Open-source software has a long history of speeding up technology. From the Free Software movement of the early ‘80s to Github repositories, the open-source movement has allowed programmers to build on established ideas and creating new programs to attack problems. This trend persists in the world of blockchain, as it was created out of a desire for increased transparency and visibility.
Software Developer Kits, or SDKs, are a common practice for software companies. These code libraries allow developers to gain insight into how a project works and the freedom to create their own apps. Giving access to anyone allows for rapid iteration of the codebase. Enough interest can lead to free development, code auditing, etc.
Tied directly to the SDK are the privacy features inherent in professional blockchain projects. Privacy on the blockchain is a somewhat complicated issue. As it stands in the industry, there are roughly three types of privacy protocols.
Open – Bitcoin, Ethereum, Litecoin, etc.
Anyone can see a wallet, its contents, and all transactions. The open nature of the wallets and transfers allows companies like Coinalysis to make tools to specifically track down users on these networks. This practice of “blockchain forensics” is utilized to flag nefarious actions and link them to criminal enterprises. The nature of these networks has led to the creation of “coin mixers” or “coin joiners” that work to obscure where payments are going and their originating addresses.
Closed – Monero, Zcoin
Using a technology called ring signatures, Monero is perhaps the most private cryptocurrency in the ecosystem. Wallet addresses are dynamically created, transactions are hidden, and looking up a wallet address delivers a humorous page.
The protocol has attracted attention from the IRS, who is offering a substantial reward for any researcher who can track Monero transactions, $625,000 to be exact. The reasons for keeping transaction private stretch beyond illicit practices. There is a large and established demographic of users who value their privacy and do not wish to fall prey to data leaks, as Experian and other institutions have been victim to in the past.
Hybrid – TIXL
Innovative companies like the German TIXL handle privacy through a hybrid model. Transactions on TIXL’s Autobahn network will be confidential for authorized service providers through the use of Stealth Chains. Similar to Moneros strategy, stealth chains are created dynamically for each transaction. Combined with zero-knowledge proofs, the Autobahn network is able to hide crypto transactions from even the most prying of eyes. These privacy features, combined with high speed, zero to minimal network or gas fees and the ability to onboard 3rd party tokens makes the Autobahn a potentially disruptive force in the blockchain world.
The speed at which blockchain is developing would not be possible without open-source software or SDKs. Privacy is and will remain a hot topic in the world of crypto as digital assets become more accepted and used by mainstream markets. Innovative projects that combine privacy with what is legally allowed might be what the crypto space is waiting for.
The Daily Chain
*Disclaimer – This content is made possible with TIXL’s support. The above article does not represent financial, investment, or trading advice, and we do not recommend the purchase of any cryptocurrency or product without consulting a financial aid. The Daily Chain strongly encourages you to do your own research before making any investment decisions.