It is often claimed that Bitcoin is anonymous, but anyone that understands the system knows that this is not true. While Bitcoin can be pseudonymous if used very carefully, achieving even that level of anonymity is difficult. Darkcoin was created to provide the ability to achieve true anonymity through a digital currency, and introduces many new features to set it apart from the rest.
How Is Darkcoin Mining Unique?
First of all, Darkcoin is based on proof-of-work (POW), like Bitcoin, but with one huge innovation. Instead of using SHA-256 like Bitcoin, or Scrypt like Litecoin, Darkcoin uses 11 rounds of different hashing functions. Due to the multitude of different functions in it’s mining algorithm, the feasibility of an ASIC is significantly reduced. In fact, the developers could even add in additional hashing functions if an ASIC is created, which would instantly make the machine obsolete. While ASICs are not necessarily bad, for a currency such as Darkcoin it is better to leave mining widespread.
Second, Darkcoin is taking a unique stance on difficulty and block reward. The difficulty in Darkcoin is re-targeted every block using a novel algorithm, developed exclusively for Darkcoin, known as Dark Gravity Wave. The block reward is not adjusted strictly by block number, as most digital currencies are, but instead is using the formula: 2222222/(((Difficulty+2600)/9)^2).
What Makes Darkcoin More Anonymous Than Bitcoin?
The anonymity of the currency is based on the functionality of a program named Darksend, which solves the issues with Bitcoin in which users could be tracked based on watching the input output of transactions. With Bitcoin, if a user buys a service or product for 0.1205693 BTC (or any other arbitrary number), then that transaction has basically linked the wallet they sent the BTC from, and any other wallets that can be easily linked, through transactions, to that single person. Unless a user only uses Bitcoin that were solo mined, and never mixes funds between wallets, it is very difficult to maintain any level of true anonymity after a transaction links them to a known purchase.
However, the solution provided by Darksend has basically implemented a tumbler into Darkcoin. A tumbler mixes users coins, to conceal their source, and Darksend does this in an ingenious way. If User 1 has 100 darkcoins, and wants to pay User 2 20 darkcoins from that, then when User 1 sends his 20 darkcoins, Darksend actually takes all 100 of hisher coins, and takes 100 coins from multiple other users at once, and mixes them all together. Then, those 300 coins are broken up into chunks of varying amounts that are placed in many wallets. Some of these wallets are fresh, empty wallets that are connected back to User 1’s account, others are connected to the other users who input 100 darkcoins, and 20 go into User 2’s wallet. Due to this mixing, and the automatic generation of new wallet addresses that are accessible to User 1, it is impossible to determine how much darkcoin User 1 was actually spending, or which coins heshe currently owns.
Where Will Darkcoin Go From Here?
Darkcoin is a very unique currency, and has potential to be the anonymous currency that many wanted Bitcoin to be. It is unlikely to achieve the level of success Bitcoin has reached, at least in the near future, as Darkcoin’s nature will make it unacceptable to many governments, consumers, or businesses. However, there is a large community of users that would benefit greatly from this system, and that gives it the potential to develop into a very important, highly valuable piece of the digital currency world.