Nik Douglas, a cryptographer, applications engineer, and director of the C++ team at Ripple, has released a recommended process for enhancing the privacy of transactions around the XRP ledger.
Inside his Github post on March 30, Bougalis centered on the destination tags that are assigned to trades made between pockets supplied by exchanges or third party suppliers — also known as hosted wallets.
Douglas argued that these destination tags pose a potential privacy risk for consumers, which might be mastered through his proposed system of”blinded tags.”
Any transaction made between hosted pockets on the XRP ledger entails two types of tag: a source label, which indicates to which user has initiated the trade, and a destination tag, meaning that the transacted funds are to be shipped.
On a cryptocurrency exchange, the origin tag (i.e., wallet address) can stay constant or variable (determined by customers’ individual choice). However, trade creates a unique destination tag for each business.
Target tags, in their current form, are unsigned 32-bit integers — meaning that there are over 4 billion possible different combinations that can be used to create each label. At the moment, these 4+ billion mixtures are sufficient to allow exchanges to generate a unique destination tag for every user — and perhaps for the near future, Douglas says.
However, the matter isn’t the finitude of possible combinations. Still, instead, the solitude hurdles that destination tags present, as an attacker could feasibly correlate transactions by isolating the” address, label set as an exceptional address corresponding to one client.”
One way to surmount this problem would be to utilize a method of so-called”blinded tags” — tags that are, in Bougalis’ outline, “mutated in such a way it is meaningful only to the sender and the recipient of a transaction, but seems arbitrary to everybody else.”
Last spring, Ripple’s Xpring combined the firm behind privacy-focused altcoin Zcash (ZEC) to invest in Bolt Labs. In essence, crypto payments begin aiming to create an anonymous second-layer protocol that could be added to present cryptocurrency networks.