The Three Musketeers of Crypto? (Spoiler Alert: PIVX is in there...)

What’s the value of first-mover? As we’ve seen in cryptocurrency, it oftentimes means everything. Bitcoin (as the first “cryptocurrency”) has remained at the top of the value pack, holding more than 60% of the total “crypto” market cap. Ethereum, as the first “computational” platform for cryptocurrencies/blockchains introduced the notion of a “smart contract”, has become the defacto standard in this realm. Monero was the first real cryptocurrency project to introduce a notion of a “private” ledger (or privacy protocols applied to an otherwise public blockchain ledger). But when we turn to other “first movers,” such as Proof of Stake, and especially, Proof of Stake + User Data Protection (via Privacy Protocols), there hasn’t been as much buzz, yet. While there has been a plethora of Proof of Stake coins (most of them being rough forks or clones), one of them has not only continually developed the Proof of Stake core codebase, it has also pioneered what some might call “Proof of Stake Privacy” or “Proof of Stake Financial Data Protection.” But before we talk about that cryptocurrency project, we’re going to give some background around Proof of Stake, user financial data protection or privacy protocols, and how both Ethereum and Tezos are following in the footsteps of this lessor known fully decentralized endeavor. While all three projects are commendable on their own, the convergence of them into the same arena begs some further analysis of the lesser known crypto, and how it’s managed to pull off what these two other titans are setting their sights to implement as well, with a FRACTION of their market cap, and, without any ICO or Presale at all. Proof of Stake The Proof of Stake consensus algorithm was introduced in a paper by Sunny King and Scott Nadal in 2012. The original concept relied heavily on the notion of “coin age”, or how long a UTXO (Unspent Transaction Output) has not been spent on the blockchain. In this way, it differed from Proof of Work by not focusing on and rewarding miners, but rather rewarding anyone willing to participate in the running of the network. The protocol was further refined in PoS version 2 for BlackCoin by Pavel Vasin (Rat4) with several potential security fixes, such as the potential of a malicious node to abuse coin age to perform a double-spend; or the potential for honest nodes to abuse the system by staking only periodically, negating coin age from consensus. Staking is making computing resources available to the network, which may “select” the node to generate the upcoming block on the chain based on delimited competition. In the case of PIVX, these limits are demarcated by considering the balance (UTXOs) staked by the wallet — every staking node is competing trying to create a valid block, very much like in PoW. Nodes, however, are technically limited in the number of trials in a given time (eliminating the need for higher computing power) and the difficulty to get a valid block is inversely proportional to the amount being staked. A higher balance means a higher chance of satisfying the difficulty criteria, validating the block, and being rewarded. Staking is significantly less demanding on resources than PoW mining, as there is no need to push towards ever-increasing difficulty, and the associated increase in computing power to solve it. As such, PoS is an environmentally friendly alternative to PoW. While the environmental factor alone already helps PoS stand out against PoW, there is another factor to be considered: maintaining a fair, distributed power across the network, which should be a high priority target of any cryptocurrency. In PoW, you’re contributing to the network by buying mining hardware which becomes obsolete in approximately 2 years time. In PoS, “mining hardware” are coins, which never become obsolete, they can always stake and secure the network. In PoS you’re “mining” with coins, not mining hardware, which is called staking. With the expanding difficulty in mining that necessitates more powerful rigs that cost more to run, the ability for people to feasibly operate such rigs becomes more exclusive. Such things as the costs of hardware, electricity consumption spent on computing, and further consumption on cooling, rule out a great many locations as suitable for mining. Inevitably, this results in a great deal of power held by miners, of which fewer and fewer are able to remain competitive, not only leading to a monopoly in rewards but in control over networks. As such, Proof of Stake present and a far lower economic and resource-dependent barrier to adoption and use globally. Lastly, setting up a mining rig requires way more technical knowledge than setting up a staking node, which opens up a space for wider adoption and involvement of non-technical users. A Bit about Ethereum (if you’ve been asleep in crypto for the past 6 years). Ethereum was the first crypto project that featured smart contract functionality. Proposed in 2013 by programmer