What are the challenges of protecting anonymity in a cryptocurrency system?

Most crypto people want to hide from others the very fact of their transactions, their amount, and the size of their wallet/vault. But unfortunately, the blockchain system is quite vulnerable in this regard because IT technologies carry an e-trace of any nature.

Since exchanges are an electronic transfer system subject to AML (anti-money laundering) and KYC (customer data verification) rules, there is no option for law-abiding business people to conduct such a business confidentially. Crypto transactions are available to all blockchain users, but attackers can track IP addresses.

In this regard, the question arose – how to conduct crypto transactions anonymously? An “anonymous currency” (Monero, Dash, Zcash, Beam, Grin) was created for this, although it exists in a “gray zone” since the states have neither approved nor banned it.

The system of anonymous currencies uses a hidden signature and address, a method of mixing the coins of several participants in a transaction by combining them into one crypto transaction, a zero disclosure protocol, and so on. But these methods must give a partial guarantee of anonymity. Because “anonymous currency” has privacy issues too:

• masternodes store data about the participants in the transaction;
• if the currency “in the source” is not initially anonymous, then it is easy to trace;
• the need for a “trusted setup,” which uses random parameters for settings, upon detecting which an attacker extracts all data about the transaction and its participants.

Also, in Bitcoin and Ethereum, there are issues associated with anonymity because criminals can deanonymize crypto transactions. Therefore, in the future, the anonymity of the crypto will be aimed at developing cryptography and including zero-knowledge protocols in the system because the main task is to preserve their funds and the fact of the transaction.

You can use MixBTC to hide your transactions and purchases. On this platform, there are no logins, and there is no fact of finding the sender/recipient address. This interface is very convenient, and its main principle is the transparency of the transaction system. 

At the same time, anonymity is the most reliable way to protect crypto assets from fraudsters. They can only trace transactions or calculate accounts with crypto assets if they know about their owner. The most important thing is the platform itself does not store data about its customers, which also provides a high level of anonymity, which means you can not worry about the security of your assets.