For those users who are particularly concerned about online privacy, traditional cryptocurrencies such as Bitcoin are gaining too much scrutiny.
DeepOnion is one of a range of privacy concious cryptocurrencies that aims to empower users who do not want their transctions being monitored. DeepOnion is integrated with the TOR network which makes use of the Onion router to encrypt traffic.
For those users who have heard of DeepOnion, it could have been through one of their numerous airdrops. Unlike most other cryptocurrencies, they have not completed an ICO and have allowed some of the 18 million pre-mined tokens to be dispersed through these Airdrops.
Problem with Bitcoin
Image Source: DeepOnion.org
For most of those who are new to the Bitcoin ecosystem, they think of it as an anoymous cryptocurrency where their use is away from the prying eyes of intelligence agencies, companies and hackers. Unfortunately, this is far from the truth as illustrated in the Deep Onion white paper.
When you create an account at a large cryptocurrency exchange, the law requires that exchange to conduct KYC (Know Your Customer) procedures on you. This means that they will require your full name as well as your address. They will require personally identifiable information.
When you want to use this exchange, they will create a wallet that is directly tied to you. Moreover, given the immutable nature of the blockchain, all transactions are tracked and any funds that are eventually exchanged for Fiat can link you with the Bitcoin that has entered your address.
Hence, even if you are not doing anything illegal with the funds, the moment that the exchange receives a full audit, your trading history will become public. There is also the chance that hackers could compromise the exchange and therefore attribute your personal information to large Bitcoin holdings. This could make you susceptible to social engineering attacks.
The other problem that has been illustrated is more to do with the technology that underpins the Bitcoin protocol. Given that Bitcoin relies on SHA 256 hashing algorithms, transaction speeds have become really slow.
Overview of DeepOnion Protocol
Image via Fotolia
The DeepOnion has been developed with all of these concerns in mind. They have used the TOR protocol in order to keep all of the transaction information secure as well as anonymous.
They will also use some technology that has been implemented in a number of other privacy coins such as Zcash. The transaction will rely on zero-knowledge proof technology in order to facilitate transactions and keep all the information related to it private.
Something that is rather unique to DeepOnion is the DeepSend technology which operates much like a multi signature system. They are also looking to partner with a number of other services that have privacy as their core function. These include such operations as the Bisq P2P decentralised exchange as well as secure online marketplaces.
DeepOnion has also just released Meek and OBFS4 protocols which help overcome the problem of countries that block Tor access.
Another interesting addition to the project is something called “Deep Vault”. This is essentially a file notary system that will make use of the blockchain to verify documents using the DeepOnion technology.
Mining on DeepOnion
In order to overcome the transaction backlog that is present on the Bitcoin blockchain, DeepOnion has combined both Proof-of-Work (PoW) and Proof-of-Stake (PoS) mining.
The PoW will use the x13 algorithm which will have a block time of about 240 seconds. Payments for solving the block will be 8 ONION per block and this will be adjusted by half each year until it reaches a minimum of one ONION where it will remain.
In terms of the PoS, there will be a sixty second block target with a variable interest rate reward scheme. In the first year this will be 10% which will fall to 5% by the second year. It will keep falling in each year after that. There will also be a minimum holding time of 24 hours for PoS generation as well as a maximum accumulated coin age of 30 days.
Unlike Bitcoin that has a 1mb block size limit, DeepOnion has a 1.5mb limit. This, coupled with the addition of the PoS mining means that the average block rate is about 47 seconds. During previous testing phases of the mining, it was found that DeepOnion was clearing about 1,825 blocks in 24 hours.
With a throughput rate like that, it implies that DeepOnion has about 10x the rate that Ethereum blocks can be created in. This may change eventually as Ethereum aims to rollout a PoS protocol called Casper.
There are numerous features that will eventually be released on DeepOnion including VoteCentral. This will be a community orientated vote system that will allow members to vote on development decisions. This is not unlike the system already in place with Dash.
DeepOnion is also planning a release of an Android version of their wallets which will no doubt assist in user experience.
Whether DeepOnion will offer a legitimate alternative to the likes of Monero and other privacy coins such as Verge is uncertain. However, their use of the latest TOR technology to encrypt traffic and hide user IPs is indeed quite unique.
How to Get ONION Tokens
As mentioned, the DeepOnion tokens will not be distributed through an Initial Coin Offering or crowd sale. They will be releasing the tokens through a series of “Airdrops”. These are essentially just giveaways of the tokens to users.
They have currently completed 30 airdrops in total with more on the way. The next batch of airdrops will be 300,000 ONION tokens which will increase to 350,000 from the 40th airdrop and beyond. If you are a member of the community who takes part in forums then you will be given an additional 10% of the airdrops.
So if you are interested in a security centric coin and would like to get the benefits of a free airdrop, download the wallets today and start taking part in the DeepOnion community.
Disclaimer: These are writer opinions and should not be considered investment advice
Featured Image via Fotolia & DeepOnion