Privacy: The Next Step in Blockchain Tech


Blockchains – innovative peer-to-peer transaction settlement layers – are the beating heart behind the growing cryptocurrency ecosystem. Every day, new cryptocurrency projects are developed, and more people rely on blockchain technology to transfer value.

Many find blockchains preferable to centralized payment processors, citing blockchain’s enabling of cryptocurrency networks to achieve transaction consensus without a central authority – a benefit that hypothetically allows individuals to transact anonymously and privately.

However, driven by modern developments in blockchain forensics, cryptocurrency experts call into question blockchain’s true degree of privacy.

Blockchains: Not So Private After All

When transactions are sent through a cryptocurrency network, they are permanently recorded in that network’s blockchain. This recording includes critical transaction data like user wallet addresses and transaction amounts, that could be used to trace transactions between senders and receivers, and identify individuals by association. describes this risk:

“All Bitcoin transactions are public, traceable, and permanently stored in the Bitcoin network. Bitcoin addresses are the only information used to define where bitcoins are allocated and where they are sent. These addresses are created privately by each user’s wallets. However, once addresses are used, they become tainted by the history of all transactions they are involved with. Anyone can see the balance and all transactions of any address.”

Tools called block explorers make this information easily accessible to everyone. Still, manual transaction tracing is arduous, especially for transactions that have been tumbled.

Tumbling refers to the process of making cryptocurrency transactions through services that send coins through a multitude of random wallets on the way to their destination. This scrambles the path that coins take between wallet addresses, attempting to obfuscate the connections between senders and receivers.

However, modern blockchain analysis softwares has made tracing blockchain transactions, including those which have gone through extensive tumbling, incredibly easy. 

Further, most investors enter the cryptocurrency space through centralized exchanges, such as Binance and Coinbase, which often require members to pass KYC (Know Your Customer). KYC is the process by which exchanges use photo identification, proof of residence, and other personally-identifiable information to verify their users’ identities. Together, blockchain analysis softwares and KYC make it possible to trace any transaction chains originating from centralized exchange wallets back to members.

As it is today, blockchain technology needs an upgrade if it is to deliver the degree of privacy necessary to uphold users’ anonymity, and thus, their freedoms.

No Freedom Without Privacy

Individuals need privacy because at times it is necessary to protect religious, political, professional, and social affiliations. These affiliations can be used by others, governments, and private interests, to discriminate against and profile populations, negatively affecting the balance of power between individuals and the world around them.

Without individual power, people are unable to freely function in a society. Instead, their speech and actions become beholden to the opinions of others. This is unproductive for all involved parties, as it stunts human progress by leaving societal development up to the court of public opinion.

As part of overall privacy needs, financial privacy is very important. Transactions can reveal much about a person – in addition to their religious, political, professional, and social affiliations – such as medical conditions, legal conflicts, and economic status. Individuals should be able to transact privately, without the fear of being watched, judged, or persecuted. Those who are active in political parties or movements, creators of controversial art or literature, political dissidents, and whistleblowers, are particularly at risk.

Neither centralized payment networks nor traditional decentralized blockchain-based cryptocurrencies are equipped to provide the level of financial privacy needed to support individual freedoms.

A Promising Solution

Whenever a problem presents itself, the innovative cryptocurrency community always arrives at a solution – a handful of teams are building “privacy coins” in an attempt to fix the privacy gaps that are present in traditional blockchain architecture.

Monero is the most popular privacy coin, sporting a market cap of over USD 3 Billion. When a transaction is made, Monero’s “RingCT” privacy protocol aggregates that transaction’s coins with the coins of 11 possible senders, meanwhile hiding transaction amounts and receiver addresses. While this provides more privacy than Bitcoin, better solutions exist, as the maximum of 11 senders does not sufficiently obfuscate transaction origins.

As an alternative, experts are turning to xNAV, a privacy coin developed by Navcoin. Like Monero, xNAV also hides transaction amounts and receiver addresses, and aggregates coins from multiple senders before distributing them. However, xNAV has a few key advantages:

  • The coins of all senders (not just 11) within a block are aggregated, greatly increasing senders’ anonymity level.
  • xNAV supports encrypted messaging, allowing senders to input a short message into transactions that only receivers can read.
  • xNAV supports pruning, which enables people to run full nodes with only a fraction of the entire blockchain, in turn enabling people with lower-spec equipment to join the network, increasing the number of nodes, and increasing the network’s degree of decentralization.
  • xNAV supports atomic swaps, which allow users to trade xNAV for other coins directly with each other, meanwhile enjoying all of the benefits that come with Navcoin’s privacy-preserving properties.

This is all made possible due to Navcoin’s self-developed “blsCT” privacy protocol, which it will soon open for use to other cryptocurrency projects. Navcoin will offer Privacy-as-a-Service through its evolving privacy platform, enabling other cryptocurrencies to use its privacy protocol. This will greatly increase the demand for Navcoin, as all fees will be paid with it.


Due to the transaction transparency that is inherent to most cryptocurrencies, Know Your Customer (KYC) regulations, and advancements in blockchain forensics, traditional blockchain implementations lack the level of privacy needed to protect individual freedoms.

Privacy coins like xNAV protect user privacy by hiding transaction amounts along with sender and receiver addresses. Through xNAV, individuals can take back their privacy, bringing the world one step closer to a fairer and just place.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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