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In bitcoin, is anonymous really anonymous?

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With an increase
in the utilization and popularity of bitcoins and the overall blockchain
ecosystem, anonymousness in transactions is becoming the preference of many
users. There’s some distinction between anonymity while transacting via
cryptocurrency, and anonymity while using a search engine. As Bitcoin’s one of
the many fundamental principles is decentralization, keeping some portion of
the user’s information hidden is somewhat complicated. The complicatedness
occurs concerning the algorithms being written at the backend. Another reason
for the increase in anonymity is the fact that models around the blockchain
framework are experimenting on making it utilized across industries and in a
sustainable fashion. This piece focuses on various protocols through which one
may decide whether a scenario could be built practically or not.

Anonymity in
a Bitcoin

The whole concept
of bitcoin when designed and built was to become an anonymous payment system. A
framework where information between public key/Bitcoin addresses isn’t linked.
But in practicality, there exist some properties through which one could
analyze the features of a transaction, and how a transaction is being implemented.
Through some techniques, one could identify the owner’s behavior via bitcoin
address. One reason identified for anonymity not being effective was that not
many users were present in a network making a specific feature get quite
visible and easy to detect. Anonymity in a protocol may not operate properly
without a communication channel. As the anonymity characteristic is still being
researched and experimented by technical experts to date, there’s a probability
that a fresh prototype may be built in the future.

Another prototype
being developed to make transactions anonymous is Dandelion. Anonymousness
includes two variables, ‘recall’ and ‘precision’. A recall is a probability of
identifying, while precision detects the exactness of the estimator. The
prototype uses a dandelion spreading technique for achieving anonymity. The
technique consists of two phases. In the first phase, the message is spread
over a randomly-selected area for a non-structured number of hops. In the
second phase, the message is broadcasted using diffusion until the entire grid
receives the message. Employing these phases helps in optimizing anonymity and
latency.

Tracking
Digital Footprints:

The most recent
digital currency started being utilized by some percentage of the population in
Cryptocurrency. The idea of using a decentralized currency daily came around
2008-09, but it became a reality only around 2014-15. A currency’s worth
increases as the trust in individuals using it increases. It was so when gold
or silver was used as a currency. It certainly was true and even is true up to
some extent even today regarding currencies like Dollar, Yen, Pound, etc. The
same is happening with cryptocurrencies. As major financial institutions are
realizing it, they’re also starting to invest in them. But to avoid using it illegally,
some form of tracking is required for accountability’s sake. One such prototype is mentioned below.

As one may see in
the image above, the proposed prototype takes into account a little complex
route involving regulatory organizations also so that the probability of the
transaction being done illegally doesn’t arise. There are many web browsers
(like Tor) in which money laundering, funding terrorist organizations, and
similar activities take place. To avoid such scenarios and to intensify the
reliability, and trust of the user towards regular usage of cryptocurrencies,
such type of fresh mechanism was built.

Blindly
Signed Contracts:

Many experts have
been researching in resolving the anonymity issue. Another piece of research shows that through ‘epochs’ (on-blockchain) and ‘micro-payment
channel networks (off-blockchain)’, the issue of anonymity could be resolved. By
using the off-blockchain method, the confirmation of blocks happens within a
few seconds rather than a few minutes. Using these techniques, it was observed
that the transaction was unforgeable, DoS Resistant, and Sybil Resistant as
well. Employing the on-blockchain and off-blockchain technique turned out to be
quite effective, just like its comparatively harder (almost impossible) to
crack an iOS operating system in comparison with an android or a windows
operating system.

Anonymity in
Bitcoin via P2P network Traffic:

Technically
speaking, bitcoin functions as a data structure. Just like in a linked list,
some data from the prior block is used, after which it’s added and then sent to
the consecutive block. The block which receives the data again takes some data
as input, and then adds the data before sending it to the consecutive block. P2P network uses a gossip protocol for circulating the messages
to the rightful receiver. CoinSeer was developed after getting inspired by Dan
Kaminsky’s Black Hat presentation in 2011. To develop the protocol, initially,
a certain type of pattern was found. Then, the pairing of bitcoin address and
internet protocol (IP) was created. After this, the pairings were computed and
analyzed statistically. Then came the part where ownership pairings were
detected. Finally, the insignificant pairing was removed. In the end, applying
highly conservative constraints, the desired outcome was achieved.

2nd
Generation Bitcoins Anonymization Techniques:

With constant up-gradation
in technology and blockchain being decentralized, mechanisms to overcome the
anonymity issue becomes like a ‘piece of cake’. The second generation of anonymization techniques aims at eliminating the single point of failure while
being deployable in the present Bitcoin ecosystem. Some techniques include Fair
Exchange, Coin Swap, Coin Join, Stealth Address.

The above image is
an example of Coin Join. In layman words, using this technique is like using a
one-time-password (OTP). The transaction’s input needs to have a genuine
signature independent of other inputs. Each input is computed over the complete
transaction and hence is valid for only that particular transaction. The
anonymity in this type of technique depends on the extent of differentiability
and the difficulty of inferring valid subsets of inputs and outputs.

