Throughout the past couple of months, Ripple XRP has risen to become the biggest gainer amongst all cruptocurrencies recording more than 4000% growth during around 6 weeks. This reflects increased trust of crypt-enthusiasts in Ripple’s network which relies on “path based” transactions which sets Ripple apart from other altcoins. Ripple is pseudonymous and deanonmymization attacks have been successful in the past across Ripple’s network. But what if Ripple can be completely anonymous? Wouldn’t that greatly increase the value of XRP?
Before we can answer this question, let’s first understand how Ripple’s network works
Ripple and Other Credit Networks:
Ripple is a form of a credit network across which users build trust with others via the “I Owe You” (IOU) credit concept. The concept initiates transactions between a couple of users to settle IOU credit along the trust path that extends between both of hem. Practically speaking, the IOU credit concept promotes the creation of credit networks that can undergo same and different currency transaction settlements among cryptocurrencies, fiat currencies and even other forms of user-defined currencies in a matter of a few seconds and at extremely low transaction costs.
Note: Stellar STR is also based on the IOU credit concept, yet Stellar is still in its infancy.
Ripple’s Privacy Issues:
Even though Ripple’s network holds great potential for individuals as well as various financial institutions all over the world, it is vulnerable to deanonymization attacks similarly to those taking place on bitcoin’s network. A recent study showed that most transactions across Ripple’s network can be easily deanonymized so that everyone can know who is paying what to whom.
Mixing solutions, which can solve the privacy issues of other cryptocurrencies without relying on smart contracts, such as Blindcoin and Mixcoin, cannot be implemented on Ripple’s transactions, because simply the central server can steal the coins.
PathShuffle – Anonymizing Ripple’s Transactions:
A group of researchers recently presented a perfect solution that can anonymize most transactions across Ripple’s network. PathShuffle is by far the first coin mixing protocol for path based transactions across credit networks. The protocol relies on a new approach named “path mixing” for anonymizing transactions across credit networks that is based on the observation that IOU credit transaction paths sharing a common node can be successfully mixed.
The researchers proposed PathJoin, a protocol able to execute transactions with multiple inputs and outputs. This allows multiple users to move credit atomically from input wallets to output wallets, thus, solving one of coin mixing’s standard fairness problems. PathShuffle is the first ever decenteralized path mixing algorithm for credit networks. PathShuffle integrates PathJoin with DiceMix; a P2P message mixing algorithm. Via this combination, PathShuffle is evidently as efficient as Bitcoin’s mixing protocols e.g. CoinJoin. The coin mixing ensues along 5 rounds to yield anonymous transactions across intersecting settlement paths on the number of users that participate in the path mixing procedure, yet this would need 5 + 3f mixing rounds when an f number of disrupting users are present.
Throughout their experiments, the researchers managed to demonstrate that their proof-of-concept (PoC) implementation of PathShuffle is fully compatible with Ripple’s protocol. PathShuffle successfully executed 100% anonymous Ripple transactions in real time.
So, if Ripple can be fully anonymous adding another advantage to its already unique features, where can we expect its price to be a couple of years from now?
Image from Ripple.com