The Need for "Dandelion" to Bring Greater Privacy on the Blockchain

Who investigated transactions on the Bitcoin Blockchain and the Tor anonymity network were able to link unique users to transactions and show how easy it is to dig up evidence of years-old bitcoin transactions.

Protocol has presented a much needed and up-to-date added layer of privacy protection on the bitcoin blockchain in addition to Tor., a widely used free software and open network that protects confidential activity online.

The first factor is privacy for transactions as traditional blockchains keep a record of every transaction including its amount and timestamp - forever.

While the blockchain does not record IP addresses, as the earlier mentioned researchers have shown, it is possible to trace a transaction back to its source even before it becomes part of the blockchain.

Privacy for financial transactions on the blockchain can be addressed by the Zerocoin protocol which is adopted by Zcoin.

The Zerocoin protocol uses Zero-Knowledge cryptographic proofs and enables users to burn their coins and mint new 'clean' coins with no transaction history tied to them.

Network privacy is much harder to maintain because the network needs to know if coins are being sent to anyone.

Cryptocurrency networks are decentralized, meaning you do not send your transaction directly to the receiver or an intermediary, but to everyone on the network.

With Dandelion in practice, when your transaction first gets send out, it is not sent to everyone but to only one of the connected nodes.

There have been several high profile cases where people have become targets because others are aware that they hold a lot of cryptocurrencies and have tied their transactions to their location.