Yesterday, an Ethereum user bought a rock for 555 ETH, valued at USD $1,730,961.75 at the time of purchase. Now this was not just any old rock, it's an OG EtherRock 38 that will vastly enhance the buyers collection, act as an investment, pay for the kids college, retirement etc, and hopefully bring a bit of luck 🍀.
Now maybe the buyer (let’s call her Ms X) wants to brag about it to her friends, post it on Twitter and all the rest. That’s definitely her prerogative, and with that choice she is consenting to the possible benefits (so so many You're a Rock Star ✨ comments) and possible pitfalls 🧗♀️ of making this information public.
However, maybe Ms X wants to stay anonymous, like many art collectors might prefer. Maybe she doesn’t want a bunch of people harassing her to buy their latest rock, stone and boulder NFTs. Maybe she doesn’t want the world knowing she has 555 ETH of disposable income, trying to find out more about her, tying together other sources of exposed data to get a fuller picture and target her crypto-wealth. Privacy is also her right, and one that should be available to all crypto users. It should be entirely up to Ms X whether or not this transaction is public or private.
By default, the blockchain makes pseudo-anonymity easy, but actual anonymity more difficult. Since each transaction is transparent, a motivated researcher or clever bot 🤖 can track every non-private transaction. With enough time and resources, and without privacy features enabled, the ETH used to purchase rock can be traced from inception - exactly where the funds came from and how and when they arrived in the purchaser’s account.
It’s not a big leap to extrapolate the identity of the account holder from there. In this study, it only took a few other scraps of PII (Personal Identifying Information) to completely de-anonymize credit card purchasers.
The right to private transactions goes well beyond NFT rocks. What about purchases of private items like medications or medical services. What about negotiation strategies, where another party’s knowledge of your assets gives them leverage. Not to mention the possibility of targeted transactional censorship or worse.
While there are tradeoffs with privacy (a developing example is the use of anonymous funds to exploit a geth bug on Ethereum today!*), it is essential to have this choice on-chain. Many of us use blockchain technology to empower ourselves with full asset ownership rather than relying on centralized entities. This should extend to the ability to protect ourselves and our data with privacy enhancing protocols.
*Note this bug DOES NOT impact xDai consensus as xDai leverages the Nethermind and OE clients and does not use geth.
Privacy on xDai
The xDai team has been busy exploring and implementing several privacy-enabling solutions which use zkSNARK technology to create privacy. zkSNARKs provide the ability to prove information and create verifiable transactions without exposing the details of these transactions. For more information, see this post by the DarkForest team, one of the applications using zkSNARKs on xDai to create an incomplete information strategy game.
zkBob is a protocol in development which will use the xDai bridge infrastructure to enable cross-chain privacy. With zkBob, Alice can transfer funds on chain A across the bridge to Bob on chain B. During the process, funds are sent to an intermediary pool based on Zeropool technology. The funds Bob receives on chain B are no longer tied to the source (Alice), resulting in private and secure cross-chain transfer of funds. The protocol is also designed to enable private, multi-chain hops (for example transfers between Ethereum, BSC & xDai).
Tornado.cash is another zkSNARK-based protocol, and it’s now deployed and live on xDai! Tornado users deposit funds to create an anonymity set. On deposit, the user receives a backup code for later funds withdrawal from the pool in an anonymous fashion. In addition, users have the choice to receive a proof of transactional history if desired later on.
Privacy and choice is important, and the xDai team will continue to advocate for user privacy options as we develop functionality and tools for the next generation of multi-chain blockchain applications.
August 27 Weekly Highlights
Projects
As mentioned above, Tornado.Cash is now deployed and fully functional on xDai. Additional funds are needed to help boost the anonymity set, so please contribute (the largest growing pool only requires a 100 xDai deposit) and increase decentralized privacy for all xDai users!
BlockScout Block Explorer improvements continue with the release of v3.7.3. The team’s focus is on increasing usability and ease-of-use, incorporating features from user requests. The latest version includes enhancements to the transactions pages, search results page, as well as support for Arbitrum (why Arbitrum? Read More here). Blockscout is the flagship open-source explorer in the space, with deployments for xDai, Ethereum Classic, Avalanche, Celo and many more, with an Ethereum Mainnet instance launching soon.
Several weeks ago Igor participated in the Chainlink SmartCon Summit, and the chainlink team posted the recording this week. His keynote covers most of what you need to know about xDai is under 15 minutes!!! Check it out and learn about some exciting new developments coming to xDai in the near term.
DarkForest Marketplace was announced this week by the DF DAO, giving DF players a way to buy and sell acquired in-game NFT artifacts. This new marketplace creates an added dimension to the game and gives players opportunities to earn money for playing their favorite game!
Genuino dropped their 2nd NFT pack on Aug 26. By August 27 they were all sold out! This exciting use case combines real-world collectibles (Fiorentina certified player jerseys) with exclusive NFTs on xDai to create something truly groundbreaking.
The Porini Foundation supports sustainability and with a zero-carbon blockchain and the first global marketplace for nature collectibles. They are bridging infrastructure to xDai to support their ecosystem on another green chain, xDai! Learn more about why they chose xDai.
🙏 Other updates too numerous to mention this week came from Elk Finance, Minerva Wallet, CowSwap, Shenanigan, Fraction and many others. We encourage you to follow xDai on Twitter for up-to-date updates, and as always thank you for your support and usage of the xDai Chain!
-The xDai Team