What could possibly be driving the interest of universities into researching to understand or improve any aspect of cryptocurrencies? This is the question that comes to mind after scientists from universities in the US and Luxembourg released updates on their efforts to improve cryptocurrencies such as Bitcoin and ZCash.
Originally, Bitcoin was conceived to be exchanged anonymously. However, that changed along the way as several experts and private companies have worked to develop highly effective methods of de-anonymizing the public keys with which users can transmit money in Bitcoin from one public key to another. As a result, Bitcoin transactions have become trackable.
Bitcoin-Compatible Anonymous Payment Hub
Now, researchers from North Carolina State University, Boston University and George Mason University have developed a system that could make it more difficult for Bitcoin transactions to be identified or tracked.
Called TumbleBit, the system is a computer protocol that runs on top of Bitcoin taking advantage of an existing concept called "mixing service" to draw more parties into a transaction involving two parties just to make it harder to determine which two parties own the transaction.
A full paper, "TumbleBit: An Untrusted Bitcoin-Compatible Anonymous Payment Hub," will be presented at the Network and Distributed System Security Symposium later this month.
New mining algorithm
In a related case, scientists at the Interdisciplinary Center for Security and Reliability and Trust (SnT) of the University of Luxembourg developed an important mathematical algorithm called Equihash as a core component for Zcash, a new cryptocurrency that offers more privacy and equality than Bitcoin.
According to the head of the research group Cryptolux, Prof. Alex Biryukov and Dr. Dmitry Khovratovich at SnT who developed the Equihash, the algorithm is meant to resolve two main shortcomings of Bitcoin through Zcash.
The first is its lack of privacy for transactions, the second - centralization of transaction verification into the hands of a dozen miners and the computational load of the Bitcoin mining algorithm that can be split into many different small tasks which can be conducted in parallel.
“The strength of a cryptocurrency comes from the fact that the ledger is globally distributed,” says Biryukov in a release. “Our Equihash algorithm reverses the situation back to this more ideal world.”
He adds that it is a unique mining algorithm that is memory-hard and easy to verify which makes mining new coins with Zcash/Equihash comparatively expensive but pose a smaller risk of monopolization which ensures new coins are genuine is memoryless, fast and cheap.
They, however, note that Equihash is not limited to use in Zcash and can be used in other cryptocurrencies including Bitcoin.
Universities are known to research into a given phenomenon to widen its field, question theories or improve the level of current knowledge. The fact that the two mentioned studies are cryptocurrency-security related gives a clue as to what the researchers might be up to on a larger scale. However, it may take some time to get a better understanding of what impact their findings would have on the entire ecosystem.