Concluding
Remarks:

As one could infer that numerous prototypes have been developed to date, and still researches are going on to build a foolproof technique. PrimaFelicitas is among few companies which have offices located at prime areas across the world i.e. where research around the blockchain happens 24*7. Besides that, the company’s founders have an educational background in computer science in the engineering field, and extensive experience related to such technologies as well. To know more about the upcoming platforms or to get some assistance to contact at PrimaFelicitas.

Source: https://www.primafelicitas.com/in-bitcoin-is-anonymous-really-anonymous/?utm_source=rss&utm_medium=rss&utm_campaign=in-bitcoin-is-anonymous-really-anonymous

Blockchain

Ethereum DeFi’s Ampleforth (AMPL) Drops 20% Despite “Whale” Accumulation

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  • Ampleforth (AMPL) has been one of the top-performing cryptocurrencies over the past month. The asset, whose long-term price performance is measured by its market capitalization rather than its nominal price, gained ~5,000% in July.
  • The asset has seen a steep correction over the past week as the focus of crypto investors has been on Bitcoin and Ethereum.
  • After a recovery, AMPL is dropping once again.
  • This drop comes in spite of positive on-chain and social media signs, according to blockchain analytics firm Santiment.

Ampleforth Drops 20% Despite On-Chain Data Indicating Accumulation

According to TradingView data, Ampleforth (AMPL) has dropped 20% in the past 24 hours as it has also been impacted by the flash crash in Bitcoin.

Ampleforth is an algorithmic stable coin that attempts to stabilize its price on the U.S. dollar in the long term. It responds to supply and demand by daily “rebasements,” which means that long-term holders of the token will have their balance change each day to try and center the price around a dollar. This latest price drop may be a byproduct of Bitcoin’s flash crash, coupled with an increase in the supply of AMPL.

Chart of Ampleforth's price action over the past few days from TradingView.com. Depicted is the price action of the Ethereum-based coin on FTX.
Price action may differ from exchange-to-exchange due to inefficiencies in this new(er) market and price action on futures vs. the actual coin.

This price drop in the price of AMPL comes in spite of positive on-chain and social trends, according to Santiment.

The blockchain analytics firm shared the chart below on July 31st. It shows that the weighted social media sentiment of messages regarding Ampleforth has hit a level above 3; a social media sentiment at such a positive reading suggests an extreme number of bulls as opposed to bears.

Image

Santiment added that per their data, “whales are accumulating” AMPL. Though, seeing the recent price action, it isn’t clear if they are having a big enough effect on the Ethereum-based token’s market.

How AMPL Succeeding Could Boost Ethereum

The recent price action has neither confirmed nor denied Ampleforth’s long-term goals to be a unique form of money. Thus, analysts have commented on what long-term effect this experiment could have Ethereum and the broader cryptocurrency space.

Ryan Sean Adams, the founder of Mythos Capital, says that he thinks Ampleforth succeeding will be “unbelievably bullish for” ETH.

This is because Amples becoming widely adopted as money will drive record demand for Ethereum transactions, forcing up the price of ETH. Ampleforth’s success will also trigger other innovations in money and other facets of society on the network, further driving demand for ETH.

“BCH, ZEC, XMR, BTC, ETH, DOGE, AMPL. Base monies. M0s all competing w/ each other. AMPL is the only one w/o its own chain. It settles on Ethereum. If the AmpleForth experiment is successful, we’ll see a rush of M0 monies competing on Ethereum.”

Adams notably did not comment on whether or not he thinks Ampleforth will succeed or fail as a project. He did, though, call it an “experiment.”

Featured Image from Shutterstock
Price tags: ethusd, ethbtc, amplusd
Charts from TradingView.com
Ethereum DeFi's Ampleforth (AMPL) Drops 20% Despite "Whale" Accumulation

Source: https://bitcoinist.com/ethereum-defis-ampleforth-ampl-drops-20/?utm_source=rss&utm_medium=rss&utm_campaign=ethereum-defis-ampleforth-ampl-drops-20

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Blockchain

Ethereum’s Compound (COMP) Slides to Multi-Month Low Despite DeFi Explosion

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  • While Bitcoin and Ethereum have seen notable bounces since imploding on Saturday evening, Compound and other altcoins are underperforming.
  • The Ethereum-based coin is down 7.5% in the past 24 hours as per data from Coin Market Cap.
  • This comes in spite of the fact that decentralized finance (DeFi), which Compound is a market leader in, has seen strong adoption.
  • Altcoins could see further losses against Bitcoin and the dollar if the market leaders continue to undergo bouts of volatility.

Compound Slides Lower In Spite of DeFi Strength

The Ethereum-based Compound (COMP) was the hottest token of June. But much has changed in the past five weeks.

In the past 24 hours, the Ethereum-based altcoin has dropped by just around 7% against the U.S. dollar. Unlike Ethereum and Bitcoin, it failed to recover a majority of the losses it incurred during Saturday night’s flash crash.

