CryptoNote - A Closer Look

Most of us who are following the current trends in digital currencies are also well aware of the technologies that underpin them. It wouldn’t be an overstatement to call the anonymous transactions a very important feature for the coins putting the utmost emphasis on user privacy. Many words have been said about ZeroCash, CoinJoin and its implementations (e.g. DarkCoin), and other mixing services however there’s one more technology that is worth looking into. The appearance of CryptoNote protocol has made quite a splash within the crypto community. Shortly after the first CN based currencies hit the market the enthusiasm reached the point where some inspired users proclaimed this privacy tool the best thing since sliced bread. So what exactly is CryptoNote and what makes it so special?

CryptoNote is an open-source protocol that allows for enhanced privacy in cryptocurrency transactions. Unlike traditional cryptocurrencies that use ordinary signatures to verify the transfer, CryptoNote utilizes ring signature. With ring signatures all the parties involved in a transaction are undistinguishable and there is no way to determine whose private key was used in the process of signing. This approach requires neither the dedicated master nodes nor the active participation from the users.

CryptoNote automatically creates multiple unique one-time addresses for each of the payments, which are created from the single public key. Even though the payment is sent to a public address, in the block chain it appears as if it is sent to a one-time address. The sender uses random data and the public address of the receiver to calculate this one-time key of the payment. The redemption of the funds requires the receiver’s private key, so only the latter may receive the money sent to the one-time address.

One issue that bothers everyone who’s ever dealt with digital currencies is double spending. CryptoNote prevents double-spending attempts by linking the transactions with the same private key. The protocol uses the key image, derived from a private key through a one-way function. Since users keep records of all previously used key images, they are checked for replication ineach new transaction. In case there is a duplicate key image, the transaction is rejected as a double-spending attempt.

Another advantage of CryptoNote is block analysis resistance. Again the obstacles for an analyst are created by using ring signatures and one-time addresses. Every address of the payment is a unique one-time key and the usage of ring signature hides the exact outputs that have been spent for the input.

Drawing a parallel with Bitcoin, there are no hard coded constants and magic numbers in CryptoNote. Each limit (max block size or min fee amount) is re-calculated based on the historical data of the system. Moreover, the difficulty and the max block size are automatically adjusted with each new block.

Since the time CryptoNote made an entrance on the crypto scene in 2012 some 20 currencies were created based on the CN protocol. Listed below are the most prominent of them.

CryptoNoteCoin

This coin is a unique project by CryptoNote designated specifically for educational purposes. The value of CryptoNoteCoin is in insight it may provide in regards to functionality and inner workings of CryptoNote technology. CryptoNoteCoin has virtually no commercial value due to its inherently short emission curve and accelerated blocks generation time. These features were included deliberately to prevent all possible attempts of commercial launch.
Visit the CryptoNoteCoin website here.

ByteCoin (BCN)

Bytecoin is the first implementation of the CryptoNote technology with its launch dating back as far as 2012. This coin is commonly deemed as the oldest and the most stable CN based currency to date. Admittedly some of its success the coin owes to the fact that Bytecoin has been originally created in close cooperation with the founders of CryptoNote.
Visit the ByteCoin website here.

DarkNote (XDN)

DarkNote is a currency that has drawn a lot of attention lately due to its innovative solutions and a well-devised marketing plan. Along with cutting edge cryptography DarkNote offers an ability to send and aggregate payments, mine XDN, send encrypted messages all from your DarkNote client.

Boolberry (BBR)

Boolberry utilizes blockchain-based Wild Keccak hash function instead of CryptoNight. It offers enhanced anonymity through unlinkable outputs and reduces the size of the block chainby pruning the ring-signatures. Among the perks available to Boolberry users are an easy-to-use GUI wallet, address aliasing and the ability to send network alerts.

Dashcoin (DSH)

Dashcoin is an automatically readjusting cryptocurrency based on Bytecoin (BCN). It is designed to act as a perfect mirror image of Bytecoin by replicating its code modification. Dashcoin demonstrates an unconventional approach to sustaining a currency based on self-mutating principle.

Fantomcoin (FCN)

Fantomcoin is the first attempt at introducing merged mining into CryptoNote. By supporting merged mining Fantomcoin allows you to receive not only the FCNs but also any other CryptoNote-based currency without having to mine them separately. As a result, the cryptographic security of all the CN coins is increased.

Monero (XMR)

Launched as a fork of Bytecoin in April 2014, this coin has been consecutively rebranded and renamed from Bitmonero to Monero. Surrounded by controversies at the onset the coin was able to overcome the feud within the community and find its place among the other CN currencies. From the technical standpoint, Monero is different from its counterparts in a way it has the fastest block generation speed of 1 minute.

Quazarcoin (QCN)

Quazarcoin is the CryptoNote currency launched in May 2014 as a result of community discussions. QuazarCoin requires 60 confirmations per transaction which enhances the protection against double-spending. Emission curve is flatter; meaning 50% QCN will be emitted in 6 years. The main focus of QuazarCoin is usability optimization. The coin already has a cross-platform GUI-wallet. Currently QCN devs are working on a decentralized data storage for torrent files & censorship-free “tracker”.

DarkNetCoin (DNC)

DarkNetCoin is CN based coin intended to be an essential part of DarkNetSpace – the platform for anonymous applications. As DarkNetSpace developers claim the platform will be used for anonymous apps such as p2p exchange, on-chain shop, lotto and online gambling.

In conclusion a few words about CryptoNote philosophy. It has several key points: privacy is an irrevocable human right; government’s influence and control remission is an aim. The economies must be segregated from politics and State-of-the-art technologies, mathematics, and cryptography are the tools to revolutionize the stagnant global financial system.

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