Privacy and decentralization are two things commonly associated with the benefits of Bitcoin and Cryptocurrencies . However, the very nature of Blockchain acting as a public ledger raises questions over how private these digital assets really are. If all addresses and transactions are public — is it technically possible to link a private address and transaction to a public identity?
The answer is yes. Which is why the innovators over at PIVX have implemented their own version of Zerocoin Protocol technology that masks users' addresses, balances and transactions from the ledger as required. Giving users the total privacy that the original founder of Bitcoin, Satoshi Nakamoto, once envisioned.
PIVX — what’s the big deal?
PIVX (Private Instant Verified Transaction) is a privacy-focused digital currency that uses a Proof of Stake (PoS) consensus system. PIVX generated a lot of interest both off and on the internet when it debuted in March 2017 with its ability to support instant transactions and low transaction fees with a focus on privacy.
The PIVX cryptocurrency, which launched back in 2016, skyrocketed to a total market cap of $682 million USD, placing it among the top 50 coins of the total cryptocurrency market. PIVX uses a system of masternodes which enables PIVX supporters to dedicate hardware and PIVX coins to be used by the network. The supporters are then rewarded a share of the block reward — a potential high-interest investment incentive for supporters.
The currency has attracted many supporters who place a premium on privacy and transaction speeds — the latter of which has become increasingly important as the popularity of Bitcoin slows down transaction speeds and drives up energy costs by its miners as it becomes more difficult to mine.
PIVX currency’s Proof of Stake (PoS) model is a more cost-effective and energy efficient than traditional Proof of Work (PoW) coins such as Bitcoin. Another potential weakness of Bitcoin and other major cryptocurrencies is their reliance on a public ledger system, the blockchain. This public ledger makes all addresses and transactions publicly visible. This is where PIVX’s Zerocoin Protocol technology comes to the rescue.
PIVX’s Zerocoin Protocol Solves Privacy Concerns
The Zerocoin Protocol is a relatively new technology that solves a privacy problem inherent in the blockchain. In a traditional blockchain, addresses and transactions are recorded on a public ledger. These blocks become a part of the larger “blockchain” as they are verified by the network.
The public nature of the blockchain means that addresses and transactions could potentially be linked to all past transactions and also reveal the user’s public identity. Zerocoin (zPiv) circumvents this problem by “unlinking” these chains when the transaction takes place — thus maintaining the privacy of the transaction and addresses.
How does this work? When a transaction takes place on the PIVX network, the PIVX tokens used are burnt from the network and converted at a 1:1 ratio for zPIV tokens.
When these zPIV tokens are sent or spent, the PIVX network converts them back to PIV tokens with no previous transaction history in the blockchain linked to them thus making it impossible to link the sender and receiver in the blockchain. zPIV even makes the account balances of the sender and receiver private due to this unlinkability.
PIVX is the first Proof of Stake currency to implement the Zerocoin Protocol and thus giving it an important first-mover advantage on other cryptocurrencies. The depth of privacy and anonymity offered by PIVX also makes it one of the most promising and technologically advanced coins on the cryptocurrency market.
Proof of Stake and Zerocoin may be the future
Proof of Stake currencies hold inherent advantages over Proof of Work systems. In a traditional Proof of Work system such as Bitcoin, every node or miner that participates in verifying an individual block uses a lot of energy in the form of electricity. Lots of it.
The problem of increasing transaction costs and slower transaction speeds has become ever more apparent as Bitcoin’s network continues to become excessively congested.
Proof of Stake relies instead on its stakeholders. These stakeholders are developers or community supporters who hold any amounts of PIVX coins in their desktop wallets and does not require a lot of processing power to verify transactions on the network.
As there is less energy needed to complete the process, the costs are lower and transaction speeds can remain fast. It also helps that PIVX has a block time of only 60 seconds with 2MB sized blocks thus being able to fit much more transactions per block per minute than most other cryptocurrencies.
Proof of Stake has gained a lot of interest as developers and crypto-enthusiasts begin to see the benefits of a PoS system over a PoW system. Ethereum, the second largest market cap cryptocurrency, will also be making a shift to a Proof of Stake system in the near future due to its inherent benefit.
As cryptocurrencies continue to gain public interest, people will look to a payment system that is fast, secure, private, and decentralized. This is where PIVX holds major advantages and their developers continue to be ahead of the industry.
PIVX users can send and receive digital assets in seconds, and do so without having to compromise their anonymity. With lower costs, faster transactions and better privacy, PIVX may be the coin to beat in 2018.
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