Anonymous Transactions through Multisig Escrow

Hi Everyone,

After the flash crash last Monday on BTC-E which took the price as low as $309/BTC, prices rebounded to the $500/BTC range.  The flash crash was similar to the one that happened on bitfinex on the 14th (margin calls and stop losses cascading after large market sells).

Other news:
  • BitsharesX (bank and exchange DAC) climbs over 100% through the week:  This makes it the third largest crypto, only smaller than litecoin and bitcoin.  I was not able to find a good reason for this jump and I am still skeptical of its long-term viability (particularly the concept of market pegged assets:
  • Storj, a decentralized cloud storage system (i.e. distributed Dropbox), raises 910 BTC in crowdfunding:
  • Nxt asset nxttycoin rallied 150% over the past two weeks:  nxtty is an end-to-end encrypted mobile texting/communication app.
  • Crypti, and altcoin which rewards users for spending their coins at merchants, has been gaining traction recently:  From a cursory glance, it seems like the system is highly centralized in how it determines which accounts are merchants versus which accounts are consumers.
  • NYDFS extends the commenting period for virtual currency regulation:
  • Wedbush Securities publishes a new paper on bitcoin volatility:
  • Chain, a blockchain analytics company, raises a $9.5m investment round:
  • Coinbase acquires, another blockchain analytics company:  Blockchain analytics seems to be the hot thing recently.  Earlier in July, Tradeblock, yet another blockchain analytics company raised $2.8m:
I recently came across a PoW(scrypt)/PoS hybrid altcoin called supercoin.  Beside having lottery-like superblocks, they also have a anonymity mechanism based on multisig escrow.

The Sender elects a Mixer to serve is an anonymizing intermediary between him and the receiver.  To keep the Mixer honest, the sender also employs a Guarantor and a 2-of-3 multisig address.  The details are below:

I think this mechanism is interesting because it almost works.  By itself, the mechanism fails when Sender and Guarantor collude against Mixer.  This could be partially remedied by a reputation system since Mixer is allowed to reject Guarantors he doesn't trust.  The another problem is that the Guarantor knows both Sender and Receiver so there is some partial loss of anonymity there.  Finally, blockchain timing analysis could reveal a possible relationship between Sender and Receiver since Mixer is known to the network as one of many mixers (you could match up inbound txns to Mixer with outbound txns from Mixer).  All in all, it's a clever mechanism but I don't think it fully works yet.  At least the mechanism is more clever than most of the multisig escrow mechanisms involving customers and merchants posting collateral:

Kevin & Team Buttercoin
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