Cryptocurrencies and anonymity. Anonymization methods and the most private cryptocurrencies.

[Carder]

The words "anonymity" and "cryptocurrency", since the appearance of the second, are quite closely related. Even when creating bitcoin, Satoshi Nakamoto said that it is now possible to anonymously make cross-border payments, and even with minimal commissions. But people understand it in different ways. Transactions in the bitcoin blockchain can indeed be made privately, but this means that you are not required to enter any personal data to send funds. This does not mean that you can conduct illegal activities and no one will know about it, since the bitcoin network is not just called a “glass safe”: you can see from which wallet, where and in what quantity funds were sent, but it is impossible to have any impact on the transaction or the coins themselves. In addition to this, many cryptocurrency exchanges are beginning to introduce mandatory identity verification, which allows you to track the transfer from a confirmed exchange account to an "anonymous" bitcoin wallet. Back in 2018, Bitfury conducted research that proved that more than 16% of all existing bitcoin wallets can be deanonymized.

The need for privacy in the digital age was discussed long before the first cryptocurrency appeared. Back in 1992, a group of people calling themselves “Cryptobunters” or “Cipherpunks " appeared, which included:

• Timothy May. Former top Manager of Intel;
• Eric Hughes. Professor of mathematics at the University of California;
• John Gilmore. One of the founders of the Electronic Frontier Foundation, a strong specialist in computer science.

A group of enthusiasts started holding thematic meetings once a month, attracting more and more like-minded people to their ranks. We discussed cryptography, programming, and the possibilities of implementing privacy and freedom in transactions. The Manifesto of the ”crypto Rebels" reads as follows:

"Privacy is essential for an open society in the digital age. Confidentiality is not secrecy. Confidential is something that a person does not want to show to the whole world, and secret is something that no one should know about. Privacy is the ability to selectively reveal yourself to the world".

With each passing month, the group grew and it was decided to conduct an e-mail newsletter in order to unite like-minded people around the world, and not just in San Francisco. This "mailing list “is interesting because in 2008, an unknown Satoshi Nakamoto sent a bitcoin WhitePepper to it and, initially, was severely criticized by ”Cipherpunks". However, the Creator of bitcoin continued to work and, as we can see, not in vain.

The lack of complete anonymity in bitcoin has prompted the crypto community to create various encryption methods that have found application in other cryptocurrencies. In this article, we will tell you what methods you can use to get, if not full, then at least partial privacy.

How can I anonymize my transactions?​

As mentioned above, the lack of anonymity in most cryptocurrencies has led many crypto enthusiasts to develop methods and solutions to this problem. Let's start with the simplest of them.

CryptoMixer​

There is no such service on the Internet, but in recent years, state regulators have begun to actively fight them, because they can be used to launder cryptocurrencies obtained by criminal means. This process occurs as follows:

1. You send the cryptocurrency that you want to anonymize to the address provided by the service.
2. The service takes all the funds received at the moment and applies various algorithms to mix them, after which it sends them to different wallets.
3. From these wallets, you get your cryptocurrency back, minus the 1-3% commission.
4. If the process of mixing cryptocurrencies from the service is carried out correctly, it will be very difficult to track your funds.

Please note that the address generated during mixing is only valid for 24 hours, so you need to transfer your funds on time, and information about the mixing itself is stored on the service for no more than 72 hours.

When choosing a cryptomixer, be careful and use proven and well-known services, as fraud cases are not uncommon. Given the fact that the main task of such services is to “cover up” all traces for tracking currency, it is unlikely that you will be able to prove that your funds were stolen.

In addition to unscrupulous companies, there are also those that provide their services poorly: you will pay money for services, and when conducting a thorough audit, information about you will still be revealed.

Obfuscation and cryptographic methods​

To understand exactly how the methods that will be described below work, let's analyze what parts the transaction consists of. Any transaction is initially divided into three parts:

• Entrance. Indicates where the funds that the transaction Creator wants to use came from;
• Exit. Indicates where the transaction Creator wants to send funds;
• Service and technical information (we will not go into details here, they are not needed in the context of this article).

