Spectre Cryptocurrency is Utilizing Proof of Stealth Staking for Privacy
The cryptocurrency Spectre created two different tokens, one named spectre token, and the other xspect token. Both of them have been launched in 2016, but did not receive the proper attention from the crypto community. At the moment of writing, the tokens are operating around the 500 place according to CoinMarketCap.
But the situation is changing with a new technology that is trying to implement which is known as staking.
Different Proof-of-Stake tokens have been launched in the last months and years, including EOS, Tezos, Neo and Tron. All of them had different degrees of success but registered an important market capitalization.
In order for these systems to work, they verify blockchain transactions through a number of delegates or representatives. But token holders play a key role here, because they need to vote for the representatives in the network. But, while token holders do not give their identification, there is a problem related to privacy with the system.
Mandica, Spectre’s pseudonymous founder, commented on the matter:
“All the UTXOs [unspent transaction outputs] spent to generate staking transactions are traceable on the blockchain and all the staking transactions can be linked and your balances are visible to anyone who knows how to analyze the blockchain.”
But there is a way that would make staking stealthy. And this is something that the Spectre team is working on since some time. At the moment, the technology is not ready yet, but it is making significant advances.
It will be possible to keep the entire balance hidden to other users at the time of staking.
“From a user point of view you will be able to keep your entire balance of anonymous coins safe from any observer and you will just need to stake your wallet to receive further anonymous coins that nobody can attribute to you,” explains Mandica.
Currently, there is no other virtual currency that has this system to make staking anonymous.
The team behind the virtual currency did not provide a white paper on it, but they say that it will be uploaded soon. But the basic rules of how the system would work are related to the privacy-coin Monero and its ring signature technology.
Specifically, ring signatures allow users to have a better privacy experience, because it is impossible to determine which participants’ keys signed the transaction It is important to mention that nodes are not invisible and it is possible to see the transactions, and this is what Spectre wants to change.
It is a little bit difficult to solve this situation, but users that contribute to the network with their wallets connected to the internet, could earn 5% annual income on their tokens. If there are less users participating in the staking process, the rewards are bigger, attracting more participants to the network.
Mandica explained that the Proof-of-Stealth algorithm will be taking advantage of the creation of new tokens that have no prior history. This will be used to increase entropy and mask the transactions.
Mandica said to CoinDesk:
“Entropy is key in a system using ring signatures to create a large pool of mixins or ‘dummy’ coins that can be used in the ring signature protected anonymous transactions.”
In order to work, protocols will need a steady stream of unspent transactions that would mask the real transactions.
The company’s next release will include the new proof-of-stealth staking mechanism that has been created for anonymous coins and the proof-of-stake version 3 algorithm that the blockchain is already using.
It is important to mention that the team has decided to embrace Tor into its system. The company has decided to implement the Tor product called OBSF4 that allows users to avoid firewalls in China and Iran.
Moreover, the team is also hidden and each of the members does not know the real name of the other team members.
“We started out in 2016 with a very unsuccessful ICO that raised only 16 BTC at a time when the BTC price was around $600-$700, so we didn’t make it far on those funds,” Mandica explained.
Spectre was able to secure a private funding with a disclosed amount at the beginning of the year. Until now, the project is still starting with the project and building a private proof-of-stake.