‘A Brilliant Idea’ for Bitcoin Finds its First Application in Zcoin

Privacy-focused cryptocurrency Zcoin claims it has become first cryptocurrency that implemented Dandelion protocol, which is praised by the crypto community as an important development when it comes to increasing privacy for crypto users.

According to Reuben Yap, COO of Zcoin, Dandelion provides another layer of privacy in order to “reduce the likelihood of linkability to personal information like IP addresses to transactions.”

As many know, privacy in cryptocurrency usage is not to be taken lightly: although most cryptocurrencies are hard to steal – barring security issues of wallets or exchanges – some criminals simply go for physical attacks and robberies.

“Having an IP address connected to a transaction can give information as private as your physical location, name and account balance – the exposure of this can have very far reaching ramifications,” Yap explained in an email sent to Cryptonews.com. However, Dandelion does not make it impossible to link a user’s transaction to their IP address but it currently offers the best possible protection over transactions without resorting to encryption, the company added.

Zcoin already includes Tor browser, used by many to protect their online identity, as a measure of privacy against IP address detection. However, as opposed to Dandelion, Tor is an external service.

“Unlike using Tor, Dandelion is implemented within the existing cryptocurrency peer-to-peer network, so it doesn’t rely on (or impose costs on) an external service. It’s also lightweight and fairly easy to implement on top of existing cryptocurrency gossip networks because it does not use encryption,” said Andrew Miller, one of Dandelion researchers and assistant professor at the University of Illinois.

Meanwhile, Dandelion is also on the way to be implemented in Bitcoin with Bitcoin Core release 0.18.0, which is 57% complete. Bitcoin evangelist, technologist and serial entrepreneur Andreas M. Antonopoulos said that this protocol is a “fascinating and fantastic development”, “a brilliant idea.”

Listen to Antonopoulos explaining Dandelion:

How it works:

The problem Dandelion works to solve is this: When a transaction on the blockchain is sent, it is usually broadcasted to multiple nodes until it is picked up by a miner and included in a block, a process known as diffusion. This diffusion is susceptible to detection, which means that the source node’s IP address can be discerned.

The purpose of Dandelion is to complicate the transaction relaying process so much that the breadcrumb trail cannot be followed back to the source node. Dandelion sends the transaction on a random path through a variable number of nodes before the transaction is diffused across the whole network. So it follows a stem – through this path – and is then diffused like the dandelion fluff after you blow on it, which is where the name comes from.

This means that triangulating the position where the initial transaction comes from will only reveal the place where the diffusion happened, not the real initial node. Additionally, the encryption within the Dandelion protocol makes sure that actually finding the initial node is much harder than it is right now – although still not impossible.

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Zcoin’s snapshot: