What is the most advanced technology for anonymous transactions feature?
I’ve heard about zerocash and coinjoin but which one of them has a technological edge? Are any of these technologies really capable of providing the anonymous transactions feature as opposed to pseudo anonymity?
CoinShuffle has improved upon CoinJoin, but active mixing it not advanced compared to the solutions below.
ZeroCash and CryptoNote have advanced significantly since you asked this question. CryptoNote has been advanced by Monero research lab and has plans to add Confidential Transactions (RingCT). ZeroCash has made advancements in decreasing the size of transactions and the design of the "trusted setup" process described below.
https://lab.getmonero.org/pubs/MRL-0005.pdf
https://www.reddit.com/r/Monero/comments/41vg68/monero_vs_zcash_eli5_fundamental_differences/
https://z.cash/blog/snark-parameters.html
https://blog.okturtles.com/2016/03/the-zcash-catch/
Monero is also teaming up with I2P developers right now on Kovri, an I2P C++ router that will help protect metadata including IP addresses: https://github.com/monero-project/kovri
CoinJoin makes anonymity possible by combining random Bitcoin transactions. The principle is that when you have lots of inputs from multiple addresses and lots of outputs to multiple addresses you can no longer determine what went where and from whom. The problem is that Coinjoin is potentially vulnerable to network analysis and therefore is pseudo anonymous.
Zerocoin originally was supposed to fix the anonymity issue of Bitcoin. The way it’s designed is you take original Bitcoins, turn them into Zerocoins, and then you turn them back into new Bitcoins in another wallet. Currently the technology is being refined to be more efficient; however it’s unlikely to be implemented in Bitcoin. Besides, one of the biggest criticisms of zerocoin is the added computation time required by the process. Also if the proofs (zero-knowledge proofs) were posted to the block chain, this would significantly increase the size of the blockchain.
Another method for anonymous transactions is Stealth Addresses but very few people actually use them. It's not very user friendly at this point in time and is considered rather experimental.
So as you see each of these technologies has its cons and pros. The one protocol that I haven’t mentioned yet is CryptoNote. To my knowledge CryptoNote is the most promising technology for anonymous transactions. The way the untraceable payments are executed there is through something called ring signatures. Here is an explanation of how it works https://cryptonote.org/inside/
Bytecoin (BCN) is the first cruptocurrency based on the CryptoNote protocol. It was launched in 2012. http://bytecoin.org/
Zerocash is on the bleeding edge of cryptographic research right now. It needs a separate implementation, and provides provable anonymity, but at a higher computational cost.
CoinJoin is a simple solution, and easier to understand. While it does not provide the anonymity of Zerocash, it is already implemented (in DarkWallet) and works on the bitcoin blockchain itself. The computational cost is insignificant, as almost regular bitcoin transactions are used.
