Group Members:

Adrian Mowrey (Transparency & Trust)

Eric Minett (Monero, Zcash)
Ishara Lansakara Mudiyaselage (Sirin Labs)
Michael Krause (Bytecoin, Substratum)

Project Title:​ Cryptocurrencies: Transparency, Trust and Security

Cryptocurrencies have an advantage from a security perspective due to the infrastructure of the
Blockchain, which is decentralized and keeps digital transactions anonymous. These few steps
that were integrated within the design of the Blockchain can help cryptocurrency proponents ––
whether it’s something like Bitcoin, Monero, Bytecoin, SIRIN LABS Token, or anything in
between, guard against a series of common attacks. Upon presenting a few of the
cryptocurrencies out there, we would like to talk specifically about Substratum as an enabler for
people to freely access the Web, EOS as a way forward for autonomous organizations and also
talk about how it all started (integrate here what the Blockchain is and how it enables these
cryptocurrencies and also about Bitcoin which was the main cryptocurrency that started it all and
that these other cryptocurrencies followed afterwards).

Transparency & Trust

Prior to getting into the different aspects of various existent cryptocurrencies, I would like to
define this very common term which constructs the building blocks of the future from a
technological, financial and economic perspective. A cryptocurrency is a digital asset designed
to work as a medium of exchange that uses cryptography to secure its transactions, to control the
creation of additional units (blocks onto the Blockchain), and to verify the transfer of assets.
They are literally a kind of digital, alternative and virtual currencies.

Cryptocurrencies use a decentralized model via the Blockchain which is a public transaction
database, acting as a distributed ledger reflecting all of the transactions that take place, unlike a
centralized model that banks use today. This allows most of the cryptocurrencies to be
transparent and trustworthy. Blockchain is the technology which allows these types of
applications and tokens to take place in a peer-to-peer fashion without the need of an
intermediary (also known as the middleman). Very soon in this presentation you’ll see how
some cryptocurrencies can do the opposite (meaning that they’re not so transparent) to provide
us with complete anonymity as well.
In order to understand what the Blockchain does for cryptocurrencies, let’s think of it as a radio
station broadcasting its contents to an “N” number of people part of the airing network, which in
our case the contents represent the various digital assets that people call into the radio station to
be broadcasted. In the real World, it’s hard to classify who intercepts the contents and in what
order or way as it’s aired simultaneously to everyone. The Blockchain provides us with this
underlying capability of accounting who was placed in queue and to what is associated, and that
can be extremely powerful because now we can manage this chain of events that are trying to
take place simultaneously. We can build the logic of what’s at stake, called consensus, which is
the general agreement among the peers part of this ecosystem, and this is how validity is met.

On the other hand, when centralized systems have the data, they can change it, but when
everyone has a copy of that data they can check their own data and know when the records have
been altered, which practically makes this public database called Blockchain immutable, and that
enables really powerful applications.

There are two concepts that often get confused: one is the application and the other is the
Blockchain itself. In order to clarify that, currency is an application and the Blockchain is a
database with application logic tied to it. As you might imagine, from a development point of
view, efficiency is key as latency is very tight, therefore languages like C++, Rust, etc. which
have very fast execution times, are very much needed in building a Blockchain-based platform in
order to be able to process tens of thousands or even millions of transactions per second.

Without a doubt, I foresee that Blockchains have the capability of changing everything. There
are already a lot of applications that we don’t necessarily need to understand the new way of
doing economics or building decentralized communities; Airbnb, Uber, and all sorts of other
applications we’re using today; they can easily migrate onto the Blockchain and thrive like never
before.

For example: email is something that can benefit from Blockchains; banking, titles, identity,
stock markets and social media, and that’s just six of thousands of things that could be done on
the Blockchain.

Before the Blockchain was established, we faced this “double-spending problem,” which is a
problem unique to digital currencies, due to the fact that digital information can be reproduced
fairly easy and as a result the value could be spent twice. In comparison, physical currencies
don’t have this problem as cryptocurrencies do because they can’t easily be replicated. This was
an initial concern with the first and most popular cryptocurrency called Bitcoin, which proved
that the distributed ledger Blockchain and its mechanism can accurately take care of each
transaction, removing the need of those intermediaries mentioned earlier and prevent
double-counting. In other words, this breakthrough was able to bridge computer science and
economics alike, beginning a new era which supports free (as in freedom) transfers of assets as
we have been transferring regular information via the Internet.

