This is my last article in the series of anonymous cryptocurrencies.
#Dash
How is anonymity ensured?
There are two types of transactions in Dash - a regular, “transparent” transaction, the data of which is available to everyone, and a private transaction “PrivateSend”. Further we will talk about the second type of transactions.
The Dash blockchain runs on the Proof-Of-Work protocol. That is, in the Dash blockchain there are miners who have a node on their computer and all transactions are carried out through the miners, for which they receive a reward.
A node is software that makes transactions and records them in blocks. Thanks to the nodes, the blockchain works.
There are two types of nodes on the Dash blockchain. Regular nodes through which “transparent” transactions are carried out and masternodes through which PrivateSend transactions are carried out.
PrivateSend starts by breaking down the transaction amount into standard denominations of 0.001, 0.01, 0.1, 1 and 10 Dash. Your wallet then sends out requests to the masternodes telling them that you want to make a transaction. When two other similar requests for mixing the same denominations are encountered in the network, a mixing session begins. The masternodes mix the sent funds and instruct all three user wallets to pay the now transformed inputs back to themselves. Your wallet pays the denomination directly to itself, but to a different address (called the change address). Some clarification is required here. When you send cryptocurrency, what goes out of your wallet is not the amount you want to send, but all your funds, some of them are sent, and the rest is returned to your wallet, which is where these “inputs” come from. To completely hide your funds, your wallet must repeat this process several times with each denomination (0.01, 0.1, etc.). Each time a process completes, it is called a "round". With each round of PrivateSend, it becomes exponentially more difficult to determine the source of your funds. The user can choose between 1-16 rounds of mixing. The mixing process occurs automatically in the background and does not require intervention on your part. When you want to complete a transaction, your funds will already be anonymized. No additional waiting is required.
What vulnerabilities does Dash have?
The biggest vulnerability I see is the ability to send “transparent” payments, this always brings problems in cryptocurrencies of this kind. It is for ordinary transactions that de-anonymization is possible. Also, it is worth noting that although shuffling is a reliable way to hide payment information, it is still mathematically possible to calculate it; the chance is very small due to possible permutations, but it is there.