Research: Cryptocurrencies integrated with the dark web
The blockchain technology, which is the basis of cryptocurrencies, is expected to totally transform the global financial system during the next few years. The anonymity offered by many cryptocurrencies represents one of the main features enticing individuals, as well as organizations, to use cryptocurrencies instead of traditional fiat currencies. The dark web has also gained much attention lately, since it protects the privacy of internet users, enabling them to browse the internet in an anonymous manner.
Many cryptocurrencies were found to not be fully anonymous, such as bitcoin, which urged developers to create other coins that can address bitcoin’s anonymity issues. Privacy coins refer to cryptocurrencies whose transactions are almost totally anonymous. These include Monero, Zcash, PivX, and others. More recently, some cryptocurrency developers have decided to utilize dark web anonymity networks, such as Tor and I2P, to create privacy coins.
Throughout this article, we will take a look at cryptocurrencies integrated with the dark web, which include DeepOnion, Verge, and Spectrecoin.
DeepOnion is focused mainly on security and privacy. The coin’s protocol is integrated with the most recent Tor, Meek, and OBFS4 protocols to maximize the privacy of transactions. DeepOnion is the first ever anonymous cryptocurrency to be natively integrated with the Tor network. This not only boosts the anonymity levels of users, but also reduces the potential of being attacked or hacked by legal or illegal adversaries.
DeepOnion is a hybrid cryptocurrency, as it is based on the proof of stake (POS), as well as the x13 proof of work (POW) algorithms. The coin implements the DeepSend feature, which is a hidden payment feature that is designated to conceal transactions and obfuscate the identity of both senders and receivers. DeepOnion implements several security layers, including Stealth Addresses which guard against deanonymization of the receiver of transactions.
The Tor protocol is integrated at the blockchain’s transport layer to boost the anonymity of network traffic taking place between the network’s nodes. DeepOnion users communicate via means of onion addresses, e.g. br3efyhgfkj4- jzfd.onion. The used onion addresses are self-authenticated, which means that the address represents a cryptographic proof of the identity of the service. Accordingly, this prevents adversaries from phishing the address. Integration of Tor into DeepOnion’s protocol involves multiple benefits which include:
– Privacy of the device used to store DeepOnion’s wallet, as its IP address becomes anonymous and untraceable
– Cryptographic verification that confirms the genuineness of the network a user connects to
– Protection against network oversight and surveillance
– Impossibility of a user getting blocked by a specific address
– Tamper-proofing via means of encryption and integrity of communications
Developers of DeepOnion also included the addition of zero-knowledge proofs to the coin’s protocol layer, in their roadmap, in order to conceal the traces of transactions sent to any user. The DeepSend feature also further boosts anonymity via utilization of multi-signatures. Anonymity is furthered even more via the application layer which involves the integration of services including decentralized exchanges and marketplaces that operate in a decentralized, anonymous, and cryptographically verified manner.
The DeepOnion blockchain is now verified by Bitcoin’s blockchain. To boost the security of the coin, DeepOnion’s blockchain hash is computed to a recent block and registered on Bitcoin’s blockchain. DeepOnion also boasts DeepVault, which is a unique information store created on the blockchain, so stored data is immutable infinitely. DeepVault guards stored files against counterfeiting, theft, and corporate espionage.
Verge is an open-source cryptocurrency that allows users to conceal their IP address and geographical location while executing transactions. Verge’s transactions are further anonymized via the use of stealth address and utilization of Ring Transactions (Ring CT). Transactions are recorded onto the blockchain via relying on Tor’s and I2P’s technologies.
Verge is based on multiple proof of work (POW) algorithms including Scrypt, Lyra2rev2, X17, blake2s, and myr-groestl. Transactions are confirmed within 5-10 seconds, and the network will eventually be capable of handling up to 2,000 transactions per second.
Electrum is integrated with Tor and I2P to maximize the anonymity of transactions. This can preserve the anonymity of users of desktop and mobile wallets. Transaction information and the IP addresses of users are obfuscated and can never be leaked to connecting servers. The integration of Electrum enables users to execute multi-signature transactions.
Verge also features a P2P messaging system that secures communications via encryption. All sent messages are encrypted via the AES-256-CBC algorithm and then distributed among Tor nodes in a way that protects message recipients from being identified by adversaries using complex traffic analysis techniques.
Spectrecoin is a cryptocurrency focused on privacy and anonymity of users, via full integration of a Tor and OBFS4 layer to obfuscate the IP address of senders and receivers of transactions. Anonymity is maximized even further via implementation of ring signatures. Spectrecoin is based on an energy efficient POS algorithm that promotes very short transaction confirmation times (< 60 seconds).
On Spectrecoin’s network, all nodes operate as Tor hidden services. Nodes are not addressed via their IP addresses, but via their .onion address, which is used to generate a public key for encryption of network traffic. The network does not include any exit nodes, and at any time, all communications taking place between two nodes are fully encrypted. Users cannot connect to the coin’s network, without the Tor browser, due to the fact that all network nodes are only reachable via their .onion addresses. No IP address is visible to any user on the network, except for their own, and the protocol framework makes it infeasible for an adversary to analyze the network traffic or attempt to censor the network.
Even though cryptocurrencies offer users means for executing anonymous transactions, integration of anonymity networks, such as Tor and I2P, can boost anonymity even more. Even though there are currently only a handful of cryptocurrencies integrated with darknets, it is highly likely that we will see many more during the next few years.