At the Privacy Enhancing Technologies Symposium in Barcelona last week, two researchers presented a plan to bring the anonymity of monero to the ethereum network. With the catchline “Trustless Tumbling for Transaction Privacy”, the protocol uses mixing solutions to obscure the payment information of ether transactions.
Unlike monero, bitcoin and ethereum do not offer transaction privacy, and users interested in anonymity must use third party tumbling services that obfuscate transactions by mismatching origins and destinations until the link is severed between sender and recipient.
Instead of relying on a centralized tumbling service, Mobius obfuscates transactions on the network by using a smart contract which employs the same cryptographic devices as Monero—ring signatures and stealth addresses—to complete the process without reliance on a third party.
Tumbling services require a significant amount of trust to use, and are in a unique position to steal bitcoin sent to them. They are also limited by their reliance on having enough customers with similar amounts of bitcoin that can be mixed up effectively enough to prevent someone from tracing the transaction back. As researcher Rebekah Mercer said at the symposium, avoiding this process could expedite the process and help prevent theft:
"Mobius achieves great things in terms of availability and theft prevention but without compromising on communication, which hopefully will encourage people to mix more often."The demand for privacy
Even though the pseudonyms used in Bitcoin and Ethereum transactions are not directly linked to real-world identities, all the movement of money between these pseudonyms is traceable, and identities can be disclosed either through revealing the public key, or using statistical methods like clustering that make inferences by looking at transactions from addresses belonging to the same party.
This was the method used in the case of Shaun Brid...