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Achieving Network Privacy In Bitcoin: VPNs And Tor Help, But Mixnets Are Needed
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Bitcoin network node count sets new all-time high
The number of reachable Bitcoin network nodes has crossed the 13,000 mark for the first time. As previously reported by Cointelegraph, the previous all-time high was 11,613 achieved back in January.
According to data from Bitcoin network statistics dashboard Bitnodes.io, this milestone was reached back on July 5 when the number of reachable nodes clocked 13,374. As of the time of writing, Bitnodes’ data puts the current network node count at about 12,835,
Coin.Dance, another tracking website also has Bitcoin’s (BTC) node count at a new all-time high of 12,825. Nodes running the Bitcoin Core software make up 98.77% of the number with the remaining scattered across less popular implementations like Bitcore and Bitcoin Knots.
Bitcoin Core 0.21.1 was released back in May with a Taproot activation code and at almost 5,000 nodes (according to Coin.Dance), it is currently the most utilized version of the software among entities running reachable nodes. Figures from Bitnodes put the number at 5,125, or 40% of the total network node count.
Bitnodes’ data also shows at almost half of the network node count is running on Tor. Back in January, only about a quarter of all reachable nodes were running on the hidden network Tor. Running a client like Bitcoin Core using Tor provides an additional privacy layer since the IP addresses of connecting nodes are obfuscated.
Related: Tor-enabled Bitcoin nodes are back after bug on network
According to Bitnodes’ data, the network node count has increased by 2,739 nodes in the last year reinforcing Bitcoin’s decentralization ethos.
The growth in the network node count is also akin to the expansion currently taking place in the Lightning Network ecosystem where capacity has gone up over 70% in less than six months.
Earlier in July, public Lightning Network capacity crossed 1,800 BTC after adding 100 BTC in less than a week. Data from Lightning Network statistics tracker Bitcoin Visuals puts the number of LN nodes at above 12,800 which is also an all-time high value.
NYM Network Review: Infrastructure for a Privacy-Preserving Internet
The way the internet is set favors big corporations and very powerful players, but not the user. As valuable as this might be for some, the internet is irreparably broken.
Evidence gathered over the years irrefutably shows that internet surfers, regardless of their locations, are pawns to the excessively intrusive online surveillance system.
Tera bytes upon terabytes of freely generated data are harvested daily for various purposes. Corporations sell this data without user’s knowledge, which can further be used for advanced profiling, micro-targeting, or even behavioral analysis.
The Internet is Broken
The coronavirus pandemic worsened this assault on privacy.
In the guise of contagion, governments—assisted by internet giants—are stepping their surveillance, sifting through personal data, to blatantly and unapologetically intrude on users’ privacy.
The bad news is that the only way this will change is through fundamental changes–involving changing the very core of the internet.
Such changes will be the silver bullet that may—just may—overcome powerful adversaries like intelligence behemoths and internet companies from indiscriminately trawling data of billions of people to serve their nefarious ends.
And it is easy to see why.
With more internet penetration and the shift to digital platforms, more people are demanding internet services. Accordingly, there ought to be some privacy-enhancing services serving the interest of the end-user.
Virtual Private Networks (VPNs), as it is, don’t necessarily protect against privacy. They may mask IPs, but what they do is shift trust since most are offered by centralized providers.
On the other hand, despite its solid reputation, Tor is “ineffective” against a well-capitalized, efficiently oiled surveillance machine that can track the whole network.
But the situation is worsened by the fact that Tor, even though helpful in masking IP addresses, offers comparatively low quality of service as the nodes are volunteer run. Moreover, the project now has cash crunches, threatening further to slow down the building of the privacy platform.
For good reasons: Privacy will transform the internet, making it secure and safe for everyone to use.
Introducing the NYM Network
The Nym Network is a privacy platform founded on cypherpunks ethos and ideas. It is setting off to solve the privacy problems facing the internet today, using a decentralized, incentivized mix network, combined with private credentials. The two technologies together make users’ data private at both network and application layers.
The project says it can sufficiently protect privacy even against the most advanced data trawling and monitoring techniques deployed by powerful adversaries who can view the entire network.
From this, NYM Network vividly demonstrates that it is part of a movement to sustainably transform the internet by integrating tools guaranteeing privacy for all users using the web.
Developing the platform is a Swiss-based startup, NYM Technologies. Some of their partners and initial funders include Binance—the world’s largest exchange by client count, Cosmos—an interoperable blockchain that recently activated its IBC–, Blockstream—who are actively building Bitcoin, and Status.
Distinguishing Features for a More Private Internet
Developers announced an incentivized test network in early April 2020.
In three weeks, there were over 3,000 NYM mix nodes joining the network.
From this test network, users could experiment with NYM Mixnet, sending privacy-enhanced packets through the network.
They do this by encrypting users’ traffic, mixing them with others, and making their packets indistinguishable.
The NYM multipurpose mixnet prevents traffic analysis from agents that can instantaneously scan the whole internet and illegally extract valuable data.
Additionally through NYM Credentials, users can allow third parties to anonymize any arbitrary ‘key : value’ pairs. As such, users can decide to reveal part or all of their data, at their discretion, whenever there is a need for compliance.
The NYM infrastructure includes a NYM token that will be released later this year. Mix node operators are rewarded in NYM tokens for their support for privacy as a public good, and as incentives to provide good quality of service to the users (as opposed to the volunteer-run projects like Tor). It also helps in making the network decentralized, sustainable and resilient.