To put this more into perspective, let’s look at a simple example of currency to visualize the
difference that Blockchain makes, which is the currency application. Previously, we could create
a digital currency, set up a MySQL database, put a front-end, allocate some tokens, implement a
little transfer form, allow users to sign up, and we’ll have a currency in its entirety. Everyone
could authenticate within the server, allow them to transfer it, etc. but it’ll be impossible to audit
it; the server could impersonate any given user, the owner of the server could be shut down. In
my own opinion, such a token would not have any market value, because nobody will trust it
with anything. Bitcoin, that’s all it is. A database, which allows people to sign transfer requests;
every transaction rather than being authenticated by a server is authenticated by everyone who
has a copy of the transaction and can verify the signature. This is fully transparent, because
everyone can audit it, has a copy of all the balances, and will know that it is legitimate. Imagine
a World where passwords never leave the hardware chip, so that they can never be copied, and
believe it or not, the corruption of any single bit is detectable. This really gives true value to
these cryptocurrencies which so many are overseeing and brushing off, quantifying it as
complete garbage. I have personally been invested since 2015, and I have seen enormous
transformation in these projects that try to evolve the businesses of today.

One project in particular that stood out to me is a project called Provenance which tries to reflect
the entire history of how a product or good is produced from A-Z. Just imagine the type of trust
this is going to reflect from the suppliers that run their goods and supply chain in general through
such a model. I believe that it has the potential to literally transform our shopping experiences
from a decision-of-quality perspective. This truly pushes the innovation within these companies.

One of my most favorite projects is EOS.io, a general-purpose platform that is trying to

decentralize and disrupt all sorts of industries. It’s a fundamental technology, like the Internet in
the sense that we need to go back and rebuild everything. As a future computer scientist and
visionary, I can’t wait to see what I will personally be able to do on top of this technology where
the enabling foundation sets out to transform the way we think about implementing something.
Security and Anonymity

Monero (XMR)

On the topic of security and anonymity, Monero truly has both; which has both the potential to
be very good or very bad. When talking about Monero, there are four key details which outline
it; it is Secure, Private, Fungible, and Untraceable.

First off, how is Monero secure? Just like any other cryptocurrency, it is decentralized. Second,
there are no third-party intermediaries needed to keep your Monero safe and secure. Third, a
Monero transaction is confirmed by the distributed consensus, and then immediately recorded on
the Blockchain. What makes Monero different though, the Blockchain can only record the fact
that a transaction was made. It can’t tell you where it came from, where it was delivered, and the
amount. We’ll cover that later.

One of the most attractive qualities of Monero is how truly private it is. Monero includes all the
benefits of any other cryptocurrency, without the typical privacy concessions. They also use
two-pairs of Public and Private Keys. In order to properly implement true privacy, Monero has to
obfuscate the origins, amounts, and destinations of all transactions. They achieved that by
creating two things: Ring Signatures, and Stealth Addresses.

A Ring Signature is Monero’s own type of cryptography, and it is unique to a group of users that
all have the keys for it. An easy way to understand how a Ring Signature works, is to think of the
Ring as a group of people; let’s say a group of 12 government officials. The Ring is unique to
that group of people. As far as the programming goes, though, it can’t determine whose signature
was used. To the program, all 12 people are the exact same and valid, all it knows is that
someone signed it. Because of Ring Signatures, Monero offers true anonymity, and plausible
deniability. Stealth Addresses double-down on the privacy aspect of Monero. They require the
sender to create a random, one-time address for every transaction on behalf of the recipient.
“One of the security properties of a ring signature is that it should be computationally infeasible
to determine which of the group members’ keys was used to produce the signature.” Again, this
is another reason how Monero offers true anonymity. Only the sender and receiver will be able
to determine where a payment was sent.

Monero appears to be the most fungible cryptocurrency to date. To break it down, fungibility
means that two units can be substituted in place of one another. An easy way to understand this
is to think of two $10 bills. A $10 bill from the 90’s pays the exact same as a $10 bill from five
years ago. Physical money is difficult to trace, whereas banking transfers from Wells Fargo to an
offshore Swiss bank account is easily traceable. What makes Monero fungible is the way it
cannot be traced, and because of that, Monero has an incredible advantage over Bitcoin and most
other cryptocurrencies. Every single transaction by any cryptocurrency can be traced. To put this
in perspective, let’s say Bobby was sent “N” amount of Bitcoin. Bobby then has the wild idea to
use his Bitcoin for an illegal purpose, whatever that may be. The receiver of Bobby’s Bitcoin
then sends it off to whoever else, and it is regularly in the flow of cryptocurrencies. Since the
Blockchain records EVERY transaction, people will be able to trace that exact Bitcoin to
Bobby’s illegal activities. Therefore, a company can blacklist any currency that has been used for
illegal activity. “Currently some large Bitcoin companies are blocking, suspending, or closing
account that have received Bitcoin used in online gambling or other purposes deemed unsavory
by said companies.” Since Monero can’t be traced, this makes it truly fungible, never knowing if
it was used for illegal activities or not. This is the catch-22 about Monero, as it would be quite
attractive to hackers and to others who want to use it for illegal/illicit activities.
Finally, all three of the previously discussed factors make Monero totally untraceable. Monero is
untraceable by default, it has been built specifically to address the problem of traceability and
nun-fungibility. Because of that, Monero can NOT be linked to a particular user or real-world
identity. Since it’s untraceable, it is perfect for two groups of people: those who simply value
their privacy above all else, and people who want to use it illicitly or for malicious intent.

