Privacy at Cardano

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The Cardano blockchain is a third generation distributed network, since it is programmable on the Proof of Stake consensus.

Unlike Monero and Zcash, the best known privacy currencies that opted for anonymity, Cardano maintains transparency and traceability over the block records, as do many others like Bitcoin.

Privacy coins are more prone to illegal use, which does not mean that they were designed for that purpose, but governments do not welcome their development and growth in the crypto ecosystem anyway.

The idea that the Cardano network maintains transparency about its block operations is no coincidence, since the mission of this blockchain is to provide global usability on distributed applications, smart contracts and digital identity.

Strictly speaking, Cardano is a pseudo-anonymous blockchain, meaning that only the amount of the transaction, the date, time and public key (network address) are visible, but not the identity of the sender and receiver of the transaction. All historical records linked to a public key can be verified, since transactions are immutable over time.

Of course, if it were possible in some way (and outside the blockchain) to identify the holder of the public key, his activity, or at least part of it, would be exposed in the blockchain.

This is not necessarily “bad”, but it is still best to preserve privacy. It is possible to verify operations, often necessary in the business world, knowing their responsibility without exposing all their activity, and this with a digital identity is possible in Cardano, where ownership is verified without exposing all the information.

Anonymity is very different from privacy, is lack of identity.

The official Cardano wallets have HD addresses (hierarchical deterministic), which allow changing the public key for each new transaction within the same wallet.

When we make a send or receive transaction our counterpart can see the balance of that address, but using HD addresses with each new transaction, it is generated without funds, which would not happen if we made all the transactions with the same public key.

A situation of attention is that when we delegate the wallet, with all its HD addresses, a single public delegation key is generated, so all the funds and all the HD addresses that make up that wallet are exposed on the network.

I advise not to disclose the public addresses in spite of being public (it would be a huge mistake if we disclose the private key) .

If for some reason you know a public address of a wallet and it is in delegation to a pool, you can know its balance, and that is why I recommend having different wallets to distribute the money, and better yet, allows to delegate to different pooles and thus contribute to the decentralization of the network.

It’s not difficult, you just need to be tidy and attentive to privacy which then ends up in security.

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I just want to note that Monero’s view keys are the way out of this. If the tax man wants to see whether i’m holding what I claim I’m holding, I can give him the view key (him knowing how to use it is none of my concern). They could use the argument “but you can have multiple wallets” but this applies to every currency. I’m big on Monero because of its privacy options. You don’t walk around with your wallet and transaction book exposed. Why do this in the online world?

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Great observation