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Is Darkcoin Anonymous Enough?
For all the talk of its anonymity, Bitcoin is, in many ways, very public. Anyone can, at any time, freely peruse the list of every transaction ever made. It’s not necessarily clear who owns each wallet, but once a wallet owner’s identity is disclosed, the facade of anonymity fades very quickly.
There are a few ideas about what to do with this. One solution is Darkcoin, which relies on a feature called “darksend” to ad anonymity – an ad-hoc network of payment mixers, who run what amount to Bitcoin-mixing services. Working together, these nodes form a network of mixers that work in a manner very much analogous to the Tor network, passing payments around to make their origin and destination difficult to detect. In exchange for their services, mixing nodes are allowed to keep a portion of each transaction. This leads to dramatically higher transaction fees, but its users argue that the increase in anonymity is worth it.
So how secure is this scheme? Well, let’s start with the protocol itself: The security muscle behind Darkcoin is a decentralized implementation of CoinJoin, a security solution that is known to be vulnerable to analysis tools. A more serious flaw, though, is that the DarkSend application itself is closed source, making it difficult to determine if there are bugs and if the software really does what it says it does. This caused issues two months ago when DarkSend bugs caused a widespread currency breakdown, necessitating a hard fork. Developers in the cryptography space will tell you that closed source cryptographic tools are suspect at best.
On the whole, it seems unlikely that Darkcoin is secure enough to hold up to a persistent, resource-rich attacker, making the security guarantees it can make cold comfort for many would-be users. Some have gone further and suggested that Darkcoin is a “pump and dump scheme” – a cryptocurrency which is primarily owned by its creator, which is aggressively promoted to produce a temporary bubble, during which the creator sells his holdings. There’s some merit to this claim: Darkcoin was aggressively mined by a small number of wallets very early on (when the reward rate was very high). Most of those coins were sold during the large price spike last year. Cryptolife, a website that analyzes various cryptocurrencies, ended a post critical of Darkcoin like this:
“All hype and no substance, DarkCoin is far from a serious contender in the altcoin world. Its suite of ‘anonymity’ features are falsely advertised, offering pseudonymity at best. At the end of the day, DarkCoin offers nothing of true value over other coins. Couple this with shady release tactics, a sizable instamine, and unsustainable price increases, only a fool would dare ‘invest’ in this coin right now.”
Fortunately, Darkcoin is not the only game in town on the anonymity front. Zerocoin, a new cryptocurrency under development (originally conceived as an addition to the Bitcoin protocol) takes a very different approach to anonymity. Users of Zerocoin, according to the proposal, will be able to “destroy” a unit of currency while preserving a secret piece of information about the destruction process. Later, they (using a new wallet) can claim control of the destroyed unit of currency by using that secret to prove that they owned a destroyed coin, without revealing which coin they owned. This is called a zero-knowledge proof, and is secure to the limits of modern cryptographic tools, though also slower and more complex than Darkcoin. Zerocoin doesn’t exist yet (developers say the initial release will be ready in less than three months).
On the whole, given Darkcoin’s various vulnerabilities (and a certain amount of potentially shady dealings by its creators), those of you with serious anonymity needs are probably best off waiting for a more robust and less sketchy alternative, like Zerocoin or a similar competitor.
Image via Darkcoin wiki (license)
I have to caution the reader, the author is being deliberately deceptive.http://press.uchicago.edu/pressReleases/2014/March/1403DunnJCR.html While describing coinjoin, mentions TOR, without disclosing Darkcoin publicly announced it is in the process of making an internet service like TOR for 50cents a day. https://darkcointalk.org/threads/development-update-august-19-2014.2086/
Made sure to use a 3 month old quote June 5th and out of context. http://cryptolife.net/disclaimer/
Always be sure to say how bad Darkcoin is for being closed-sourced. Downplay development absolutely as much as you can. Do not let others catch on.
Let us reiterate the truth,
Darkcoin has more to offer then the rest. Darksend+ is more then just anonymity. That part will go open-source RC5 and is being audited by independent security experts. Kristov Atlas, Many people know, like and trust him, wrote: https://plus.google.com/115080614177201373926/posts/V1GDLn7tRTq.
Darkcoin has proof of development (PoD) This is rarely proven through a long time of energy spent developing.
X11 remains ASIC resistant, Darksend has never been broken, altcoins have gone on record stating they will copy/paste darksend+ when its allowed. Darkcoin has a responsibility to not release unfinished products on most noob altcoin devs. It is what responsible devs do. You can trust Evan Duffield. They operate at a higher level then other coin teams. This shows professionalism and nothing less.
What a terrible attempt at a hatchet job. You really are going to undermine your reputation if you keep pushing out nonsense like this.
And if you believe what you wrote; go re-do your research. Seriously; I expected better from coinreport.
Does the reply section work?
This article misleading and should be rewritten after reading.
https://darkcointalk.org/threads/development-update-august-19-2014.2086/
Oh, only duckNote is anonymous enought. duckNote ia a real anonymous crypto. Use it to save your privecy, XDN is a good investment.
I have no idea whether Darkcoin is solid for anonymity. However, your article solidly implies the creators of this coin were involved in shady dealings, yet there is no evidence that this is true. This is not a claim you should be making unless you have evidence to back it up.
As my citation notes, 40% of all DarkCoins were mined in the first 24 hours after launch, likely by the coin’s creator. Its anonymity software is closed source. There are innocent explanations for all of these things, but taken together they ARE shady.
Whenever you write an article critical of an altcoin, people heavily bought into that altcoin come out of the woodwork to protect their financial interest by decrying the piece as ignorant slander. I have no interest in arguing with such people. Cryptocurrencies are, perhaps, unique in their ability to produce their own shills without any external influence whatsoever.
In my previously deleted post I noted that the author is solidly claiming that the founders of Darkcoin have been involved in shady dealings, yet you provide no evidence of such, which is irresponsible.
This article has nothing to do with independent journalism. I cannot take this seriously. Coinreport, can you please have a look at the nonsense the author is writing and have the article removed or rewritten. Also, please hire independent writers, who know what they’re talking about.