Incognito Whitepaper: Incognito Mode for Cryptonetworks

Incognito Whitepaper: Incognito Mode for Cryptonetworks

Abstract

The inherent lack of privacy to cryptonetworks today is a real and present threat to the entire crypto space. Existing solutions like Monero, Zcash, Grin, and Beam introduced their own version of cryptocurrencies that focus on privacy. Incognito takes a different approach, based on the premise that people don’t want a new cryptocurrency with privacy.

What they really want is privacy for their existing cryptocurrencies: incognito mode for any cryptocurrency.

First, we proposed a solution to shield any cryptocurrency such as BTC, ETH, and USDT. In effect, any cryptocurrency can now be a privacy coin. Both shielding and unshielding processes are carried out via a decentralized group of trustless custodians. Once shielded, transactions are confidential and untraceable. To provide privacy, we employed the linkable ring signature scheme, homomorphic commitment scheme, and zero-knowledge range proofs.

Second, we presented a solution to scale out a privacy-focused cryptonetwork by implementing sharding on privacy transactions and a new consensus based on proof-of-stake, pBFT, and BLS. Transaction throughput scales out linearly with the number of shards. Currently, with 8 shards active, Incognito can handle 33 TPS. And with a full deployment of 64 shards, Incognito can handle 266 TPS - a significantly higher number than that of other privacy blockchains, usually less than 10.

Incognito launched its mainnet in November 2019 as a privacy-protecting, high-performance cryptonetwork to deliver incognito mode for other cryptonetworks like Bitcoin and Ethereum. As of January 2020, it has 8 shards powered by over 1,000 validators and has processed over 150,000 privacy transactions - mainly in BTC, ETH, and USDT.

Contents

  1. Introduction: A Platform of Decentralized Privacy Coins

  2. Shielding Cryptocurrencies: Turning Any Cryptocurrency Into a Privacy Coin

  3. Trustless Custodians: A Decentralized Approach to Cryptocurrency Custodianship

  4. Sending Cryptocurrencies Confidentially: Ring Signature, Homomorphic Commitment, and Zero-Knowledge Range Proofs

  5. Privacy at Scale with Sharding

  6. Consensus: A Combination of PoS, pBFT, and BLS

  7. Incognito Software Stack: Navigating the Incognito Source Code

  8. Incognito Performance

  9. Network Incentive: Privacy (PRV)

  10. User-Created Privacy Coins

  11. Use Cases: Privacy Stablecoins, Privacy DEX, Confidential Crypto Payroll, and more

  12. Future Work: Smart Contracts, Confidential Assets, Confidential IP, and more

  13. Conclusions, Acknowledgments, and References

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