A Ripple cryptographer and software engineer has published a proposed method of ensuring more privacy for transactions on the XRP Ledger.
According to Nik Bougalis who is also the head of Ripple’s C++ team, tag blinding is the solution. In a recent Github Post, Bougalis explains that the XRP Ledger uses both source and destination tags for its transactions. Basically, when a transaction is initiated, the account doing this uses a source tag that carries information about the origin of the transaction. A destination tag then describes where the transaction should end.
Bougalis explains that while destination tags have over 4 billion possible combinations, it still presents a privacy risk, allowing an address to easily be traced to a customer. He writes that a “possible workaround” would be tag blinding, allowing crypto exchanges to assign multiple new tags as often as may be required, to reduce the possibility of correlation to addresses or users.
“A blinded tag is mutated in such a way that it is meaningful only to the sender and the recipient of a transaction, but appears random to everyone else.”
The post also says that if blinded tags are implemented, attackers would have a harder time breaching any transactions on the ledger. However, he admits that exchanges might not be willing to do this as it would complicate their records and their transaction processes. Bougalis specifies that using blinded tags should be seamless.
“This proposal aims to be secure, minimal, and performant; ideally, it should be possible to implement tag blinding as a single function call that does not noticeably increase the time necessary to assemble a transaction. Similarly, using a blinded tag should not make it significantly harder for the intended recipient to process a transaction.”
While increased privacy will mostly be lauded, it could beg the question of transparency in transactions. Most decentralized blockchains are an open book. Anything short of that could easily be kicked against.