Cryptonote Privacy

General discussion of CryptoNote and the future world

Cryptonote Privacy

Postby m97daa » Thu Mar 27, 2014 5:36 pm

Upon reading the description of CryptoNote a few questions jump to my mind about the untraceability of transactions. Perhaps in an economic based exclusively on CryptoNote your privacy claims works but it seems a little flawed once CryptoNote is used in conjunction with fiat currencies such as EUR or USD. As we have seen with Bitcoin and many other currencies, many of the network's participants engage in trading them for fiat currencies. Once they do, they create uniquely identifiable accounts on exchanges which are well aware of every transaction that occurs in their system.

Suppose such an exchange arises (for the sake of the argument even take an exchange trading exclusively in cryptocurrencies), I would have an e-mail address associated with an account. Every operation of depositing or withdrawing CryptoNote would show up on my account and be associated with my e-mail. Therefore, I would be theoretically giving up a large chunk of my privacy since all my deposits and outgoing payments become known and associated with my e-mail address. Much the same way as an online payment for goods would require me to give a postal address, once again robbing me of my privacy. I feel like there's a false sense of "unlinkability" being fostered here. More precisely an unlinkability that can only take place if two participants meet outside and exchange goods and money... a property USD and EUR currencies already possess.
m97daa
 
Posts: 5
Joined: Thu Mar 27, 2014 5:04 pm

Re: Cryptonote Privacy

Postby RedSnapper » Thu Mar 27, 2014 5:56 pm

m97daa wrote:Upon reading the description of CryptoNote a few questions jump to my mind about the untraceability of transactions. Perhaps in an economic based exclusively on CryptoNote your privacy claims works but it seems a little flawed once CryptoNote is used in conjunction with fiat currencies such as EUR or USD. As we have seen with Bitcoin and many other currencies, many of the network's participants engage in trading them for fiat currencies. Once they do, they create uniquely identifiable accounts on exchanges which are well aware of every transaction that occurs in their system.

Suppose such an exchange arises (for the sake of the argument even take an exchange trading exclusively in cryptocurrencies), I would have an e-mail address associated with an account. Every operation of depositing or withdrawing CryptoNote would show up on my account and be associated with my e-mail. Therefore, I would be theoretically giving up a large chunk of my privacy since all my deposits and outgoing payments become known and associated with my e-mail address. Much the same way as an online payment for goods would require me to give a postal address, once again robbing me of my privacy. I feel like there's a false sense of "unlinkability" being fostered here. More precisely an unlinkability that can only take place if two participants meet outside and exchange goods and money... a property USD and EUR currencies already possess.


As far as I understood cryptonote doesn't deal with this problem directly. They're more into anonymous payments within the system. A good point though.
RedSnapper
 
Posts: 7
Joined: Wed Mar 26, 2014 4:10 pm

Re: Cryptonote Privacy

Postby Werner_Albert » Fri Mar 28, 2014 9:56 am

I’d agree with RedSnapper, CryptoNote is not entirely “on scope” on this question.

However, I see a point in your claims. Fully anonymous payments would require a different kind of economy and it should be coupled with the significant social institutions changes.
CryptoNote is not an instrument for money laundering or taxation avoidance. We believe that the users should be free of governmental surveillance, but still ought to comply with the regulation.
One could be anonymous with personal issues until he’s dealing with the sensitive areas and the interests of the society. In this case full anonymization is a matter of a distant future with a rather different global paradigm and the CryptoNote technology is just the beginning of the larger changes.
Werner_Albert
 
Posts: 56
Joined: Wed Mar 26, 2014 3:23 pm

Re: Cryptonote Privacy

Postby a_chester » Mon Mar 31, 2014 12:58 pm

RedSnapper wrote:
m97daa wrote:Upon reading the description of CryptoNote a few questions jump to my mind about the untraceability of transactions. Perhaps in an economic based exclusively on CryptoNote your privacy claims works but it seems a little flawed once CryptoNote is used in conjunction with fiat currencies such as EUR or USD. As we have seen with Bitcoin and many other currencies, many of the network's participants engage in trading them for fiat currencies. Once they do, they create uniquely identifiable accounts on exchanges which are well aware of every transaction that occurs in their system.

Suppose such an exchange arises (for the sake of the argument even take an exchange trading exclusively in cryptocurrencies), I would have an e-mail address associated with an account. Every operation of depositing or withdrawing CryptoNote would show up on my account and be associated with my e-mail. Therefore, I would be theoretically giving up a large chunk of my privacy since all my deposits and outgoing payments become known and associated with my e-mail address. Much the same way as an online payment for goods would require me to give a postal address, once again robbing me of my privacy. I feel like there's a false sense of "unlinkability" being fostered here. More precisely an unlinkability that can only take place if two participants meet outside and exchange goods and money... a property USD and EUR currencies already possess.


As far as I understood cryptonote doesn't deal with this problem directly. They're more into anonymous payments within the system. A good point though.


Digital currency creator's have to keep it in mind. Otherwise, once the community is little bit more than just geeks, the further development may hault. m977daa is absolutely right that anonymity will be compromised at points of exchange with fiat.

