On-Chain Privacy Revolution: Bringing Total Anonymity to Web3 | Cryptocurrency

Despite all of web3’s ideals of decentralization and anonymity, a privacy crisis is bubbling beneath the surface, directly threatening users’ financial and identity security. The public nature of blockchain information makes anonymity particularly crucial to web3 culture, as for many it is necessary to keep their identity and financial data separate. Behind every NFT profile picture and anonymous identity is a real person who usually uses a burner wallet, preferring that their financial transactions are not directly linked to their real name. The slippery nature of metadata and the grim reality of how wallets connect to Web3 applications make this anonymity particularly difficult to maintain.

Metadata leakage is a threat to privacy

Since metadata leakage is a threat to Web3 privacy and security, it’s worth exploring exactly what metadata is. Metadata is essentially data about data: information such as file size, date and time of creation, and who sends data to whom and when. Unlike the data itself, which is usually heavily encrypted, metadata is often public and very easy to access and store. Despite some very justifiable historical and current use cases, metadata is leveraged by entities with dubious intentions to compromise your identity and security. Companies, governments, and other groups around the world frequently use metadata from many forms of Internet communications to conduct surveillance or to sell user information. Although the content of our Internet communications is generally well encrypted, the metadata alone can be used to create an alarming picture of each user. Even when a well-meaning centralized entity collects highly sensitive information, that data is collected and placed in a server that is highly vulnerable to theft by a more nefarious entity.

Web3 aims to solve these problems by using decentralization to give control back to users. Unfortunately, a naive implementation of this actually poses more risk to users’ privacy, not less. Indeed, decentralized networks are often more vulnerable to attack and individual members of the network are even less trustworthy than centralized Web 2.0 powerhouses.

But there is another way, one that protects users by prioritizing privacy and treating metadata as just as valuable and vulnerable as data. A mixnet combines and recombines different user data until it is made indistinguishable from other data passing through the network. One of the notable projects that popularized something similar is the Onion Router, commonly known as TOR. However, TOR’s incentive structure and current node architecture raise important questions about the extent of their security. Since maintaining a node on the TOR network is very expensive, with no rewards provided in exchange, this raises questions about the motives of those running the network.

How a new approach to mixed networks from the Swiss privacy project HOPR can protect all Web 3.0 activity from metadata leaks

One of Web3’s leading privacy projects, HOPR, has a unique incentive structure that uses cryptocurrency to ensure that every node runner is properly rewarded. Each node runner in the HOPR network will be rewarded with the native $HOPR token, but only once it verifiably completes its job of relaying data to the next “hop” in the network. This extra step, known as proof of relay, closes the circle of secrecy and inducement that has held back previous iterations of mixnet technology.

Privacy is often an afterthought for Web3 users and developers, many of whom consider moving away from Web 2.0 a sufficient solution in itself. But more and more people are discovering that privacy is not just a problem in Web3, but THE problem: without strong protection of metadata, especially IP addresses, many Web3 services are extremely vulnerable to disruption and attacks.

It’s not just about protecting user identities – although of course that is important. Without strong metadata confidentiality, fundamental services can be disrupted. Imagine a blockchain that cannot produce new blocks because miners and validators continue to be hit by denial of service attacks, made possible by exposed IP addresses. Without strong infrastructure-level privacy protections, the foundations of web3 rest on shifting sands. Fortunately, an update to decades-old mixing technology can provide the stability and security the space needs.

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On-Chain Privacy Revolution: Bringing Total Anonymity to Web3 | Cryptocurrency


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