LEOcoin Whitepaper

Thursday, June 21, 2018
Download document
Save for later
Add to list

Digital Currency Whitepaper LEOcoin’s new privacy settings

Contents Introduction ............................................................................................ 1 Foreword .................................................................................................. 2 Digital currency anonymity and privacy....................................... 3 LEOcoin’s new privacy settings ........................................................ 4 Conclusion ............................................................................................... 6 Glossary .................................................................................................... 8

Introduction Our vision for the future of digital currency LEOcoin was created in June 2014, and LEOcoin has now undergone a has been backed by a dedicated digital significant technological innovation, currency exchange (www.LEOxChange. which will give its users access to com) since April 2015. It is the first a unique level of privacy – setting digital currency to be launched in LEOcoin apart from other digital the UK that is designed for small currency competitors. business owners; allowing individuals to make fast, secure and cost effective This Whitepaper sets out the new transactions through a decentralised functionality of LEOcoin and the peer-to-peer network. The usability and key debates on the capability of accessibility of the currency positions digital currencies to be anonymous LEOcoin as a world currency and the and private. currency of choice for entrepreneurs. 1

Foreword The Western world has undoubtedly This is an efficient way to send money embraced digital exchanges of to family and friends as well as pay for currency, but the question now is products and services worldwide; and whether it will entirely embrace digital is much simpler to use than online currency itself. banking, as the user is entirely in control of their wallet. Our digital currency combines development skills, international Sending LEOcoin is as easy as typing in infrastructure, real-world the address of the receiver and clicking entrepreneurial know-how, and a global the send button. Everything else is network and user base, creating a done by a very advanced programme platform for growth. that requires no further user interaction. Sending LEOcoin is a fast and simple Here we set out to answer a number way to transfer money globally, of questions around the security without the need for transaction fees, and secureness of digital currencies middlemen or banks. Through the (also known as cryptocurrencies) and use of advanced cryptography and blockchain technology, as well as an encryption methods, LEOcoin has introduction to LEOcoin’s new unique managed to create a truly private privacy function. digital currency. Dan Andersson When the idea of cryptocurrencies emerged, one of its purposes was to create a truly anonymous system that requires no bank or centralised operator. Founder of LEOcoin, and Chairman of the LEOcoin Foundation LEOcoin leaves banks out of the money transfer process. This means there are no third party transferring agents who want their share. So the cost of sending LEOcoin is practically zero compared to the bank transfers most people are used to. 2

Digital currency anonymity and privacy Digital currencies are often referred to they are not operating anonymously. as private or anonymous currencies. In For many users of digital currencies, the context of financial transactions, who access the currency through digital currency has the potential to one of the popular online wallet or be private and anonymous with new exchange services (like LEOxChange), technological solutions now available their participation at the outset on the market to protect the users’ entails linking their personal identity right to privacy – in this regard digital to their digital currency holdings. A currencies are no different to the use digital currency for this type of user is of cash. effectively no more anonymous than a bank account. For example, to open Digital currencies, like LEOcoin, are a digital currency wallet an individual anonymous in terms of programming, must conform to the same proof of and provide anonymity in practice identity checks that an individual would thanks in large part to advancements go through to open a bank account, i.e. in the capability to protect the users’ proof of ID, address, etc. details — name, home address or bank details — from all kind of snooping. Digital currency transactions can LEOcoin’s new privacy option within then be anonymous, since real-world the latest ‘Upgrade’ feature augments identities are not recorded on the this further. blockchain ledger: the only identifying information recorded there are the Identities are not recorded in the Bitcoin addresses, whose corresponding LEOcoin protocol itself, but every private keys are held by the owners as transaction performed with LEOcoin proof of ownership. is visible on the distributed electronic public ledger known as the blockchain. A further source of potentially However, outward transactions do deanonymizing information is available contain a privacy feature that protect to every computer that participates user’s privacy and their identity from in the decentralized transaction unwanted surveillance. network by hosting a digital currency ‘node’. This information is the set of The privacy provided by digital Internet Protocol (IP) addresses of the currencies is a point of attraction and a computers that announce new digital challenge for financial regulation (see currency transactions. So the computer Jason Weinstein’s comments on page 4). where the coin was generated could be traced back to its IP address, however Yet the practical reality for the vast not necessarily the user. majority of digital currency users is that 3