Important rule: the amount of funds transferred at the output must match the amount of funds at the input or be higher. Now that we have a little understanding of the "body" of the transaction, let's go directly to the encryption methods.

CoinJoin Method
This method involves creating a single shared transaction from multiple users. here's an example: Masha, Pasha and Tanya decided to pay for freelance services in bitcoins, but they don't want their transactions to be tracked by competitors, because they can “spy” on how much and to whom they pay. In this case, all three interested parties join forces and apply to the service. The service creates one General transaction that has three inputs, three outputs (for each of the freelancers), and three “false” outputs. All outputs are mixed together in random order, after which each of the senders checks the received transaction and if it is correct, then signs the input they need. If all three transactions were confirmed by the senders, it is sent to the blockchain and waits for confirmation from the network. For communication between participants in the process, you need to use a VPN. This method greatly complicates the ability to track transactions, because it can have a thousand origin options, but it does not completely remove it. This method has several modifications:

• Chaumian CoinJoin. This involves an operator whose task is to mix inputs and outputs, as well as create the final transaction. The operator does not have access to the funds of the participants in this process, because they “blind” all information before sending it, and only after receiving the transaction back, the sender removes the “blindness”. The process of "blinding" itself is similar in principle to a regular electronic signature. To perform this process, you need to use a VPN;
• CoinShuffle. This method no longer requires a strict VPN. Here, users can create the desired transaction themselves, with the desired number of outputs. Generated false addresses where you want to get the means of each of the participants, all of them know, but not talking about it to each other. Next, each participant in the process generates a new key pair, after which public keys are exchanged. After all this, a certain chain is formed, during which each participant signs the transaction he needs with a private key.

Confidential Transactions Method
This method has the following principle of operation: a third party will not be able to find out about the transaction amount at the input and output, but the output amount can not be greater than the input amount. Confidential Transactions is based on a cryptographic proof of zero-knowledge proof - which allows you to find out only a fraction of the information about the transaction.

The Method Of Ring Confidential Transactions
This method is known as "Ring signatures" - it allows you to confuse the history of cryptocurrencies in the following way: several outputs are presented, one of them is marked with a ring signature, but only the sender of funds knows which one. This method is used in the Monero cryptocurrency. For the first time, ring signatures were used in the CryptoNight algorithm.

The Stealth Addresses Method
The process is as follows: you want to send a payment to your partner, and to do this, you take their public key, as well as their own public and private keys. They are used to generate a new one-time public key, which is specified in the transaction as an address. It turns out that no one will know the exact destination address except you and your recipient, which significantly increases the confidentiality of the transaction.

Anonymous cryptocurrencies​

As we found out, there are enough methods to obfuscate transaction paths. But there are also those who do not want to deal with all the proposed methods, but simply buy cryptocurrency and be sure that their transactions will be anonymous. Especially for such people, we will present a list of the most anonymized cryptocurrencies.

Monero​

Monero (XMR ) is an anonymized cryptocurrency, a fork of Bytecoin (Bytecoin). The main difference that makes XMR a unique cryptocurrency is the use of ring Signatures and Stealth Addresses for fungible coins. The private address mechanism means that a participant has one public address that can be shared with anyone, and all the others are private or private. In The monero address subsystem, two such keys are used: for viewing (viewkey) and spending (spendkey). A private spendkey is used to sign transactions, just like Bitcoin. The private viewkey will help you view transactions related to your Monero address. Ring signatures hide the real transaction inputs, and they do not allow you to identify all the links in the block chain, so you will not be able to track transactions even with specialized SOFTWARE. Monero was founded by Ricardo Spagni and Francisco cabanas in 2014.

Dash​

Dash ( DASH) is an anonymous and fully decentralized cryptocurrency developed on the basis of the Bitcoin source code, but unlike the first cryptocurrency that uses the SHA-256 encryption algorithm, the Dash cryptocurrency is based on the X11 algorithm. the X11 Algorithm consists of a" mix " of 11 different cryptographic encryption methods that you will need to bypass everything to crack the network, which is almost impossible.