Vitalik Buterin, development was crowdfunded in 2014 (raising $100million plus), and the network went live on 30th July 2015 with a 72 million coin premine. As a result, Ethereum has become the defacto standard for launching other coins, running ICOs, pumping crypto kitties (the rise of NFT’s?), and more. As a Proof of Work coin, its token emission/supply is created through mining on full ETH nodes, and as time has demonstrated, the cost to send a transaction (using gas) has grown exponentially at times, leading to clogged networks and delays in transactions. As one step in making the network more robust, ethereum has already started implementing a series of upgrades called Ethereum 2.0, which includes a transition to Proof of Stake (away from Proof of Work) — designed to make the ecosystem more efficient, and potentially more decentralized (though that remains to be seen, as running an ETH node to stake is becoming more and more financially impossible for most, requiring over $50k USD). While Ethereum has no defacto financial data protection protocols, Vitalik is no stranger to the world of zk-SNARKs, having collaborated with the likes of Electric Coin Company (the company behind zk-SNARKS and the cryptocurrency Zcash, which is a highly regarded and academically vetted leading Proof of Work privacy project). In fact, users and developers can already run zk-SNARK smart contracts, providing privacy features for those specific transactions. Here is another clip of Vitalk talking about zk-SNARKs. Whether Ethereum will be exploring implementing zk-SNARKS sometime in the future remains unknown, it is noticeable that this titan of crypto (#2 by market cap) continues to pivot to not just Proof of Stake, but also supportive of financial data protection through privacy afforded by zk-SNARKs. Ethereum’s coin supply is currently north of 110million, and while it currently has no hard cap or deflationary mechanisms built-in, it is planning to start burning transaction fees (can read more about that here). A Bit about Tezos Tezos is another blockchain network that can execute peer-to-peer transactions and serve as a platform for deploying smart contracts (similar to Ethereum). Tezos was first proposed in a whitepaper published in 2014, and after one of the largest ICO’s ever (raising $200million plus), it launched in September 2018. The Tezos network differed from Ethereum in that it’s consensus was (And is) a liquid proof-of-stake model (where instead of traditional proof-of-work mining, individuals could run full nodes with tezos inside and earn rewards for staking those coins (either by directly running the node, or delegating your coins to be staked on your behalf). In this model of staking coins are locked for set periods of time, during which they are completely unspendable or unusable. Tezos has consistently been at the top of the rankings (according to its market cap), and according to their roadmap, are planning on pushing zk-SNARK Sapling to their network, which will enable privacy-preserving smart contracts. Thus, another large cryptocurrency project is moving into the Proof of Stake privacy realms as well. Tezos’ coin supply is currently north of 750 million, with no hard cap or deflationary mechanisms built-in. Litecoin, though not Proof of Stake, is also implementing Privacy as early as next month! https://coinmarketcap.com/headlines/news/litecoins-mimblewimble-privacy-upgrade-is-ready-to-roll-on-march-15/ https://www.coindesk.com/litecoin-privacy-charlie-lee Proof of Stake Financial Data Protection So now that we’ve seen two of the largest crypto projects, all moving into the realms of Proof of Stake financial data protection (privacy), it begs the questions: Why move this direction? Has anyone else done this before? As to #1, Financial Data Protection is becoming more important in the digital age, with regulatory bodies passing regulations and laws concerning the use, transmission, and legality of digital assets, and the associated data required to use digital assets. The role that cryptocurrencies play in the 21st century continues to expand, and with this, the myriad of opinions around “privacy” and “digital currencies” continues to emerge. As giants like VISA begin to move into the sector, these privacy and security conversations become evermore tangible. To prevent terrorists and other criminals from having unfettered access to wire transfers for moving funds, and for detecting certain misuses upon occurrence, the FATF Recommendations include a rule similar to the Funds Travel Rule, known as the FATF Travel Rule. The FATF Travel Rule recommends that financial institutions be required to pass certain information to the next financial institution for qualifying funds transmittals that involve more than one financial institution. As Perkins Coie put it, “Regarding the “anonymity” factors, privacy coins and other cryptocurrencies provide greater anonymity than account-based currency equivalents (such as bank-issued payment instruments) since the transaction identifier is recorded