PIVX Launches zPoS - Fully Anonymous Proof-Of-Stake Tech - Bitsonline

PIVX Launches zPoS – Fully Anonymous Proof-Of-Stake Tech

To many, proof-of-stake mining (PoS) represents an exciting and potentially lucrative alternative to proof-of-work mining. In many ways, PoS is a lot like earning interest in a bank account, or earning dividends from the stock market. By participating in the network, you earn rewards just like with mining. PoS has always had at least one major deficiency, however. No project that uses PoS also offers full privacy and anonymity features. With PIVX, that may be about to change.

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Introducing PIVX

Most popular privacy coins like Monero and Dash rely on (arguably wasteful) PoW. PIVX have now launched new technology that incorporates complete anonymity with PoS mining. In this article, we’re going to dig into what that tech is and how it works.

For those unfamiliar, let’s do a quick review of the PIVX currency. PIVX is a popular altcoin that ordinarily resides among the top 50 coins on coinmarketcap.com. It’s a low cost and high speed network with blocks created every 60 seconds or so. What’s unusual about PIVX is that it doesn’t have a set supply cap. Instead, five PIVs are created in each block, and all transaction fees on the network are burned.

PIVX

While some detractors have argued that this type of monetary policy is inflationary (and thus a bad store of value long term), PIVX claims that their system is deflationary. Specifically, they claim that not only are transaction fees burned, but network participants are incentivized to buy and hold PIV in order to engage in PoS mining, or in setting up a masternode. This, in turn, is intended to restrict the supply that hits the market.

The method by which transactions are made private is also relatively unique. As such, it does have a slight learning curve, and may take a bit more time to grasp than an always-on privacy project like Zcash or Monero.

PIVX

Casino Chip-Like Privacy Features

PIVX uses a sort of sub-currency called zPIV. Within a wallet, users can choose to create or “mint” units of zPIV. zPIV comes in specific denominations only, like 1, 5, 10, and so on. This is similar to how paper money works. When a user sends zPIV, the receiver gets regular PIV, but without being able to tell where it came from.

zPIV units only exist within a single PIVX wallet and cannot be directly bought or traded on an exchange. Their value is also permanently equal to PIV at a 1-to-1 ratio. Basically, zPIV is not its own currency, but acts more like a casino chip that can be anonymously exchanged for its face value. zPIV can be sent to any PIVX address, including exchange addresses.

Think of it this way. Sending bitcoin is like sending a bank transfer to someone else’s bank account. The bank has a record of what happened, and they can refer to it at any time. Using zPIV is like withdrawing cash from an ATM, giving it to someone, and then having them deposit the cash in their own bank account.

PIVX

But as this system requires the additional step of minting zPIV, and then choosing to send zPIV specifically, it does add a certain degree of difficulty for new users, or those unfamiliar with cryptocurrency wallets. From a technical perspective, however, the anonymity provided by zPIV seems to be on par with other privacy coin implementations.

Another issue is that zPIV cannot be staked. So users who want to earn returns from staking will probably choose not to use zPIV unless they very specifically want to perform a private transaction.

Privacy and PoS, Together With zPOS

As a major feature in the latest version of the PIVX wallet (version 3.1), users can now stake their zPIV and earn regular returns on it. In a recent press release, PIVX Community Leader Bryan Doreian said:

“zPoS is a major step forward for decentralized cryptocurrency technology at large because it allows for the freedom to maintain one’s own private crypto balances (with zPIV), and to earn rewards privately and securely. It’s akin to having your own personal growth account, outside the prying eyes of hackers, scammers, and other entities that would otherwise spy on your data and use it for their purposes.”

In addition to the new privacy features, those who stake zPIV (instead of regular PIV) will earn a larger share of the block reward.

Why increase the reward? The more people on the network that use zPIV, the higher the anonymity and security of the network as a whole. Secondly, converting PIVX into zPIV does incur a small minting fee, comparable to a standard PIVX transaction fee. Increasing the block reward for staking zPIV helps to offset and even fully cover this minting cost.

PIVX

Lastly, as using zPIV does require some additional effort on the part of the user, the PIVX team feels that users who do get involved with zPIV should be rewarded for doing so.

So far, other privacy coins have only managed to offer private transactions through what some commentators consider wasteful and unfair proof-of-work mining algorithms. While the first version of zPIV did not need proof-of-work (and neither does the current version), it was not compatible with their proof-of-stake consensus mechanism.

As such, zPOS appears to be more than a gimmick. It is a major step forward for decentralized cryptocurrency technology. Not only that, but a somewhat smaller player was able to pull it off first.

Will the Community Embrace It?

PoS may have its detractors, but it has proven to be an effective consensus method for multiple cryptocurrency projects. Ethereum itself is also moving into a PoS model in the near future. What’s been missing in PoS up until now has been solid and reliable privacy features.

PIVX

Thankfully, the team at PIVX have created a real and workable solution that allows network participants to not only earn rewards, but maintain their valuable anonymity while doing so. And in this age of endless and sweeping electronic surveillance programs, anonymity is becoming more valuable than ever.

What is yet to be seen, however, is if the community at large will embrace this unique and perhaps somewhat puzzling form of blockchain privacy. There is no doubt that this achievement is a first for any cryptocurrency, but it may take some time until it sees wider adoption.

What do you think? Will the community embrace PIVX and its new private PoS features? Will we see this kind of tech in other projects? Let us know your opinion in the comments section below.


Images via pivx.org, Pixabay

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