With this latest drop, COMP is near multi-month lows not seen since the launch of the asset in the middle of June. At the current price of $128, the asset is also down by approximately 70% from its all-time high price set in late June.

Chart of Compound's price action over the past few days from TradingView.com

This drop comes in spite of the fact that Compound, which the COMP coin is critical to, is the second-largest DeFi protocol and continues to gain traction. In fact, data from DeFiPulse suggests that there is around $767 million worth of cryptocurrency locked in the protocol.

Analysts expect the Ethereum-based coin to decline further as time goes on, unfortunately for its holders.

One trader explained that because the “fundamentals of [Compound’s] ‘governance’, given the public information, don’t make too much sense today,” a drop under $100 is likely:

“I’m short on $COMP, the fundamentals of the ‘governance’, given the public information, don’t make too much sense today. Won’t be surprised to see it fall below $100 unless a revenue model is proposed soon.”

His sentiment boiled down to the fact that companies that accomplish what Compound does are valued far below the market capitalization of COMP.

Altcoins Are Unlikely to Benefit if Bitcoin and Ethereum Undergo Further Volatility

Further volatility in the price of Bitcoin could further suppress altcoins, including Compound.

Nik Patel, the author of “An Altcoin Trader’s Handbook,” recently said on the outlook for altcoins in the current environment:

“Wouldn’t surprise me to see dominance now rise until BTC all-time highs (pending a confirmed Weekly breakout above $10,600) > break $20k and alts find another bottom (like Nov/Dec 2016) > they rally concurrently like March-June 2017.”

One trader, though, said that Bitcoin and Ethereum are likely to consolidate after Saturday’s flash crash. This could trigger rallies in altcoins as money flows from these large caps to smaller players.

Featured Image from Shutterstock
Price tags: ethusd, ethbtc, compusd, compbtc
Charts from TradingView.com
Ethereum's Compound (COMP) Slides to Multi-Month Low Despite DeFi Explosion

Source: https://bitcoinist.com/ethereums-compound-comp-slides-multi-month-low/?utm_source=rss&utm_medium=rss&utm_campaign=ethereums-compound-comp-slides-multi-month-low

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Blockchain

Why Analysts Expect Ethereum to See Further Downside Following Intense Selloff

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  • Ethereum witnessed some intense overnight volatility that caused its price to slide as low as $300
  • This intense selling pressure came about in tandem with that witnessed by Bitcoin – which caused its price to slide down to lows of $11,000
  • Analysts are now noting that ETH may be positioned to see further downside due to the strength of this movement
  • Although it has found some support and stability within the mid-$300 region, weakness against its BTC trading pair may also drag it lower

Ethereum and the entire cryptocurrency market is currently trying to stabilize following the unprecedented volatility witnessed overnight.

This came about after Bitcoin rallied to highs of $12,000 while ETH reached highs of $415.

From here, the market’s strength began degrading, with BTC ultimately reeling as low as $11,000 while Ethereum plunged to $300.

Both of these assets have since recovered slightly, but they still remain in a precarious position.

While looking towards Ethereum, one analyst is now noting that he is expecting ETH to see further near-term downside in the days and weeks ahead.

That being said, he still believes that the crypto’s macro strength makes it so that “dips are for buying.”

Ethereum Plunges as Low as $300 Overnight as Selling Pressure Ramps Up

At the time of writing, Ethereum is trading down just under 6% at its current price of $365.

This is a far cry from where it was trading at during the crux of the overnight movement when bears sent it as low as $300 on some platforms.

The drop to this level was incredibly fleeting, and it only traded here for a mere moment before being propelled back up to the mid-$300 region, where it is now consolidating.

While looking at Ethereum’s Bitcoin trading pair, one analyst explained that he is expecting it to see a continuation of this downtrend.

“ETHBTC: Channel fakeout? Gray zone is where I would like to reload up on ETH. I’m being patient – may take a few months – may not happen – that’s fine by me,” he said.

Ethereum

Image Courtesy of TraderXO. Chart via TradingView.

As seen on the chart he offers, the ETH/BTC price he is looking to accumulate at exists around 0.026. It is currently trading at 0.033.

Analyst: BTC Likely to See Further Downside, But Macro Uptrend Remains Strong 

Another analyst explained in a recent tweet that he now believes that Ethereum could pull back a bit further against USD before finding meaningful support.

“ETH / USD: Price perfectly tapped our previous highs of $315 overnight and was pretty much instantly bought back, over a 12% wick, bulls seem to be buying back up dips… LTF seems like we could pullback a little more, with some continuation to the downside, dips for buying.”

Image Courtesy of Cactus. Chart via TradingView.

As seen in the above chart, the lower-$300 region has been a historically important level for Ethereum, and the overnight dip here further confirms this.

Featured image from Unsplash.
Charts from TradingView.

Source: https://bitcoinist.com/why-analysts-expect-ethereum-to-see-further-downside-following-intense-selloff/?utm_source=rss&utm_medium=rss&utm_campaign=why-analysts-expect-ethereum-to-see-further-downside-following-intense-selloff

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