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 that has already taken place in 2021. This case shows that even highly secure cryptocurrencies like Monero are not protected. of persecution. However, it is not known exactly how the identity of those involved was discovered.
Monero has become known for its data protection features. Unlike Bitcoin or Ethereum, where transactions can be tracked on a public ledger, Monero hides transaction data 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 protecting their privacy.
When it comes to the privacy a system provides, 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, each blockchain records addresses, amounts, associated inputs and outputs, and data embedded in transactions.
The method Monero uses with ring signatures, stealth addresses and confidential transactions contrasts with zero-knowledge based methods. While Monero encrypts the sensitive data and mixes it with other data, keeping sensitive information hidden, 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 exposing any sensitive data to give. A serious drawback here is the need for a “trusted setup” procedure, ensuring that no one has knowledge of the parameters used.
Another zero-knowledge method is the Mimblewimble protocol, used by EPIC Cash, which requires the sender and recipient to 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 extensive, highly complex computational processes such as previous snark-based zero-knowledge methods or additional storage-intensive obfuscation tactics such as ring signatures.
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 subsequent deanonymization of all transactions carried out to date will hang over Monero, especially since it is not known how the aforementioned deanonymization was actually carried out in Japan.
In any case, Chainalysis claims to have found a method to deanonymize Monero transactions. A leak shows that a multi-pronged approach is being used by using both on-chain and off-chain data. Poisoned nodes are used, as well as transaction pattern analysis. This once again shows 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 greater the Cut-Through effect, which is the best condition for a highly scalable payment system.
The question of whether the deanonymizations in Japan are merely the result of user misconduct or whether a deanonymization has actually occurred remains unanswered, but leaves a degree of uncertainty for all Monero users.
AI and possible quantum computers will play an increasingly important role in the deanonymization of privacy-preserving blockchain protocols in the future. As long as transaction data remains stored on the blockchain, even in encrypted form, the theoretical possibility of subsequent decryption exists. Regularly removing transaction data that is no longer needed from the blockchain, as done by the ‘Cut Through’ feature unique to the Mimblewimble protocol, could further increase security.
It is clear that the authorities will do everything they can to make anonymous transactions transparent. The WEF wants everything and everyone to be transparent and auditable. Control over all financial flows is the ultimate goal of any dictatorship. That’s why cash is on the hit list, even though many people don’t want to admit it. If there is no immediate ban on cash, it will be due to further inflation, which will simply make existing cash in its current denomination useless.
Privacy is the indispensable cornerstone of a free society. The fact that we are moving closer to a dictatorship should not have escaped the notice of any attentive observer. The WEF claims that 98% of all central banks are working to introduce CBDCs. Once this is done and cash is completely abolished, only precious metals and private cryptocurrencies will be left to escape direct control and blackmail by the state.
Precious metals have the disadvantage of being difficult to distribute and control for counterfeiting, meaning they can really only be used as a store of value and not as a medium of exchange. Privacy-protecting cryptocurrencies like Monero are the only way left to avoid this vulnerability to auditing and blackmail by those in power.
Monero is always deliberately portrayed as a cryptocurrency for criminals. But in reality, the users of Monero and other private cryptocurrencies are the ones supporting an important pillar of a free society. The users of fully controllable 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 supervision, Monero has done groundbreaking work. The “Full Chain Membership Proofs” will solve one of the problems. What will remain, however, is a bloated blockchain with limited scalability, but this has not detracted from its popularity so far. While EPIC Cash can achieve future-proof privacy protection with improved scalability, its popularity is only a fraction of Monero.
Monero is still the king of private cryptocurrencies. Whether this will remain the case depends on whether Monero succeeds in future-proofing its privacy protections and scalability with improved technology.