Zcash​

Zcash (ZEC) is one of the first anonymous cryptocurrencies to use the zero - proof proof Protocol. The Protocol works according to the following principle: one of the two parties can verify the mathematical correctness of the other party, but any other information about the other party will not be available. Zcash acts either as a completely anonymous cryptocurrency, or selectively transparent, which of these is decided by the user himself. ZEC was developed as a result of the bitcoin fork, but with the addition of the Zerocash Protocol. The founder and ideological leader of the company is Zuko Wilcox. Edward Snowden commented on the coin: in his opinion, it is the most interesting altcoin.

Ways to buy, sell, and invest anonymously​

Let's look at how you can maintain privacy in the digital space and not have serious consequences.

The first step is to create an email with strong encryption, such as ProtonMail. Reasons why you should choose this particular service:

• Thanks to end-to-end encryption, the recipient of your email will not be able to read it until you tell them the passcode. Third parties will also not be able to read the email.;
• IP address registration is disabled by default in ProtonMail. you can enable it if necessary;
• When creating a mailbox, you don't need to enter any personal information;
• ProtonMail is created and located in Switzerland and user data is stored on servers there. Any information about the service's customers can only be obtained if, in the opinion of the local authorities, the user has violated Swiss laws. Requests from other countries are most often rejected.
• In 2015, a series of powerful DDoS attacks were committed on the service, after which an agreement was signed with the company, which to this day successfully protects their servers from cyber threats.

Of course, you can use any mail that provides similar services.

Then, after registering an encrypted mailbox, select a cryptocurrency exchange that does not require identity verification, for example, Yobit - there are no daily restrictions on currency input/output, KYC and AML are not present. We connect a VPN, but be careful-on most cryptocurrency exchanges, VPN is prohibited, up to the ban of your account with the freezing of funds. You can try to buy a VPN with a static address, that is, you will always be on the same IP address, but not on your own, which will attract much less attention from the exchange. The Yobit exchange is also suitable for this purpose, because we did not find a ban on VPNs in the user agreement.

Procedure of actions:

1. We start bitcoins on the exchange;
2. Change to one of the presented anonymous cryptocurrencies;
3. We withdraw and run it through several cryptocurrency wallets;
4. We start a new one on the exchange and exchange it for bitcoins;
5. We display it in a convenient way for you. If you also want to anonymize these bitcoins, use one of the encryption methods suggested above.;

Important: you register all accounts that require email to a secure email address.

Where can I trade anonymously?​

You can trade anonymously on the largest cryptocurrency platforms, such as Binance and BitMEX.

On Binance, without a verification procedure, you can start and trade any volume, but withdraw no more than 2 BTC per day. In principle, if you are not a crypto oligarch and you do not need almost a million rubles a day, then this will be quite enough. Binance is also convenient because if necessary, you can use Fiat funds to Deposit and withdraw, as well as dozens of other cryptocurrencies and tokens.

Even more anonymous for using bitcoin is BitMEX, where the verification procedure is not required at all. You can start, trade and withdraw any volume, but BitMEX does not have the ability to work with Fiat currencies.

Does this keep the investor completely confidential? Yes, if you are not a notorious criminal who is wanted by the police or other law enforcement agencies. Exchanges will disclose your data and even block your account only if they receive an official request from regulators or law enforcement agencies. If you are an ordinary trader, even with good capital, or, for example, a freelancer who receives payment in crypt, then you have nothing to fear, most likely, you are simply not interesting to either the security forces or anyone else. At least until the full and strict regulation of the crypto industry.

Who cares about privacy?​

Why do people value privacy? And who appreciates it the most? First, the desire to preserve the confidentiality of financial transactions is quite a natural desire. If a person is clean before the law, he has every right to protect his funds from other people's attention by any means.

Another category of people is those who, for some reason, do not seek to disclose their income:

• Optimization or tax evasion, including offshorization;
• Corruption, fraud, and proceeds of crime;
• Disagreement with the modern banking and economic model in principle.