Nym is planning to launch publicly later this year, and next year they are aiming for their technology to be adopted by the big players. Their team is well-known to be friends with Signal and Ben Laurie, the Head of Security at Google, is one of their advisors.
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Tor Project’s crypto donations increased 23% in 2020
The cryptocurrency community has been doubling down on its support to privacy-centric applications like Tor Browser in 2020, according to new data.
The Tor Project, a non-profit organization behind the anonymous Tor Browser, saw a 23% increase in cryptocurrency donations in 2020. A spokesperson at the Tor Project told Cointelegraph that crypto-powered donations surged from $189,637 in 2019 to $233,019 in 2020.
According to a Jan. 25 announcement by the project, crypto donations made up nearly 26% of total individual donations, which amounted to $913,110. According to a Tor Project representative, Bitcoin (BTC) was the most popular cryptocurrency for their donors in 2020, followed by Ether (ETH) and privacy-focused altcoins like Monero (XMR):
“We have seen that Bitcoin remains the most popular cryptocurrency for our donors, followed by Ethereum and Monero — these two currencies are about evenly split for second most popular. Next most popular is Zcash.”
The Tor Project has emerged as a major Bitcoin-friendly nonprofit, having started accepting BTC donations back in 2013. In March 2019, the Tor Project expanded the number of supported cryptocurrencies for donations, adding eight altcoins including Ether, Bitcoin Cash (BCH), Litecoin (LTC) Dash (DASH), Stellar Lumens (XLM) and others.
The project’s move to support more cryptocurrencies for donations was apparently widely appreciated in the crypto community as Bitcoin holders got an opportunity to keep their BTC and donate in other digital currencies instead. In September 2019, Matt Odell, a Bitcoin maximalist and co-host of the Tales from the Crypt podcast, urged the community to support the Tor Project with altcoins, not Bitcoin. “Donate shitcoins. stack sats,” Odell wrote in his XLM transaction to the Tor Project.
Cryptocurrencies like Bitcoin were becoming increasingly popular as a tool for donations in 2020. Dave Portnoy’s Barstool Fund — an initiative to support small businesses impacted by the COVID-19 pandemic — started accepting crypto donations through The Giving Block in late 2020.
Bitcoin Core’s Latest Release Is Out: Here’s What’s in It
Originally slated for Dec. 1, 2020, Bitcoin Core version 0.21.0 is now available for download, and includes a handful of notable changes to Bitcoin’s primary software implementation. Most notably, Bitcoin now supports Tor’s latest address format, Taproot’s code is now live for testing and Bitcoin Core finally gets manual fee setting.
With bitcoin’s price pumping, these new features don’t grab headlines every day, but the improvements they make to the Bitcoin network’s privacy, tooling and complex transaction logic are building a stronger foundation as the cryptocurrency sees a new wave of investor interest.
Taproot is one step closer
The consensus rules for the highly anticipated Taproot upgrade, which will allow for more complex smart contracts using Schnorr signatures, have been slightly tweaked since they were merged into Bitcoin Core in October. Taproot is also now fully live on Bitcoin’s signet, a sandbox network for developers to test new software and upgrades before pushing them to Bitcoin’s mainnet.
With the code now ready for testing, developers can now test the feature before activation begins later this year.
Fees get a makeover
Another change some 3.5 years in the making, Bitcoin Core now allows its users to set manual fees which are denominated in satoshis (Bitcoin’s smallest unit) instead of in bitcoin. Before, Bitcoin Core relied on a fee estimator for transactions, and these fees were set by specifying a bitcoin amount (say, 0.00001 BTC) instead of satoshis (1000 sats).
Privacy
Additionally, the new version supports privacy browser Tor’s V3 address. Before this update, Tor V3 addresses could not fit into the message data that Bitcoin nodes share to connect with each other. Core now has a new method to transport these addresses so that nodes can establish peer-to-peer connections through them, a necessary addition as Tor V2 address will no longer be functional by next year.
The release also introduces a new block-filtering system for “light clients” (wallets that do not keep a full history of Bitcoin’s transaction ledger but queries data as needed from a full node). Instead of using so-called “bloom filters” to query whatever blocks these wallets need to make transactions, now, a process called “compact client-side block filtering” makes this possible.
This new method is more privacy-preserving for light clients, because the nodes create the block filters ahead of time for the wallets, and the wallet will request block data on a case-by-case basis to retrieve the specific transaction data they need. The old process had wallets requesting specific block data from their peer nodes.
Bitcoin gets a new sandbox
Bitcoin is also getting a new testing network. Signet, as it’s called, is now operational and takes its place beside Bitcoin’s other test-only blockchains, regtest and testnet.
The new signet is centrally controlled and so is more reliable than Bitcoin’s other testing grounds; there is currently one public signet available, though developers can spin up their own, as well.
Other notable changes to Bitcoin Core
Bitcoin Core now supports descriptor wallets, as well. These wallets use scripts instead of keys to execute functions, so this – among other things – will make it easier for Bitcoin Core wallets to partake in things like multi-signature transactions; it will also pave the way for hardware wallet integration.
In addition to many other minor tweaks, Bitcoin Core now supports the SQLite database, as well as a feature that reduces the amount of rebroadcasting attempts a node makes when it fails to broadcast a transaction to its peers. It also comes with a new dashboard for easily viewing network information and peer node data.
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