Bitcoin and Privacy
In Satoshi Nakamoto's Bitcoin whitepaper - A Peer-to-Peer Electronic Cash System - segment 10 is dedicated to privacy. The talk of keeping public keys anonymous, with no trusted third party is an important factor in Satoshi's goal for privacy. However, with so many exchanges requiring AML/KYC and companies dedicated to chain analysis it is becoming harder to keep public keys truly anonymous on a public ledger like Bitcoin's.
This was not what was intended originally, and although protocol upgrades such as Taproot implementing Schnorr Signatures into the Bitcoin Core code will improve privacy - they will not make transactions opaque.
The importance of privacy was obviously extremely significant to Satoshi, since even today we do not know the identity of the creator of Bitcoin - the cryptocurrency with a market cap succeeding one trillion USD.
Monero and Privacy
Along comes Monero, originally known as Bitmonero - a cryptocurrency with a focus on absolute privacy. Monero's blockchain is completely opaque, using ring signatures (and it is impossible to trace how many monero are sent, where they are sent from, where they are sent to, and even how much is in a single wallet.)
RingCT (Ring Confidential Transactions) was implemented in 2017 and so far no one has found a way to breach the privacy. The only people who know how much was sent and where it was sent from and to are the people making the transactions.
Monero does have a 'secret view key' for each wallet. This key allows people to see transactions made but does not allow any access to funds in the account - it is a sort of opt-in translucency. Even with this option, it is considered far too much of a risk for criminal use at this given time.
Regulators have come down hard on Monero and it has even been removed from some of the largest exchanges due to it's absolute privacy. Although it is the true libertarian cyberpunk coin, we do live in a heavily regulated world still - and Monero is considered too private for the time being.
A Compromise Was Clearly Needed - PIVX
PIVX (Private Instant Verified Transaction) is a blockchain that can bypass the regulations and still allow completely opaque transactions. The fact that it is the first Proof-of-Stake blockchain to implement zk-SNARKs is impressive enough, however there is much more to this project.
PIVX has a blockchain which can be completely open, the ledger can be checked on the block explorer just like with Bitcoin's ledger. Balances, transactions, everything can be seen - this makes PIVX compliant with the AML/KYC regulations that got Monero removed.
However, PIVX has shielded addresses too. PIV sent from a shielded address to another shielded address is completely untraceable thanks to the implementation of zk-SNARKs - 'Zero-Knowledge Succinct Non-Interactive Argument of Knowledge'.
The transactions are completely opaque and just like with the Monero, only the sender and the receiver know how much PIV is transacted. This makes PIVX completely fungible which is something that is a requirement for any currency.
When you take cash from an ATM, you don't know if it's been used for banking or a bakery, or for drug dealing and prostitution. With an open ledger you get tainted coins, you might receive coins once used in 2011 on SilkRoad to buy heroin, and it is easy enough to trace it. For a currency to work, all coins must retain equal value and not be able to be 'tainted' or have less worth due to previous transactions.
“Tainted coins are very destructive. If you break fungibility and privacy, you break the currency. If fungibility is not fixed, it is possible to attack Bitcoin in ways we haven’t seen yet and that could prove very effective. You could see rapid evolution of Bitcoin in a privacy direction or even replacement by other privacy cryptocurrencies.”
Andreas M Antonopoulos
PIVX offers a solution to a problem that has been facing cryptocurrency from the beginning. A way to have an open ledger and yet also retain the ability to make opaque transactions which allows true fungibility.
Proof-of-Stake and Energy Consumption
Satoshi's whitepaper for Bitcoin states that "Proof-of-work is essentially one-CPU-one-vote." What he did not anticipate was the mass production of ASICs which now use more electricity a year than the entire of Argentina in a year - although a lot of the energy used is sustainable, a huge amount of is not. If the hashpower continues to grow then more electricity will be used to mine Bitcoin.
This is an unforeseen environmental disaster, until there are ways to have completely sustainable electricity sources then Bitcoin mining will continue to be a growing contributor to greenhouse gas emissions which contribute to global warming.
PIVX runs of Proof-of-Stake, instead of needing huge amounts of power from ASICS, the entire blockchain can be stored and transactions validated from a raspberry pi - and soon it will be possible to run the entire blockchain from your mobile phone.
Since the Proof-of-Stake algorithm uses people who are simply holding PIVX in their wallet to validate transactions - the amount of energy consumed is almost nothing compared to Proof-of-Work blockchains.
PIVX is The Way Forward
Being a privacy coin with AML capability with energy efficient Proof-of-Stake algorithm that also implements zk-SNARKs - PIVX really is a coin that will change the way we look at cryptocurrency in the future.
The focus right now is not on privacy, it is on gains, DeFi, and NFTs - but their will be a time when people realise that privacy is a requirement. It has the 7th most active GitHub of all cryptocurrency projects in existence, and it is a project that is here to stay.
