role in the deanonymization of privacy-protecting blockchain protocols in the future. As long as transaction data remains stored on the blockchain, even in encrypted form, there is the theoretical possibility of later decryption. Regularly removing transaction data that is no longer needed from the blockchain, as is done by the “Cut Through” feature unique to the Mimblewimble protocol, could further increase security.
It is obvious that authorities will do everything in their power to make anonymous transactions transparent. The WEF wants everything and everyone to be transparent and controllable. Control over all cash flows is the ultimate goal of any dictatorship, which is why cash is on the hit list, even if many people don’t want to admit it. If there is no direct ban on cash, then it will be through further inflation, which will simply render the existing cash in its current denomination useless.
Privacy is the indispensable cornerstone of a free society. The fact that we are moving ever closer to dictatorship should not have escaped the notice of any attentive observer. The WEF boasts that 98% of all central banks are working on the introduction of CBDCs. Once this is done and cash is completely abolished, only precious metals and private cryptocurrencies will remain to escape direct control and blackmail by the state.
Precious metals have the disadvantage of being difficult to divide and check for counterfeiting, which means that they can only really be used as a store of value, not as a medium of exchange. Cryptocurrencies that protect privacy, such as Monero, are the only remaining way to avoid this vulnerability to controllability and blackmail by those in power.
Monero is always intentionally portrayed as a cryptocurrency for criminals. But in reality, the users of Monero and other private cryptocurrencies are those who support an important pillar of a free society. The users of fully monitorable cryptocurrencies are unaware that in their ignorance they are supporting the criminals who want to establish a New World Order based on total control.
As a spearhead in the fight against total financial surveillance, Monero has done pioneering work. The “Full Chain Membership Proofs” will solve one of its problems. What will remain, however, is a bloated blockchain with limited scalability, but this has not detracted from its popularity so far. Although EPIC Cash can achieve future-proof privacy protection with improved scalability, its popularity is only a fraction of that of Monero.
Monero is still the king of private cryptocurrencies. Whether it will remain so depends on whether Monero succeeds in future-proofing its privacy protection and scalability with improved technology.
Read the full article here
