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Mastercard, the company that went through the whole process of laughing, fighting and then embracing Bitcoin (and then attacking it again), has applied for another new patent in the blockchain space. Their last was regarding – we are not inventing – a fractional reserve cryptocurrency. They describe a new method of anonymous transaction which, in function, does not represent those implemented by Monero or other private currencies.
Instead, the method described sounds a lot like mixing coins, a service that various companies in the community have offered for years.
For those who are not aware, coin-mixing (also called tumbling) is the process of taking many different inputs, from senders, throwing them together as a washing machine, and pushing out new transactions from the recipient's address – thus obscuring the Original source of funds.
There are several methods for rolling bitcoins. Mixing coins or rolling them is no longer illegal than getting a change at a gas station. In no case can you be sure that the previous unit holders were not criminals or involved in criminal activities. It is here that the concept of fungibility is more applicable.
The Mastercard method is described as follows;
The blockchain node can receive the request and can process the transaction to transfer the specific amount from the blockchain wallet of the processing server to that of the receiving device. In some embodiments, the processing server may notify the sending device and / or the transfer receiving device, which may also include the provision of a transaction record identifier for the second transaction.
As a result, the sender can transfer to the recipient a specific amount of digital currency with greater anonymity, because the blockchain can only reflect that the sender sent the currency to the processing server and that the recipient received the currency from the processing server. When you use the processing server on multiple transactions and with multiple entities that use the processing server, the true source or destination for any transaction is obscured to the point that it is impossible to identify. If used for each transaction, a nefarious actor who observes transactions for the sender 104 will only see transfers to and from the processing server, thus revealing information about the sender's spending habits, thus protecting the sender's anonymity.
The above is exactly how Bitcoin mixing services work. Create a transaction on the mixer site and then say how much you want to send and where you want to send it. You can also specify, with most decent services, a number of "rounds" you wish to use. This means that the coins will be thrown between the portfolios on the server before being sent.
The author has not seen a tumblr that does the following, in which more than one portfolio will be used to actually send the funds and the amounts will be changed.
In some embodiments, the processing server may use multiple blockchain portfolios to further increase anonymity. In such embodiments, the processing server may possess a plurality of different pairs of cryptographic keys. […]
In some embodiments, the processing server can also render transactions anonymous by obscuring transfer amounts. In such embodiments, the processing server may interrupt the second transaction (e.g. transfer to the recipient's blockchain portfolio) in multiple transactions, where the total amounts from each of the transactions equals the specific amount that is transferred. to the recipient from the sender. In some cases, each transaction can transfer an equal amount of currency (for example, a total transfer of 36 currency units can be made in three transactions of 12 currency units).
It is not clear what Mastercard intends to do with this patent. A regulated financial company, certainly, does not start any product or company based on the model without regulatory approval, which means that if they did, there would be amount to regulated and legal Bitcoin tumblers. In the case of transactions originating from Mastercard, however, at least the sender's information should be retained for compliance with the KYC and AML laws.
Do they intend to obtain this patent and then apply the patent to companies that are already doing a similar service, often with similar or superior levels of anonymity? The move raises many questions in the mind of every cryptographer, and CCN has contacted Mastercard for comments on the nature of their plans around this technology they try to patent.
Shutterstock foreground image.
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