On 27th July, ZCoin tweeted an official Medium blog post about the privacy software Dandelion. It is similar to the famous private browsing network Tor but is further used to add privacy to the IP address making a transaction.
Tor is a free browser network used by many to protect their online identity from traffic analysis borne out of data surveillance. This is implemented by the corporations to exploit a user’s online presence to fetch advertisement profits and more. The browser is also used to protect confidential business activities, state security and relationships.
There are two factors in the cryptocurrency world that determine the privacy in the space. Firstly, the blockchain must have privacy. Secondly, the network must also be private.
Blockchain privacy is provided by ZCoin through its Zerocoin protocol that makes the transactions untraceable, whereas the integration of Tor ensures privacy on the network.
The difference between these two kinds of privacy is that in network privacy, a computer’s IP address is concealed to protect all the personal information and online freedom. In blockchain privacy, details of the transactions such as the to and from of transaction addresses, the amount and the user identity are subject to protection.
Dandelion’s added advantage
Dandelion assists in building network privacy and conceals the IP address of a system broadcasting the transaction. This privacy tool came into being post the research work conducted by Giulia Fanti, Surya Bakshi, Shailesh Bojja Venkatakrishnan, Shruti Bhargava, Bradley Denby, Pramod Viswanath and Andrew Miller.
In cryptocurrencies such as Bitcoin, Ethereum and others, transactions are propagated on the network via nodes. These nodes are nothing but systems that possess a copy of the ledger to authenticate transactions. These transactions are broadcasted to all the nodes on that particular network.
This process is casually known as ‘Bitcoin’s gossip protocol’ among many in the space. This is for a simple reason that each node is aware of each transaction made on the network along with their addresses and amounts.
ZCoin in its blog also wrote:
“Identifying the originating IP address of the transaction can be done if someone controls enough nodes on the network to observe how the transactions travel through the network. That way he can check when a transaction has been received in which part of the network.
It further explained:
“By seeing which nodes ‘see’ the transaction first and observing the propagation patterns, an estimate of the IP address that originated the transaction can be made. A study indicates that the accuracy of these methods can be in between 11% to 60%.”
Therefore, Tor and Dandelion together make for a perfect combination of tools to combat surveillance and bring privacy to the table. Dandelion is required along with Tor as Tor becomes slow due to its limited bandwidth. Moreover, it is also vulnerable to cyber attacks launched to direct nodes into rejecting and blacklisting Tor connections and crack transaction anonymity.
Dandelion, without the assistance of Tor, can also perform efficient protection for a user who is reluctant to use Tor.