If even 10 years ago, almost anyone could withdraw capital to offshore zones and foreign banks, and then freely dispose of them, then in the era of AML and KYC it became much more difficult to do. Large banks, which used to allow funds to be used freely around the world, have now tightened the rules and maintaining at least conditional anonymity requires complex legal schemes. For this reason, cryptocurrencies have become so popular.

So who values anonymity the most and is willing to pay for it?

• Politicians, officials and their families;
• Law enforcement officers and their families;
• Owners of large volumes of cryptocurrency;
• Individuals who have problems with the law and a bad reputation in the eyes of banks;
• Persons engaged in shadow business;
• All the other people who want to maintain the confidentiality of financial transactions.

The conclusion from all of the above is quite simple: cryptocurrencies are a convenient way to gain privacy and hide very significant amounts from the attention of outsiders, tax and other services, at least until you seriously violate the law.

At the same time, you can adjust the level of confidentiality yourself, from very superficial and conditional, to the most complete anonymity, which will not allow even the most powerful law enforcement agencies and other persons to reach you.

 

[Carding 4 Carders]

Cryptocurrency and cybersecurity​

Cybercrime incidents are on the rise year after year – there doesn't seem to be a slowdown for Internet criminals.
With the advent of cryptocurrency, these cybercriminals now have new aspirations and new motivations for their criminal activities online.
Moreover, the rise of cryptocurrencies has led to the creation of new types of criminal activity.
Cryptojacking, Ransomware and various other similar activities have a direct correlation with the growth of cryptojacking.
Cryptocurrency traders are also targeted – because some of them are the first traders to be tempted by the massive price increases that cryptocurrencies can offer.
Current cybercriminals now use tactics as simple as the old phishing methods to steal crypto money.
Sometimes these attacks have a more advanced level, such as exchanging cryptocurrencies, obtaining hacked data, or ransomware attacks.
Let's take a closer look at how cryptocurrencies pose a threat to cybersecurity.

Cryptocurrency and cybercriminal​

Below are some of the most common criminal activities related to cryptocurrencies.

A clickjack
A criminal offense, mainly when websites are injected with malicious code that runs cryptocurrencies, using the processing power of the Central processor of site visitors!
Clickjacking is on the rise, and recent high-profile cases include the Google Chrome extension, where hundreds of thousands of users are infected.
Specific YouTube commercials were also caught when running this script, which caused launch operations to be performed when the ad was displayed.

Ransomware
exist for a short time – but with cryptocurrencies they have picked up their pace of development.
An aggressive attack encrypts all your files, and the key to decrypt these files is shared with criminals.
You cannot decrypt or access files on your computer before entering the key.

These cybercriminals often demand ransoms to be paid in cryptocurrency – and they give out the key after they receive the cryptocurrencies.
These attacks were on the rise, the most notorious of which crippled some hospital systems in the US.

Hacking of cryptocurrency exchanges
Hackers are also constantly increasing the frequency of cryptocurrency exchanges.
The cryptocurrency exchange has been hacked for quite some time – the first one is Mt. Gox hacked back in 2014, and the most recent one was hacked by Coincchck, which is the most significant cryptocurrency hack of all time, when hackers made off with $ 500 million worth of cryptocurrencies.
Countries around the world are setting stricter security standards and ensuring that exchanges comply with these standards.

Phishing attacks
While this may seem a bit old-school, phishing attacks do too – causing a lot of damage.
Users who don't have a proper 2FA system may end up giving them access to their exchange or wallet codes to hackers – who can easily get away with cryptocurrencies.
A recent attack on Binance, the largest cryptocurrency exchange in the world, saw the use of a phishing attack – however, in this case, hackers lost money, but not everyone was so lucky!

Twitter Impersonation
In one of the most low-cost crimes designed to attract first-rate users and gullible Internet users, Twitter crooks impersonate popular accounts like Vitalik Buterin, Charlie Lee, and Elon Musk among others-asking for 0.2 ETH from users and promising to send them 2 ETH in return.
While this is an obvious Scam for most users – it's surprising to see how many people fall for it when you look at the details of a wallet transaction.

How do I stay protected?
At a time when cyber-criminal activity is at its peak, there is an urgent need to take appropriate security measures.
Here are some tips that you can use to protect yourself from actions related to cryptocurrencies:

Don't upload attachments from an unknown sender
These attachments may contain malicious files attached to them – sometimes even a harmless jpeg image may have a ransomware app attached to it.
Most ransomware is distributed via email, which makes it critical only to download attachments from people you trust.

Remember that there is no FREE money
So many people fall victim to those scammers who pretend to be Elon Musk or Vitalik Buterin.
There is no free money, and no one gives it away !
Even the guaranteed profit from investment fraud encourages such users to ask them to Deposit a certain amount and get a guaranteed profit in exchange.
Anyone who asks you for money to pay you back more is a fraud!

Configuring 2FA protection
The necessary security is that setting up the system ensures that even if your password is compromised, hackers will not be able to access your account and transfer cryptocurrency without having access to another device that you have.
This second form of authentication can be in the form of Google Authenticator, email, or even a text message.
After entering the password, this second authentication must be granted before logging in.

Don't forget to back up your data
Precautions are better than treatment!
A regular backup of your data is essential for its security, especially files that are of great value.
Even in this case, attacks where ransomware infects your computer; because of these regular backups, all your data remains safe.

Using hardware wallets
Nowadays, both the security measures of a cryptocurrency exchange and any online storage platform are not really in the hands of the user.
The best way to save your currency is to store it in a hardware wallet.

Hardware wallets are the actual physical devices on which cryptocurrency is stored, and they can remain disconnected from the Internet when not in use – keeping them safe from any attacks.

Conclusion
In addition to criminal cyber activities, cryptocurrencies have also been linked to other illegal activities, such as financing terrorists and facilitating illegal trade – something that many countries have criticized the cryptocurrency for.
Cryptocurrencies have been the preferred payment method in darknet markets for many years.
In addition to this, another important problem that international governments face with the emergence of crypto money tags is that it also leads to an increase in corruption, as well as money laundering – due to the anonymous nature of crypto transactions, money can be hidden in different crypto wallets without proper disclosure.

 

[Lord777]

Monero
Monero is considered the most secure cryptocurrency by representatives of the crypto community. It originally appeared as a result of the Bytecoin fork. Monero uses hidden addresses and Ring Confidential Transactions (RingCT) to maintain anonymity of transactions and parties. The development team is constantly adding new features such as Tails OS integration to stay one step ahead of those looking to access personal information. The project is entirely focused on privacy, sometimes the usability suffers from this.

Dash
Although Dash loses out on anonymity to some of the cryptocurrencies on this list, it still has a few interesting features. The developers have integrated the PrivateSend method into the cryptocurrency, which allows sending coins to recipients anonymously. To do this, the master nodes mix the money of different users, sent over the network, several times. As a result, the coins become indistinguishable from each other. Dash is a fork of Bitcoin, so many of the unique technologies of the latter can be found here as well.

Verge
Verge is infamous for its collaboration with the Pornhub site. The history of cryptocurrency is quite controversial, and blockchain apologists differ in their assessments. But let's get down to the facts. Verge uses the Tor IP anonymizer to conduct transactions, while maintaining the anonymity of the connection to the blockchain. In addition, it is possible to conduct transactions through I2P - another IP address anonymizer. A distinctive feature of Verge is the Wraith protocol. It allows transactions to be carried out both through public and private blockchains. In the second case, transactions go through hidden addresses (like Monero) in combination with the previously mentioned Tor anonymizer.

Zcash
This anonymous cryptocurrency is based on the zk-SNARKs protocol. It is a kind of mathematical algorithm that confirms the accuracy of the transmitted information without revealing its content. As a result, all transaction data is encrypted. As with Dash, increased user anonymity is possible, but not the primary goal. The Zcash development team does not hide the degree of confidentiality of their cryptocurrency. It is fairly well secured, however multisignatures are not encrypted and IP addresses are not masked.

