Dr. Duncan S. Wong, the co-inventor of the cryptographic primitive known as “Linkable Ring Signature” that powers the world’s 10th largest cryptocurrency Monero, said on Wednesday that the matter of privacy for enterprises from considering the adoption of cryptocurrencies and blockchain technologies is like a double-edged sword.
“You can’t really imagine big banks using cryptocurrencies if it is possible to easily trace all of their transactions, as we can do with Bitcoin today”, he said. “But at the same time privacy tokens also won’t be able to achieve widespread adoption, because authorities such as tax bureaus still demand to have some insight into them.”
He was speaking after a summit in Malaysia announcing his “Accountable Privacy” initiative – Abelian. The aim of this initiative is to create a public blockchain where the transaction record is visible and tracible by regulatory authorities, while still preserving privacy in-between users and towards the general public.
Wong’s comment on the importance of privacy were the latest to highlight the adoption problem in the cryptocurrency space. Earlier this month, Ethereum’s Vitalik Buterin said “there is still a way to go” in terms of preserving privacy on blockchain, pointing out that “currently, there are no good ways to use blockchain while preserving privacy”.
The “Accountable Privacy” initiative is a collaborative effort between research institutes of Nanyang Technological University (NTU) of Singapore, Shanghai Jiao Tong University (SJTU) of China, and University of Wollongong (UoW) of Australia, and can be seen as a challenge to Buterin’s statement. The development is handled by Hong Kong based blockchain development firm CryptoBLK, which is well-known for its previous development work for HSBC and ING.
So called privacy cryptocurrencies make use of cryptography, that is mathematics, to hide information such as a payment’s source, size, and destination from the public. Achieving privacy may be crucial in promoting widespread adoption of cryptocurrencies, yet leading privacy cryptocurrencies such as Monero, ZCash, and Dash have long been criticized for their potential use in supporting the illegal trading of firearms, drugs, and pornography.
“Somehow privacy in the cryptocurrency space carries negative connotation. But think about this – what I buy in a supermarket may not be a secret, but do I necessarily want everyone to know? Probably not,” said Wong. “Privacy of our transaction history is indeed a very basic request”.
“The challenge is to enable and abide by regulations, such as KYC and AML policies, while maintaining the privacy of users. This can be done by introducing a cryptographic primitive called verifiable encryption into the cryptocurrency”, Wong continued. “If we can balance the need for privacy versus accountability, it solves a lot of concerns from enterprises. They could in turn promote the technology to more people.”
Dr. Wong was the inventor of Linkable Ring Signature, a defining technology for Monero, the most popular privacy token to date. The concept of Linkable Ring Signature allows a transaction initiator to sign-off on a transaction, and then mix his signature with the signatures of other users, effectively hiding the initiator of the transaction. It remains to be seen if Dr. Wong can repeat the success of Monero, and successfully challenge Vitalik Buterin’s statement, but the Accountable Privacy initiative certainly seems to be off to a flying start.