Monero is as semi-transparent as the user wishes. They can have some information be
transparent, or they can have their information 100% private.

Z Cash (ZEC)

Z Cash is another type of cryptocurrency that is fairly private. Just like any other cryptocurrency,
Z Cash is decentralized, and open source. Similarly to Monero, Z Cash offers selective
transparency. Therefore, you can send Z Cash publicly or privately.

The biggest factor that separates Z Cash from other cryptocurrencies, is the fact that the creators
of Z Cash developed their own cryptography, called zk-SNARK. They simplify it, calling it a
Zero-Knowledge Proof. It’s too complicated to include in this portion of the paper, so we’ll leave
it out.

Z Cash maintains a secure ledger of balances without disclosing the personal information of the
user who owns it. The transaction metadata is encrypted, and by using zk-SNARKs, they can
validate the integrity of the transaction without revealing the personal information of the user. It
also prevents cheating and stealing of Z Cash.

In my research, the biggest difference between Z Cash and Monero, is that Z Cash is much more
focused on privacy as opposed to anonymity.

Bytecoin

Bytecoin’s specialty is in transferring its cryptocurrency privately, quickly and effectively. It has
many of the same features as Monero: anonymity for the sender, receiver and dollar amount
through the use of their own algorithm. Onto some specifics, it prides itself on is its transfer
speed, being taken care of over the internet with no middle-man.

Bytecoin is powered by the computers that are part of the transaction process, meaning that the
people who mine for Bytecoin also participate in keeping the network active. It’s also very easy
to do so as Bytecoin doesn’t have high computer requirements in order to mine effectively. All
of the money gained is protected during the transaction making it an easy and safe way to
support and benefit from investing in Bytecoin.

Substratum

Substratum seeks to support the decentralized web by being an internet medium that avoids
censorship through the support of its own cryptocurrency and nodes as their form of “mining”.
Any user is able to host content through Substratum using a “node” to transfer information and
any user is able to view that content after it is successfully posted.

Substratum uses cryptocurrency to support content creators instead of advertisements to avoid

the chance of advertisers not wanting to support certain kinds of content. Through a voting
algorithm, Substratum can be governed by the user base, downvoting offensive content should a
consensus be reached. This, in conjunction with how it holds content, allows content creators to
produce worry-free of higher powers censoring content through hidden algorithms or paid fast
lanes.

Sirin Labs

Sirin Labs was founded by Moshe Hogeg in 2014. It’s a Swiss-Israeli based company. Sirin has
released Ultra secured, P2P resource sharing devices. A open-source smartphone and PC, which
is called FINNEY, and runs its own SIRIN OS. It’s just like Apple has its own devices and OS.
The difference is SIRIN labs guarantee that their OS and devices are not hackable. And it’s the
first ever open-source, blockchain enabled smartphone and PC.
SIRIN OS operates on an independent blockchain network powered by IOTA’s Tangle
technology and Sirin Labs’ own security framework. The system is designed to support inherent
blockchain applications such as a crypto wallet, secure exchange access, encrypted
communications, and P2P sharing and transactions, to enable secure and reliable handling and
exchange of crypto currencies and assets, as well as participation in the network powered by the
company’s SRN token. While Finney devices will provide users with enhanced crypto security in
general, they will themselves form an independent blockchain network (as shown in the above
diagram), “free from centralized backbones and mining centers,” based on the “distributed,
scalable, lightweight, ASIC-resistant ledger” at the heart of Shield OS. Finney devices will also
utilize a tamper resistant hardware secure element to store confidential and cryptographic data
such as encryption keys and biometric templates. Furthermore, both hardware and software
platforms are to be released as open-source. To ensure the integrity of the distributed ledger
transaction, SIRIN OS offers multi-layered cyber protection. It makes use of innovative methods
to secure the weakest link in cryptocurrency transactions, which is in the interface between the
wallet, internet connection and blockchain network.

The main goal of the wallet is to safeguard the user’s private key. It also displays the user’s
balance, transactions history and public address. It is hardware based embedded inside the
TrustCore, a tamper-resistant secured element, which is protected by SIRINLABS Blockshield
technology – a secure area, protected by a physical switch. When the embedded wallet is not
being used, it will be physically and electronically disconnected from the network.

Resources:

TRANSPARENCY:
Bitcoin ​https://bitcoin.org/en/

SECURITY/ANONYMITY:
Monero ​https://getmonero.org/
Bytecoin ​https://bytecoin.org/
Zcash ​https://z.cash/
Sirin Labs ​https://sirinlabs.com/
Substratum ​https://substratum.net/

TRUST:
EOS ​https://eos.io/