using a cryptographically generated address, rather than personal information. But they still provide levels of anonymity nearing bearer instruments, like cash, card, or paper payment instruments, because the transactions are executed using networked distributed ledger technology and therefore are (to varying degrees) pseudonymous rather than truly anonymous. Depending on the privacy coin or cryptocurrency, addresses can be traced to natural persons using forensic technology, or permissions can be given to VASPs (e.g., view keys) enabling them to see transaction data and related addresses, as discussed below.” As to #2, the title of this writeup may have given it away. Proof of stake financial data protection, and specifically, zk-SNARK privacy on a proof of stake blockchain, has been successfully deployed, however, most don’t yet realize it, or how incredible this accomplishment is. You see, despite the hundreds of millions of dollars raised by these other two projects, and mass of engineering, this lesser-known (but no less accomplished) blockchain has pulled off implementing zk-SNARK sapling into proof of stake first. Now, one might argue that the reason you don’t know about it is that they don’t have the millions of dollars marketing budget that the other projects have (and you’d be absolutely correct about that). But it doesn’t take away from the fact that this project is paving the way for the entire crypto landscape, or at least the ones that are turning towards proof of stake privacy. Introducing (or re-introducing) PIVX: Protected Instant Verified Transaction If you’ve been around cryptocurrency long enough, you might have heard of PIVX before. Many wrote it off as “just some dash clone” or worse a “pump and dump purple scam coin” due to its meteoric rise during the 2017 bull market, which shot it to the #10 spot by market cap. However, what most failed to appreciate, or even understand, is how focused, and accomplished, this “little” DAO, non-ICO project was and still is today. For those who don’t know much about PIVX, let’s take a look at its history, leading to how it’s become the defacto gold-standard for Proof of Stake Financial Data protection and privacy. PIVX, which is the name of a cryptocurrency project and acronym that stands for Protected, Instant, Verified, Transaction or Exchange (X), is designed and engineered using advanced cryptography to provide user financial data protection through privacy protocols for its users compared to other cryptocurrencies that rely solely on public ledgers such as Bitcoin, Litecoin, Ethereum, and DASH PIVX is based on Bitcoin’s codebase fundamentally, with major custom developments and integrations. It is a Proof-of-Stake (PoS) protocol using its custom-developed PoS consensus engine with a native cryptocurrency, denominated as “PIV”. PIVX user financial data protection is secured through a highly customized implementation of a highly vetted academic anonymity protocol, zk-SNARKs Sapling developed by the Electric Coin Company, for all transactions and staking. PIVX is fully compliant with the Anti-Money Laundering and Counter-Terrorism Financing (AML/CFT) requirements written by the Financial Action Task Force (FATF). As PIVX contains technology to both allow a sender to attach encrypted personal identification along with the transaction, that only the recipient can see, as well as the ability to share private “view keys’’ allowing regulatory bodies to observe the required data, PIVX maintains a high level of compliance with modern banking, financial transaction, and digital currency regulatory statues. PIVX is a decentralized, open-source, fair-launch blockchain/cryptocurrency project managed, developed, governed, and stewarded by a community-driven decentralized autonomous organization (DAO). PIVX integrates other features including a 2nd layer of functionality through a Masternode network that provides a decentralized governance mechanism of voting; and is currently developing new features for this layer such as the Deterministic Masternode Lists, Long Living Masternode Quorums (LLMQs), and more. The PIVX coin supply occurs as a direct result of a static/fixed block emission rate plus any monthly budget allocation payouts. PIVX also has a dynamically calibrated coin-supply restrained by the burning of transaction fees. PIVX is an independent, application, and payment agnostic blockchain. PIV may be purchased and/or obtained to be held or staked (hot or cold) or locked in Masternodes by individuals who want to participate in the network. PIVX is one of the most actively developed cryptocurrency projects since January 1st, 2020 according to CryptoMiso, and currently is in the top 5 developed projects along with Chainlink, Bitcoin, Bitcoin Cash, and Lisk. History of PIVX Private Instant Verified Transaction (PIVX) was announced on bitcointalk.org on November 25th, 2015. For historical purposes, PIVX was originally launched under the name Darknet (DNET) and officially rebranded to PIVX on January 1st, 2017. On January 30th, 