This gets to a rather rhetorical question whether full anonymity is needed for the currency and can be achieved at all.
a_chester
 
Posts: 7
Joined: Wed Mar 26, 2014 4:11 pm

Re: Cryptonote Privacy

Postby m97daa » Mon Mar 31, 2014 5:00 pm

The debate whenever currencies need to be fully anonymous is a rather large one. Some people will always be for complete anarchy and anonymity, while others be fully against it.

I think that CryptoNote actually has a very interesting application in payment processing. For example, it could help lower fees on payments. It would allow various competing payment services to deploy networks away from each others eyes' hence keeping their partners and customers secret. This would force the market into developing better technologies and lowering processing fees. Also it's peer-to-peer nature would allow it to circumvent the massive capital requirements that would be needed to construct a network the size of VISA or Mastercard. Instead it would allow large webs to spring up at a fraction of the cost.
m97daa
 
Posts: 5
Joined: Thu Mar 27, 2014 5:04 pm

Re: Cryptonote Privacy

Postby The-rocket-A » Tue Apr 01, 2014 2:01 pm

Too rigid privacy protection may play a bad joke on business, 'cause company's financial operations should be easily understood, clear, frank and candid.
Will companies (and governments that is very important) be able to provide transparent financial reports if they use CryptoNote based currencies?
User avatar
The-rocket-A
 
Posts: 6
Joined: Tue Apr 01, 2014 5:04 am

Re: Cryptonote Privacy

Postby Maurice.P » Tue Apr 01, 2014 6:43 pm

The-rocket-A wrote:Too rigid privacy protection may play a bad joke on business, 'cause company's financial operations should be easily understood, clear, frank and candid.
Will companies (and governments that is very important) be able to provide transparent financial reports if they use CryptoNote based currencies?


It's an important issue. We tried to address as we were developing CryptoNote. Currently the protocol supports completely transparent financial operations that do not de-anonymize other involved parties. Thus, the companies accepting CN-based currencies will still be able to comply with the regulation. On the other hand, the financial privacy of the individuals is not under risk.
Maurice.P
 
Posts: 63
Joined: Wed Mar 26, 2014 3:26 pm

Re: Cryptonote Privacy

Postby m97daa » Tue Apr 01, 2014 8:24 pm

What I was thinking about was among somewhat different lines. Suppose you have a very small currency exchange or local stock exchange that wants to accept credit cards. VISA and Mastercard charge these types of customers ridiculous fees and they penalize payment processors that go around their fees and supply these exchanges with better rates by accepting VISA first and then moving the funds to the exchange. Now suppose this payment processor uses CryptoNote, he would process the card and then move the funds to the Exchange in CryptoNote, hence giving the exchange some breathing room on the fees!

The idea is that such tools would force monopolies to reconsider their rates and make the market more competitive!
m97daa
 
Posts: 5
Joined: Thu Mar 27, 2014 5:04 pm

Re: Cryptonote Privacy

Postby Werner_Albert » Thu Apr 03, 2014 2:58 pm

m97daa wrote:What I was thinking about was among somewhat different lines. Suppose you have a very small currency exchange or local stock exchange that wants to accept credit cards. VISA and Mastercard charge these types of customers ridiculous fees and they penalize payment processors that go around their fees and supply these exchanges with better rates by accepting VISA first and then moving the funds to the exchange. Now suppose this payment processor uses CryptoNote, he would process the card and then move the funds to the Exchange in CryptoNote, hence giving the exchange some breathing room on the fees!

The idea is that such tools would force monopolies to reconsider their rates and make the market more competitive!


We don't understand the status quo with unfairly high processing fees for the cards. However, I still didn't get your point. My guess is the fees from VISA will be passed on by the processor to the exchanges. So it won't make a huge difference from the current point of view if we add an additional layer to the current system. I'd say the solution is a gradual redesign of the financial institutions as we know them.

The-rocket-A wrote:It's not about regulators, it's more about the way of doing business. Transparency is important for company owners, investors and employees as well as for regulators.
And what do you mean by "out of our scope"? Aren't you ambitious enough to do the technology for the future worldwide currencies?


As Maurice noted, in the majority of the cases the companies will be able to identify their clients, since they'll need the delivery addresses and contact information.

We're technologists, not the business people. We create infrastructure, not the exact solutions.
Werner_Albert
 
Posts: 56
Joined: Wed Mar 26, 2014 3:23 pm

Re: Cryptonote Privacy

Postby AndrewSF » Wed Nov 19, 2014 11:26 pm

The problem you are referring to with fiat currencies is the exchange. It is impossible to trust anonymous exchanges to be a good actor without legal recourse to problems developing. Engaging in the business of money transmission or trading is a regulated activity that requires compliance to KYC and AML laws in local jurisdiction or the operator risks going to jail and the customers funds seized. At present their is no way to run an anonymous p2p exchange but eventually a solution will be found.
AndrewSF
 
Posts: 4
Joined: Wed Nov 19, 2014 11:15 pm

Next

Return to Philosophy

Who is online

Users browsing this forum: No registered users and 1 guest

cron