Summarizing and Analyzing the Privacy-Preserving Techniques in Bitcoin\n and other Cryptocurrencies

Abstract

Bitcoin and many other similar Cryptocurrencies have been in existence for\nover a decade, prominently focusing on decentralized, pseudo-anonymous\nledger-based transactions. Many protocol improvements and changes have resulted\nin new variants of Cryptocurrencies that are known for their peculiar\ncharacteristics. For instance, Storjcoin is a Proof-of-Storage-based\nCryptocurrency that incentivizes its peers based on the amount of storage owned\nby them. Cryptocurrencies like Monero strive for user privacy by using\nprivacy-centric cryptographic algorithms. While Cryptocurrencies strive to\nmaintain peer transparency by making the transactions and the entire ledger\npublic, user privacy is compromised at times. Monero and many other\nprivacy-centric Cryptocurrencies have significantly improved from the original\nBitcoin protocol after several problems were found in the protocol. Most of\nthese deficiencies were related to the privacy of users. Even though Bitcoin\nclaims to have pseudo-anonymous user identities, many attacks have managed to\nsuccessfully de-anonymize users. In this paper, we present some well-known\nattacks and analysis techniques that have compromised the privacy of Bitcoin\nand many other similar Cryptocurrencies. We also analyze and study different\nprivacy-preserving algorithms and the problems these algorithms manage to\nsolve. Lastly, we touch upon the ethics, impact, legality, and acceptance of\nimposing these privacy algorithms.\n