LEOcoin’s new privacy settings The new encryption features of letters and numbers that make no sense LEOcoin’s blockchain means that every unless you know how to turn it back to move that is recorded in the ledger is its original state. Think of it as a locked encrypted. It is written in a way that chest, we can see that there is a chest would take all the computers in the but not what’s inside it. world thousands of years to decrypt and brings with it the highest level LEOcoin is spearheading a new of security. Every identity and every direction for digital currencies. LEOcoin transaction is turned into a series of users now have access to a unique level Is digital currency the criminal’s friend or foe? Jason Weinstein, a partner at Steptoe & Johnson LLP and a former deputy assistant attorney general in the US Department of Justice, in charge of cybercrime and organized crime, gave a recent speech on digital currency in relation to criminal use. He says a user’s Bitcoin address is like an account number that stays with the user; if you can connect that address to a user, you can identify and trace all of the transactions in which that individual has participated using that address. As with banks, law enforcement would be able to obtain information about the address user by serving a subpoena or following other lawful process. There are existing and rapidly improving techniques to help link those users to their Bitcoin addresses and transactions using, among other things, analysis of transaction patterns to make connections among multiple addresses used by the same individual; mining of data from social media and public sources; and analysis of IP addresses used to conduct transactions. He added that there’s also a real attribution advantage: the traceability, search ability, and permanence of the blockchain. Whether a law enforcement agent identifies the owner of an address tomorrow or two years from tomorrow, the agent will then be able to trace back every transaction involving that address, all the way back to the beginning. Moreover, because the ledger is publicly accessible, law enforcement does not have to worry about what type of legal process is required to access the data, and because the ledger is borderless, law enforcement can get the data without having to go through a foreign government. That gives law enforcement the data it needs to ’follow the money‘ in a way that would never be possible with cash. Law enforcement is still on a learning curve with Bitcoin, although the case against Carl Force IV, the former Drug Enforcement Administration (DEA) agent convicted of stealing bitcoins during the Silk Road investigation, demonstrates that even at this early stage, law enforcement has already developed an impressive capacity to follow the money using the blockchain. 4

of functionality that will allow them to The payer derives a new, normal address use these new encryption features to ‘go from the Stealth address, to which the private’. This method will allow the user funds will be sent and in that process to choose to trade their currency in an only allows the payee to compute the even more secure form – something that corresponding private key. This is based no other digital currency offers. on the mathematical principle called the ‘Diffie-Hellman Key Exchange‘. It Every wallet will start with two allows two entities to generate a shared addresses, one public and one private secret based on their keypairs. Like with (also known as Stealth address). The the famous Enigma machine, it did not public address will work in exactly matter if you had the code for either end the same way that other digital of the transmission, if you didn’t have currency transactions work - publicly the source code the Enigma machine recording the user’s pseudonymous was using, you could not translate information and the transaction it. With the Stealth address system history of every LEOcoin. However, even a super computer like Colossus choosing the private option, launches cannot crack it. ‘Ring of Trust Technology’, which essentially creates and confirms the Essentially, the coins are destroyed after transaction on the blockchain without they are sent from the original wallet publishing potentially identifiable and created anew before they arrive details. This model is called Dual-key with the recipient (meaning the process Stealth Addresses and it keeps users’ cannot be reverse engineered). information safe by not recording any pseudonymous information. What’s more, LEOcoin’s new privacy functions include a private messenger Stealth addresses are generated in function so that traders can a different way than normal ‘Bitcoin’ communicate with the utmost privacy as addresses, but they have a similar well as trade privately. structure. A dual-key stealth address contains a lot more information because All messages are encrypted by the it requires the sender of a transaction to proven AES-256-CBC algorithm, and know the public scan key and the public distributed between nodes. Even if spend key, which is not stored on the the ‘assailants’ could view the entire blockchain. All data required to perform network the message information such a transaction is derivable from the would remain private due to the stealth address itself. aforementioned encryption. 5

Conclusion Average users and regulators should Our private feature ‘The Upgrade’ be aware that trading in digital protects our users’ identities at a currency using standard functionality time when identity theft, the right to is certainly less ‘anonymous’ than anonymity and privacy in the digital age cash, but more so than conventional is at the forefront of public attention. online fiat transaction. However, dedicated users can make specific The rapid pace of technological transactions anonymous through the development enables individuals all use of LEOcoin’s new privacy settings. over the world to use new information However, the open nature of the and communications technologies transaction ledger makes it extremely (ICTs) to improve their lives. At the difficult for the user to achieve absolute same time, technology is enhancing the anonymity, unless on a limited scale capacity of governments, companies using LEOcoin’s new technology. and individuals to undertake surveillance, interception and data In summary, the consumer advantages collection, which may violate or abuse of instant, secure, international human rights, in particular the right transaction are considerable. - Yes, there to privacy. are opportunities to exploit the system, much as there are with existing forms Article 8 of the European Convention of fiat transaction, but the security on Human Rights legislates for an concerns presented by the supposed individual’s ’private and family life, anonymity of digital currencies are his home and his correspondence‘, largely overblown. subject to certain restrictions that are ’in accordance with law‘ and ’necessary in Furthermore, law enforcement agencies a democratic society‘. This article clearly have largely caught up with people provides a right to be free of unlawful using it for criminal purposes and have searches, and mass surveillance been able to discover information campaigns. Therefore anonymity in about transactions where relevant to a conducting your financial affairs is criminal act. very much within the letter and spirit of international laws. LEOcoin’s new However the new level of privacy offering exemplifies this right. offered by LEOcoin’s upgrade, will offer our users an added level of protection. Furthermore, a 2014 report to the The right for consumers to privacy General Assembly of the United Nations must always be considered – and that (UN) by the UN’s top official for counter- is why LEOcoin has introduced this new terrorism and human rights condemned feature for its users. mass electronic surveillance as a 6

clear violation of core privacy rights individuals to undertake surveillance, guaranteed by multiple treaties and interception and data collection, which conventions and makes a distinction may violate or abuse human rights, in between ’targeted surveillance‘ – which particular the right to privacy. ’depend[s] upon the existence of prior suspicion of the targeted individual or The UN policy links the right to organization‘ and — ’mass surveillance‘, privacy with the exercise of freedom by which ’states with high levels of of expression, as well as participation internet penetration can gain access to in political, economic, social, and the telephone and e-mail content of an cultural life, a framing that challenges effectively unlimited number of users increasing identification of security and maintain an overview of internet and surveillance by governments activity associated with particular and corporations. websites‘. Only targeted interception of traffic and location data in order At LEOcoin we have given our users to combat serious crime, including the ability to go private – because terrorism, is justified, according to that’s their right. With government a decision by the European Court approval, or at least acquiescence, of Justice. This should not include legal businesses and users can take legitimate businesses only seeking to advantage of the potential speed, low trade. Our new privacy settings will give costs, flexibility, and privacy offered by those traders a new level of security. LEOcoin and our contemporaries. A new resolution on the right to privacy in the digital age, adopted on 21 November 2016 at the UN General Assembly of the UN, comes at a time when the rapid pace of technological development is enhancing the capacity of governments, companies and 7

Glossary Digital anonymity This method is known as Proof of Digital currencies are pseudonymous; Work, and in essence it meant the that is, sending and receiving digital more powerful a computer you had, currency is like writing under a the more digital currency you could pseudonym. If an author’s pseudonym mine. But not any longer. LEOcoin has is ever linked to their identity, now moved to a Proof of Stake (POS) everything they have ever written model, which rather than rewarding under that pseudonym will be linked LEOcoin investors for the power their to them. In digital currency, your computer lends to the network, instead pseudonym is the address at which rewards LEOcoin users based on the you receive it, and every transaction number of LEOcoin’s they currently hold involving that address is stored forever and ‘stake’. Essentially, this means the in the blockchain. However, technology more LEOcoin’s you have the more you is now available to undertake a financial will earn. transaction anonymously by creating and confirming the transaction on the This method is far less demanding on blockchain without publishing the computer power and in practical terms original sending address. Essentially, that means the consumer and small the coins are destroyed after they business owner does not need to invest are sent from the original wallet and in an expensive and powerful machine created anew before they arrive with to mine LEOcoin. This makes LEOcoin the recipient. mining available to a wider mass- market audience. Blockchain LEOcoin’s POS model also reduces the Blockchain technology itself is nothing risk of ‘Selfish Miner flaw’ and ‘51% new, it is just an encrypted database attacks’. Transactions in any digital that is distributed across a computer currency have to be approved and network. What makes it possibly verified by the peer-to-peer network. revolutionary is that it can only be This community approval means updated when everyone on that everyone has a stake in the currency, network agrees and once entered, the so it is in the community’s interest to information cannot be overwritten. ensure security. Proof of Stake Initially LEOcoin used a hashing algorithm (Scrypt-Jane) that gradually increases the demand in RAM (a computer’s processing power). 8

LEOcoin Foundation Battle Barns 112 Preston Crowmarsh Oxfordshire, OX10 6SL United Kingdom www.LEOcoinFoundation.org www.LEOcoin.org www.digitalchamber.org 9