Blockchain tokenization experiments began in 2012 with “colored coins.” Despite this initial release, many agree that the full potential of tokenization was not reached until 2014 with the release of the scripting language that allowed complex programs and applications on Ethereum to communicate with each other and with the Ethereum network. With the ability to issue custom assets without the burden of maintaining a full blockchain infrastructure, more than 600,000 token contracts were staked on the Ethereum mainnet, sparking an emerging digital token economy.
The caveat is that despite their fundamental role in the industry, tokenized digital assets have made no progress in terms of security. While tokenization has seen widespread adoption and growth, many digital assets therefore remain vulnerable to security breaches.
Blockchain’s foundation of transparency means that a user’s financial activities are publicly available to the network, making crypto enthusiasts vulnerable to extortion, hacking, or discrimination based on personal information that can be obtained, such as wealth level, political affiliations, or sexual orientation . For this reason, confidential assets become crucial for high net worth users and corporate clients, who require privacy to maintain their competitive edge in the marketplace.
The growing need for blockchain security later resulted in the launch of privacy coins. By definition, these coins are a type of cryptocurrency that offers users anonymity and confidentiality when making transactions. To do this, these coins rely on sophisticated cryptographic techniques to hide transaction details such as the sender, recipient and amount sent. While privacy coins work in theory, the level of technical expertise required to implement these features was deemed too complex for widespread adoption. Therefore, the market-wide problem becomes enabling confidential assets with privacy features native to privacy coins without needing the technical expertise to release them en masse.
Improving security on an industrial scale
With a clear need for advancements in grassroots privacy, a network that works with enterprise-level security is deemed necessary to promote cryptocurrency adoption. Some of the key requirements of this solution include the ability to serve a huge user base, especially given the huge values traded daily in the decentralized finance (DeFi) industry, while at the same time making it impossible for an outsider to identify specific assets involved in a transaction.
Other important properties are untraceability, which means that the identity of the sender cannot be determined. Detachability is also key, as it is impossible to distinguish if more than one transaction has been sent to the same recipient. In addition, the indistinguishability of assets makes it difficult to determine which assets were involved in a particular transaction. At the same time, privacy ensures that the amount of a confidential asset traded remains secret. Finally, IP obfuscation must also be considered as it becomes almost impossible to trace the geographic location of the transaction sender.
For this reason, experts agree that a solution like this would become the critical layer of security that DeFi currently lacks, as it provides enterprise-level security that is essential for transactions involving significant amounts of digital assets. In addition, the added layer of security will give users a sense of security and reassurance, increasing trust in the DeFi industry on an individual and corporate level. With the deployment of this network, potential use cases are believed to extend to a wide range of industries, including financial services, healthcare, and real estate.
Set a new priority
The resulting new base is controlled by Zano, a secure and scalable cryptocurrency designed for use in e-commerce applications. Under the upcoming Zarcanum fork, Zano will become available to the public as a highly advanced and secure foundation for modern blockchain technology. Complete with a hybrid proof-of-work and proof-of-stake consensus support with confidential transactions and hidden-amount integrations, Zano will provide a full suite of digital asset security controls.
Commenting on this release, a member of the team shared, “As far as we know, all generation 1 token standards suffer from the same weaknesses as generation 1 cryptocurrencies: full, non-optional, naked transparency. Like a cookie consent popup with no opt-out button. Transaction data is detailed, potentially compromising and available to anyone through the relevant block explorer.”
Therefore, by providing a more secure foundation, the Zano team is able to encourage the building of a new class of decentralized apps and digital assets leveraging Zarcanum’s security. With these foundations, Zano becomes an attractive choice for individuals and organizations looking to issue their own currency and digital tokens on a blockchain that is significantly more secure than first-generation cryptocurrencies.
Zano representatives also shared: “Zano Confidential Assets allows anyone to easily spend their own currency and digital tokens on the Zano chain – assets secured by the same mechanisms that make Zano itself so much more secure than first-generation cryptocurrencies, namely hidden addresses, hidden amounts and IP obfuscation.”
disclaimer. Cointelegraph does not endorse any content or product on this page. While we strive to provide you with all the important information we can obtain in this sponsored article, readers should do their own research before taking any action with respect to the company and take full responsibility for their decisions, nor should this article be considered as investment advice.