Discover how the Veil Project is leveraging state-of-the-art technologies to set a new standard in the field of privacy-focused cryptocurrencies.
Introduction & objectives
Across the landscape of privacy-focused cryptocurrencies, two general approaches have been taken—one providing full time privacy, and the other providing superior anonymity. Each of these approaches have benefits and trade-offs.
The original privacy coin, Monero, with its RingCT technology, provides “full-time” privacy. RingCT, however, based on sophisticated mixing, has been surpassed in terms of strength of anonymity by advanced cryptographic methods. Coins like Zcoin are based on the Zerocoin protocol, providing superior anonymity, but with the drawback that only certain types of transactions in the network are private—making it possible to inadvertently transact publicly. To emphasize the magnitude of this problem, in the networks of some of today’s most visible privacy coins, less than one percent of all transactions are private.
Finally, a drawback shared by many privacy-focused projects is a dependance on outside expertise and external software developments to improve their networks.
The Veil Project improves the state of privacy-focused cryptocurrencies by creating a secure, anonymous coin and by providing full-time privacy. Veil offers a user experience suited to the masses with self-funding to support long-term research and development by a dedicated team of researchers and blockchain developers.
This document introduces the project, its technologies and its approach to long-term sustainability.
Core privacy technology
Veil combines the world’s most secure blockchain software, Bitcoin version 0.17.1, with the advanced, cryptography-based privacy protocol, Zerocoin.
Over a decade in operation, the Bitcoin core software has demonstrated itself to be the most secure and battle-tested blockchain software in existence.
The Zerocoin protocol is based on zero-knowledge proofs, a cryptographic method which allows a computation to be proven to have taken place, without knowledge of its inputs and outputs. In the case of a cryptocurrency, this computation would be a value transaction, in which the sender, receiver and amount transacted can remain anonymous.
Support for the Dandelion protocol makes it nearly impossible to trace a transaction back to its source node on the network.
Providing always-on privacy, efficiently
Those familiar with Zerocoin-based networks know that the protocol involves a non-private transaction state known as Basecoin to account for the fact that zero-knowledge proof transactions happen between discrete coin denomination sizes. In such networks, like PIVX for example, anonymous discrete denomination coins enter a publicly visible “Basecoin” state, from which smaller anonymous denominations may then be recreated in a process called “minting”, with any remaining Basecoins considered to be “change” in the coin’s wallet.
In order to provide for “always-on” privacy, Veil will add RingCT privacy from Particl to its Basecoin transactions, such that all transaction components in the Veil network will be as anonymous as technology today provides for.
Finally, Bulletproofs technology will be adopted to ensure minimal transaction sizes.
The Veil network will operate a hybrid Proof-of-Work (PoW) and Proof-of-Stake (PoS) consensus system.
The Proof-of-Stake consensus system will ensure maximum decentralization, energy efficiency and provide a mechanism for all Veil holders to earn rewards in Veil through the process of staking. To further enhance the coin’s privacy, staking will only be available through Zerocoin denominations, and for that reason, all Veil balances (with the exception of exchanges) will auto-mint to these denominations: 10, 100, 1000 and 10000 Zerocoin Veil.
The Proof-of-Work mining system, guarantees a fair distribution of the coin, avoids the necessity of an ICO or pre-mine, and adds security to the overall network. To promote fairness of mining, Proof-of-Work mining will utilize the ASIC-resistant X16RT hashing algorithm, an improved version of X16R introduced by the Ravencoin project.
Veil places great emphasis on user experience, and in this regard will support a number of experiential benefits, beginning with multi-transaction Zerocoin spends.
What does this mean? Those familiar with the protocol will be familiar with the concept that, due to the computation and transaction size requirements, Zerocoin systems usually limit transactions to a fixed number of denominations. How this manifests itself as a user problem, is in limiting the amount a user can spend in a single transaction. Veil addresses this user friction with multi-block transactions that are transparent to the user, and allows them to create sends of any size.
To avoiding the necessity of file backups, the Veil wallet will support a single BIP-0039/BIP-0044 Deterministic Seed from which its entire wallet can be restored, including both Basecoin and Zerocoin transactions.
Finally, starting in phase 2 the Veil wallet will offer users the option of saving tremendous (and ever-growing) amounts of local disk storage, through a process known as transaction pruning, in which all transactions not relevant to the particular wallet are removed from the local data set.
For those interested in helping to secure the network through the running of a full node, Veil will include the reward of all the transaction fees in the block.