This is an op-ed by Kudzai Kotokowa, financial inclusion advocate and Mandela Washington Fellow.
When the use of strong encryption becomes commonplace, it becomes difficult for the government to criminalize it. Therefore, the use of PGP is beneficial for maintaining democracy. If privacy is forbidden, only outlaws have privacy… PGP enables people to take their privacy into their own hands. There was a growing social need for it. That’s why I wrote it.”
–Phil Zimmerman,”Why did you write PGP“
the issue Roman Stirloff, who is accused of operating the kept bitcoin mixer, “Bitcoin Fog,” points to several situations in which individuals are targeted by law enforcement to protect their financial privacy.
As described inWhat did bitcoin do?The U.S. Department of Justice relied on Chainalysis Reactor software to trace Bitcoin Fog’s domain purchase back to an address associated with Mt. Gox’s Stirlof account, making it its operator. Reactor is designed to link cryptocurrency addresses to real-world identities. Despite the various irregularities found in this Ongoing issueone could infer that it sends a clear message that “you will not have financial privacy”.
Introducing Ark
Given this growing hostility towards the financial privacy of Bitcoin transactions, there is an urgent need to develop superior tools. At the recently concluded Bitcoin 2023 conference, a potentially game-changing tool was called Ark protocolwas an introduction.
Announce during sun Main sessions In the open source stage by the developer Burak, Ark is a layer two scaling solution that enables cheap, anonymous and off-chain bitcoin transactions. The protocol also has a minimal on-chain footprint, further protecting user privacy while keeping transaction costs low. In what can be described as an “accidental invention” that occurred when Burak was trying to develop a Lightning wallet, Ark is a distinct protocol that could expand the use of non-custodial bitcoins.
Burak named the protocol “Ark” in reference to Noah’s shipwhich acts as a lifeboat that provides a refuge from predatory blockchain watchdogs and guardians.
During his presentation, Burak highlighted one of the most troubling trends with the Lightning Network today, which is that there are more existing Lightning users than most. This is mainly due to Lightning’s liquidity restrictions that require non-custodial users to first receive liquidity from someone else’s node before they can receive funds. Custody wallets like Wallet Of Satoshi strip this issue away from the user but at the cost of the user not having 100% control over their funds, as well as their financial privacy.
Alternate layer 2 protocol
I interviewed Burak to gain a deeper understanding of the Ark and the inspiration behind its development. When I questioned him about what motivated him to develop the alternative Layer 2 protocol, he said:
“I’ve always been a critic of Lightning mainly because of incoming fluidity issues, asynchronous receiving as well as its impact on the chain. Incoming fluidity has always felt like a bug to me, making the user experience unenjoyable. In addition, it would take more than a century to introduce all world population in a way that is not tied to the Lightning Network, assuming that each person has four channels consuming a few hundred bytes each.”
As he set out to address these and other issues, the idea for the Lightning Wallet eventually morphed into the Ark.
“Ark could be better defined as a trustless cryptocurrency or liquidity network similar to the Lightning Network but with a UTXO pool that lives completely off-chain and is neither a chain of command nor a pool,” Burak said. “These UTXOs are called “virtual UTXOs” or “vTXOs,” which have a “life” of four weeks. The essence of Ark’s anonymous off-chain payments are driven by vTXOs.
Throughout the conversation, Burak continued to stress his obsession with a frictionless end-user experience, and his opinion that sending sats should be as easy as pressing a button. This is one of the reasons why Ark users do not need channels or liquidity, as this is delegated to a network of untrusted intermediaries known as Ark Service Providers (ASP). These are always-on servers that provide liquidity to the network, similar to the method Lightning service providers It works, but with an added advantage: ASPs can’t associate senders with receivers, which adds another layer of privacy for users.
This is made possible by the fact that every payment on the Ark takes place in a range CoinJoin The round that blocks communication between sender and receiver. The best part about this is that CoinJoin happens completely off-chain while settling payments every five seconds, which not only greatly reduces footprints on the chain but also enhances users’ privacy. An anonymity pool is each party involved in a transaction, and in theory, this creates a greater degree of privacy than is possible on the Lightning Network. Moreover, Ark simulates on-chain user experiences where users have a dedicated address for sending and receiving payments, but the difference is that it is a reusable address that does not compromise user privacy, and is made possible in a way that resembles silence. work payments.
trade-offs
However, like any other system, the Ark has its trade-offs. While it may not offer instant settlements as fast as Lightning, it does provide instant access to funds without having to wait for confirmations in what Burak described as “instant availability with final delay.”
For sellers, Lightning is still the best option when it comes to receiving payments. In addition, liquidity providers are required, but based on the assumption that individuals will be motivated to provide liquidity to earn a return on bitcoin, Burak also believes that this challenge can be easily overcome in the long run. This new proposal addresses some of Lightning’s shortcomings, but it also comes with its own set of challenges.
way forward
In short, the Ark protocol is a unique Layer 2 scaling solution with unilateral exit that enables seamless transactions without imposing any restrictions on fluidity or interaction, and requires no direct communication between sender and receiver. Therefore, recipients can easily receive payments without the hassle of any onboard setup, maintaining a continuous server presence or compromising their anonymity to third parties. Ark is designed to be a scalable and securityless solution, allowing users to have complete control over their funds and giving everyone the option of self-custody of their funds.
Ark is interoperable with Lightning, but also serves as a complement to it. However, due to Lightning’s complex self-guarding process and different levels of privacy for senders and receivers, along with the imminent danger posed by blockchain surveillance companies, privacy-prioritizing scaling solutions such as Ark are becoming necessary. Various attempts to attack Bitcoin through malicious prosecution, as in the case of Stirloff, and predatory legislation such as that of the European Union micademonstrating the need for scalable, efficient, and privacy-preserving tools in order to prevent future issues.
Against this background, I think Ark is an interesting concept worth pursuing as the protocol evolves. Of course, without code to review right now or a functioning battle-tested prototype, there’s still a long way to go. Despite the unexpected challenges ahead, Burak is optimistic about the potential of Ark and is convinced that it is a hack that strikes a balance between Bitcoin’s private transactions and scalability, in an easy-to-use manner. A sentiment I also share, given the vital need for non-custodial tools that preserve privacy.
This is a guest post by Kudzai Kutukwa. The opinions expressed are entirely their own and do not necessarily reflect the opinions of BTC Inc or Bitcoin Magazine.