2016 it was announced that PIVX (DNET) would officially be released and at 04:10:07 UTC on January 30th, 2016, the first block of the PIVX network was created. The initial codebase for PIVX started as a fork of DASH, which was a fork of Litecoin, the first fork from Bitcoin. In its PoW phase in order to launch the network, PIVX utilized the Quark algorithm as it was deemed most fair due to its less exclusive technical limitations. On February 29, 2016, PIVX was added to the Bittrex cryptocurrency exchange. On August 16th, 2016 after a period of 259200 blocks, PIVX replaced Proof of Work with Proof of Stake in order to provide a more robust, lower economic barrier, more energy-efficient, and long term sustainable means of securing the network and rewarding those participants who help secure and govern the network. A 2nd layer to the blockchain was carried forward as well, this layer often being referred to as a Masternode layer. This layer provided the governance mechanisms as well as instant transaction capabilities. With this, PIVX became the first Proof of Stake cryptocurrency to have masternodes, blockchain-based governance mechanism, and a community based self-funding treasury. On April 15th, 2017, PIVX reached #10 for all cryptocurrency projects for market cap value on Coin Market Cap. On August 17th, 2017 PIVX became the first Proof of Stake cryptocurrency with codebase above bitcoin core 0.10x. On October 7th, 2017 PIVX became the first proof of stake project to implement the zerocoin protocol and subsequently, anonymous staking was introduced, pioneering Proof of Stake Privacy. On Nov 30th, 2017, PIVX became the first cryptocurrency project to have its main website natively translated to 30+ languages. In January of 2018, PIVX was added to the Binance cryptocurrency exchange. On April 5th, 2018, PIVX was added to Coinomi wallets, allowing apple users to carry PIVX on mobile devices. On May 8th, 2018 PIVX became the first Proof of Stake project to implement private staking. On December 9th, 2018, PIVX released the Zerocoin Protocol Light Node. This was the first-ever Zerocoin protocol to function on a light node. With it, light nodes were able to complete both Zerocoin mints and spends without needing to request or store the whole set of public commitments of Zerocoin. On December 21, 2018, PIVX released Zerocoin Small Signature of Knowledge — Bulletproofs. This was the world’s first “Bulletproofs implemented Zerocoin protocol”, developed by the PIVX core development team along with cryptography work done by cryptographers Mary Maller & Jonathan Bootle. In this protocol, the signature of knowledge algorithm was changed drastically to enable much smaller proof sizes. This change results in significant reductions of Zerocoin transaction size, blockchain growth rate, and improved verification time. On January 7th, 2019, PIVX released an Apple App, which was the first Proof of Stake privacy coin with a native app on the Apple AppStore. On June 18, 2019, PIVX was listed on the KuCoin exchange. On December 18th, 2019, PIVX released its 4.0 Wallet. This release included a complete UX/UI Rewrite of Qt core wallet (which was the first-ever), Cold Staking, upgraded Proof of Stake with the newly integrated Time Protocol v2, and spend/conversion of zPIV enabled. In February of 2020, the new user data protection and privacy protocol for PIVX was announced: Advanced zk-SNARKs privacy using the Sapling protocol. On November 1, 2020, The first-ever successful proof of stake shielded-shielded transaction was achieved on PIVX regtest. On January 8th, 2021, PIVX released SHIELD (v5.0 wallet), which was the first-ever successful implementation of zk-SNARKs based Sapling privacy protocol on Proof of Stake Summary Ethereum, Tezos, and PIVX are all unique. Two (ETH and XTZ) are more “platform” plays, with smart contracts and a slew of other elements. One (PIVX) is a more pure P2P cryptocurrency, with masternodes, atomic swaps, decentralized governance, and a currency inflation limiter (accomplished through transaction fee burning). However, all three of them will be (According to Ethereum and Tezos) overlapping into the Proof of Stake Privacy realms at some point. PIVX has been pioneering in this space for the past 5 years, continuously pushing the boundaries of possibility with the proof of stake algorithm and privacy, oftentimes unknown to the rest of the crypto markets (due to lower budgets, less noise, and a commitment to over-delivering, under-promising). However, as more projects begin to reflect and speak up about the importance of financial data protection, PIVX is beginning to see its efforts rewarded for having held the line as the defacto go to for proof of stake privacy. What does this mean for PIVX and its market cap? Sometimes a picture tells it best (and in this case, that picture is a table). As always, DYOR, be safe, secure your keys, and take a look at these three pioneers, and where you might find a hidden gem in the lesser-known PIVX project. At the time of writing this: