Mastercard, a leading global payments & technology company, filed a patent for a method of anonymizing transactions on a blockchain technology. The news was confirmed by an application published by the United States Patent and Trademark Office (USPTO) on December 6. The patent application, originally filed on June 5, 2017, has been published by the US Patent and Trademark Office (USPTO) on Thursday.
The application outlines that “the use of one or more intermediary addresses to obscure the source and destination of funds in a blockchain transaction” can be used in order to “increase anonymity of entities associated with blockchain addresses.”
The process of identifying a user behind a blockchain address is extremely difficult. An individual can transfer or receive funds utilizing blockchain technology while keeping a high level of anonymity.
The nature of the blockchain network as an immutable ledger is such that every transaction can be traced and followed back to the genesis block of the blockchain. It can be possible to identify and view all of the transactions associated with a specific blockchain wallet by analyzing the movement of digital currency in a blockchain through its transactions.
Mastercard notes that many “are flocking” to various blockchain-based cryptocurrencies, such as Bitcoin (BTC), for the perceived “high level” of anonymity. Blockchain technology is an immutable ledger which means that every transaction can be traced by to its place of origin.
Mastercard suggests that many users are running towards blockchain technology because of the anonymity it promises to offer. However, blockchain data can, once accumulated and analyzed, can reveal the user behind a wallet or at least provide information about them, such as geographic location, interests, spending habits, etc.
“The existing communications and attribution structure of blockchain technology such as Bitcoin require identification of where the transactions are emanating and terminating, in order to maintain the ledger. This creates a technical problem of competing interests within the technology.”
Mastercard is by no means the first to tackle the limitations of anonymity within blockchain systems; two high profile privacy-focused altcoins, Zcash (ZEC) and Monero (XMR), are both designed with similar concerns in mind.
ZEC uses Zero-knowledge proofs (ZKP) technology, an alternative algorithm for authenticating distributed ledger entries, in which transacting parties provide proof of validity, but all other information remains encrypted, including their identities. Monero, meanwhile, uses stealth addresses to mask identities by enabling a sender to create a random one-time address that is based on the transaction receiver’s published address.
Panaesha Capital is a Singapore based fintech company, offering products and services within the sphere of blockchain technology and cryptocurrencies. The company offers products that are decentralized, secure and cost-effective.