Bytecoin
Bytecoin was created in 2012. Some representatives of the cryptocurrency community consider it the first secure digital currency, the founder of a whole direction. As mentioned earlier, Monero originates from it. Bytecoin runs on the CryptoNote protocol - a mixture of ring signatures and one-time hidden addresses. Each transaction uses a unique one-time public key. As a result, it is impossible to track the history of transactions with a specific coin. Over the years, Bytecoin has suffered many forks, however, the development team has stepped up lately. The project underwent a rebranding and began to strengthen ties with the community.

Bitcoin private
Bitcoin Private is a forked mixture of Bitcoin and Zclassic. The team's goal was to create a cryptocurrency with the same security and recognizability as bitcoin, while inheriting the Zclassic way of maintaining anonymity. Bitcoin and Zclassic owners could receive Bitcoin Private in the form of an Airdrop. In fact, Zclassic is a descendant of Zcash, but without the founder's reward. Thus, Bitcoin Private has inherited all the principles of protecting the privacy of Zcash.

Hshare / Hcash
This cryptocurrency is not confidential in the full sense of the word. It allows value transfer between blockchains, as well as between blockchain currencies and non-blockchain based cryptocurrencies. They also include anonymous currencies, so Hshare / Hcash has to support all of their security methods. There are two types of wallets on the Hshare / Hcash platform: black and white. White wallets remain open, access to black ones is limited. To do this, Hshare uses technology developed by Zcash.

PIVX
PIVX is a fork of Dash. PIVX stands for Private Instant Verified Transaction. The Proof-of-Stake cryptocurrency is designed for everyday use. PIVX uses the Zerocoin protocol to hide addresses associated with wallets and ensure the anonymity of transactions. Unlike its predecessors such as Zcash or Dash, the cryptocurrency is completely resistant to blockchain analysis, keeping senders and recipients completely private. To make an anonymous payment, you first need to convert PIVX to zPIV coins. They are then credited to the desired address in the form of regular PIVX coins. The Zerocoin protocol allows transactions to be secured on the blockchain while maintaining the anonymity of the parties.

Zcoin
The Zcoin cryptocurrency is not widely known. It uses the Zerocoin protocol to ensure the confidentiality of payments. In a typical transaction, a number of Zcoins are burned (destroyed) in order to obtain Zerocoins that can be spent. In the process, a commission of 0.01 Zcoin is charged. Since Zerocoins have just been mined, they have no history of transactions. Zero knowledge proof allows you to untie the coins from the sender. The recipient of Zerocoin knows that money has been transferred to his account, but does not know from whom.

ZenCash
ZenCash is more than just an anonymous cryptocurrency. It includes a content platform, messaging, and a decentralized autonomous organization (DAO). ZenCash is a fork of Zclassic, which in turn is a descendant of Zcash. Like its predecessors, ZenCash allows confidential transactions using z-addresses (anonymous) and t-addresses (aliases). In the future, the ZenCash development team plans to implement a decentralized exchange, banking services, peer-to-peer insurance, and a governance-as-a-service (GaaS) system. All these add-ons will provide the same high anonymity as the original project.

Nav Coin
Like many other cryptocurrencies on this list, Nav Coin includes an option to conduct anonymous transactions. Closed transactions take place in the NavTech sub-chain. Instead of sending the cryptocurrency directly to the recipient, it is encrypted and moved into a sub-chain, ending up in a pool of many servers and encryption layers. NavTech then sends another set of coins from the pool to the recipient.

Related projects
We have described the largest anonymous cryptocurrencies, but there are still many small projects aimed at maintaining privacy and protecting personal data. Good examples are Hush, Sumokoin (a fork of Monero), and Aeon (another fork of Monero). In addition, some projects bring privacy to the platform level. For example, Wanchain develops smart contracts that are compatible with different blockchains, and Enigma allows you to create anonymous decentralized applications. With the growing number of cases of attacks on privacy, the list of anonymous cryptocurrencies will only grow.