Despite advancements across the industry, many of today’s cryptocurrencies still have the same security protocols in place as first-generation releases.
Blockchain tokenization experiments began in 2012 with “colored coins.” However, despite this initial release, many agree that it wasn’t until 2014 that tokenization’s full potential was achieved with the release of the scripting language that allowed complex programs and applications on Ethereum to interact with each other and with the Ethereum network. With the ability to issue custom assets without the burden of maintaining an entire blockchain infrastructure, over 600,000 token contracts were deployed on the Ethereum mainnet, initiating an up-and-coming digital token economy.
The caveat is that despite their fundamental role in the industry, tokenized digital assets have not seen any advancements when it comes to security. Therefore, while tokenization has seen widespread adoption and growth, many digital assets remain vulnerable to security breaches.
Blockchain’s foundation of transparency means a user’s financial activity is publicly available to the network, making crypto enthusiasts vulnerable to extortion, hacks or discrimination based on personal information that can be obtained, such as wealth level, political affiliations or sexual orientation. For this reason, confidential assets become crucial for high net-worth users and enterprise clients, who require privacy to maintain their competitive edge in the market.
The growing need for blockchain security later resulted in the launch of privacy coins. By definition, these coins are a type of cryptocurrency that provides users with anonymity and confidentiality when making transactions. To do so, these coins rely on advanced cryptographic techniques to hide transaction details, such as the sender, receiver and amount sent. While privacy coins work in theory, the level of technical expertise needed to implement these features was deemed too complex for widespread adoption. Therefore, the marketwide problem then becomes enabling the launch of confidential assets with privacy features native to privacy coins without needing the technical expertise to release them at mass.
Advancing security at an industry scale
With a clear need for advancements in privacy at the foundational level, a network that operates with enterprise-level security is deemed necessary to advance cryptocurrency adoption. Some of the key requirements of this solution would include the ability to serve a vast user base, especially considering the enormous values transacted daily across the decentralized finance (DeFi) industry, while simultaneously making it impossible for an outsider to discern the specific assets involved in a transaction.
Other key properties include untraceability, which prevents the sender’s identity from being determined. Unlinkability is also key, as it makes it impossible to discern if more than one transaction was sent to the same recipient. Additionally, asset indistinguishability makes it difficult to determine which assets were involved in any given transaction. At the same time, privacy ensures that the amount of a confidential asset transacted remains undisclosed. Finally, IP obfuscation must also be considered, since it makes it nearly impossible to trace the geographical location of the transaction originator.
For this reason, experts agree that a solution like this would become the crucial security layer DeFi currently lacks, since it offers enterprise-grade security that’s essential for transactions involving significant amounts of digital assets. Moreover, the added layer of security will provide users with a sense of safety and reassurance, thereby increasing trust and confidence in the DeFi industry from an individual and a business level. With the deployment of this network, potential use cases are believed to extend to a wide range of industries, including financial services, healthcare and real estate, among others.
Setting a new precedence
The resulting new foundation is being piloted by Zano, a secure and scalable cryptocurrency that has been designed for use in e-commerce applications. Under the upcoming Zarcanum fork, Zano will become available to the public as a highly advanced and secure foundation for modern blockchain technology. Complete with a hybrid proof-of-work and proof-of-stake consensus backing with confidential transactions and hidden amounts integrations, Zano will offer a full suite of digital asset security measures.
In reasoning on this release, a member of the team shared, “To our knowledge, all first-generation token standards suffer from the same weaknesses as first-generation cryptocurrencies: complete, non-optional, naked transparency. Like a cookie consent popup with no opt-out button. Transaction data is detailed, potentially compromising, and available to anyone via the relevant block explorer.”
Therefore, by providing a more secure foundation, the Zano team is in a position to encourage the building of a new class of decentralized apps and digital assets, leveraging the security of Zarcanum. With these foundations, Zano becomes an appealing choice for individuals and organizations that are looking at issuing their own currencies and digital tokens on a blockchain, which is significantly more secure than first-generation cryptocurrencies.
Zano representatives also shared, “With Zano Confidential Assets, anyone can easily issue their own currencies and digital tokens on the Zano chain — assets secured by the same mechanisms that make Zano itself so much more secure than first-generation cryptocurrencies, namely hidden addresses, hidden amounts and IP obfuscation.”
Material is provided in partnership with Zano
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Source : Cointelegraph.com