The quest for anonymity has been tied to Blockchain technology from it’s earliest days. When the Bitcoin network was small, and still operated in relative obscurity, Bitcoin itself was championed as a quasi-anonymous method of sending transactions. It has become clear in the near-decade since that transactions on the Bitcoin blockchain can be tracked and traced to their origins by entities with enough dedication and resourcefulness. As alt-coins have risen in popularity, one of the chief draws of would-be Bitcoin competitors such as Dash, Monero, and others, have been their enthusiasm for obscuring all traceable aspects implicit in the sending, receiving, and storage of their respective digital assets. While such projects do a fine job by modern standards, the aspiration of achieving perfect and perpetual anonymity is likely to be a futile one.
Dash, formerly known as Darkcoin, was one of the first alternative blockchains to offer some semblance of anonymity to their user base. Dash attempts to achieve transaction privacy through a built-in coin mixing service, whose operation is similar to that of CoinJoin. Though more adequately veiled than the average, unmixed Bitcoin transaction, such practices are far from infallible. Low liquidity, and the reliance on master nodes potentially leave the currency open to future breaches in Dash’s security.
Another coin which touts the anonymity claim is Monero. Long championed as the truly anonymous alternative to Bitcoin, Monero has had its share of stumbling points since launching in 2014. A recent study concluded that upwards of 80% of Monero transactions fully lack anonymity due to the predictability in the timing of how such transactions are obfuscated. Similar to Dash, Monero likewise utilizes a form of coin mixing to achieve its goals of privacy. When a transaction is sent, it is displayed along side former transactions, making it difficult to determine which is the most recent. Due to the design of it’s blockchain however, it is now becoming clear that determining the newest transaction is as trivial as observing which transaction has the largest block number. While Monero boasts several other noteworthy features, anonymity may be one whose time has not yet come.
The last of the anon-inspired currencies of note is ZCash. Shortly after launch, a bug was discovered which impacted the fidelity of the coins private transactions. However, the currency recovered much of its momentum and status in the months that followed due to its unique and thoughtful approach to anonymizing transactions. Zero knowledge proofs are used to prove the accuracy of hidden information, without actually revealing the information in the process. For all intents and purposes, ZCash truly may be anonymous for the time being, when used with a shielded address. Transactions sent appropriately with Zcash do not appear to be vulnerable to investigation using any modern methods of detection. Methods and technologies employed by future parties are a different matter, however. The developers of Zcash freely admit that as quantum computers enter the technological landscape, breaking the encryption scheme utilized by Zcash and Zero-knowledge proofs will become trivial. There is likely to come a time in the near future when many transactions on the Zcash blockchain will be retroactively de-anonymized.
Anonymity is a lofty goal. Though we may come close to accomplishing it for brief moments in time, such moments are unlikely to last forever. Relying on the technology of today to obscure our exploits tomorrow is an act of reckless optimism, and may ultimately lead anonymity partisans to their undoing.