Department of Homeland Security Turns Attention to Monero, Zcash
- Can anonymous cryptocurrencies survive the American internal security services?

The US Department of Homeland Security, the branch of the American government which manages areas such as border control, terrorism, cyber-crime, and disaster management, intends to design a system to monitor anonymous Cryptocurrencies Cryptocurrencies By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the networks which are used to authenticate blockchain technology. Cryptocurrencies can be thought of as systems that accept online payments which are denoted as “tokens.” Tokens are represented as internal ledger entries in blockchain technology while the term crypto is used to depict cryptographic methods and encryption algorithms such as public-private key pairs, various hashing functions, and an elliptical curve. Every cryptocurrency transaction that occurs is logged in a web-based ledger with blockchain technology.These then must be approved by a disparate network of individual nodes (computers that maintain a copy of the ledger). For every new block generated, the block must first be authenticated and confirmed ‘approved’ by each node, which makes forging the transactional history of cryptocurrencies nearly impossible. The World’s First CryptoBitcoin became the first blockchain-based cryptocurrency and to this day is still the most demanded cryptocurrency and the most valued. Bitcoin still contributes the majority of the overall cryptocurrency market volume, though several other cryptos have grown in popularity in recent years.Indeed, out of the wake of Bitcoin, iterations of Bitcoin became prevalent which resulted in a multitude of newly created or cloned cryptocurrencies. Contending cryptocurrencies that emerged after Bitcoin’s success is referred to as ‘altcoins’ and they refer to cryptocurrencies such as Bitcoin, Peercoin, Namecoin, Ethereum, Ripple, Stellar, and Dash. Cryptocurrencies promise a wide range of technological innovations that have yet to be structured into being. Simplified payments between two parties without the need for a middle man is one aspect while leveraging blockchain technology to minimize transaction and processing fees for banks is another. Of course, cryptocurrencies have their disadvantages too. This includes issues of tax evasion, money laundering, and other illicit online activities where anonymity is a dire ingredient in solicitous and fraudulent activities. By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the networks which are used to authenticate blockchain technology. Cryptocurrencies can be thought of as systems that accept online payments which are denoted as “tokens.” Tokens are represented as internal ledger entries in blockchain technology while the term crypto is used to depict cryptographic methods and encryption algorithms such as public-private key pairs, various hashing functions, and an elliptical curve. Every cryptocurrency transaction that occurs is logged in a web-based ledger with blockchain technology.These then must be approved by a disparate network of individual nodes (computers that maintain a copy of the ledger). For every new block generated, the block must first be authenticated and confirmed ‘approved’ by each node, which makes forging the transactional history of cryptocurrencies nearly impossible. The World’s First CryptoBitcoin became the first blockchain-based cryptocurrency and to this day is still the most demanded cryptocurrency and the most valued. Bitcoin still contributes the majority of the overall cryptocurrency market volume, though several other cryptos have grown in popularity in recent years.Indeed, out of the wake of Bitcoin, iterations of Bitcoin became prevalent which resulted in a multitude of newly created or cloned cryptocurrencies. Contending cryptocurrencies that emerged after Bitcoin’s success is referred to as ‘altcoins’ and they refer to cryptocurrencies such as Bitcoin, Peercoin, Namecoin, Ethereum, Ripple, Stellar, and Dash. Cryptocurrencies promise a wide range of technological innovations that have yet to be structured into being. Simplified payments between two parties without the need for a middle man is one aspect while leveraging blockchain technology to minimize transaction and processing fees for banks is another. Of course, cryptocurrencies have their disadvantages too. This includes issues of tax evasion, money laundering, and other illicit online activities where anonymity is a dire ingredient in solicitous and fraudulent activities. Read this Term like Monero and Zcash.
The plan is described in a document called the 'Small Business Innovation Research (SBIR) FY19 Pre-Solicitation'. The document proposes a number of areas in which the department could spend its massive budget in 2019. The proposals are open to consultation until the 18th of December.
Phase I, II and III
It intends to "design a blockchain analysis ecosystem or modify an existing one" in 'Phase I'; 'Phase II' involves demonstration of a prototype, in which a number of representative transactions would be analysed; 'Phase III' is the application of the system.
Anonymity and the blockchain
There is a widely held misunderstanding that cryptocurrency transactions are anonymous - in fact, they are pseudonymous. Transactions are openly recorded and cannot be deleted, and the contents of all wallets are open to public view. However, the identity of the owner of a wallet need not be disclosed.
It was in January 2018 when a product for tracking Bitcoin first emerged. Crystal, released by San Francisco-based blockchain software company BitFury, allows law enforcement to detect suspicious behaviour on the blockchain and determine wallet ownership, providing evidence that can be used in court.
Monero and Zcash came about because of market demand for anonymity. XMR, Monero's cryptocurrency, offers users the option of hiding transaction amounts, creating stealth addresses, and obfuscating the path of a transaction. Note that illegality is not the only reason that someone might have for wanting to hide their transactions; avoiding the taxman could be a reason, as could belief in the principle that a person should be able to exchange their money without being watched (as people can currently do with cash).
However, as blockchain businesses aim are increasingly accepted into the mainstream, and big-money investors get involved, anonymous coins begin to stand out as being in defiance of existing financial law. In Japan, for example, these coins have been banned by the cryptocurrency industry's own self-regulatory organisation.
The DHS is the youngest branch of the American government, created after the attack on New York on September 11, 2001. It is also one of the largest, with a budget of $44.2 billion in 2018. It has requested a 7.8 percent increase in 2019.
The US Department of Homeland Security, the branch of the American government which manages areas such as border control, terrorism, cyber-crime, and disaster management, intends to design a system to monitor anonymous Cryptocurrencies Cryptocurrencies By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the networks which are used to authenticate blockchain technology. Cryptocurrencies can be thought of as systems that accept online payments which are denoted as “tokens.” Tokens are represented as internal ledger entries in blockchain technology while the term crypto is used to depict cryptographic methods and encryption algorithms such as public-private key pairs, various hashing functions, and an elliptical curve. Every cryptocurrency transaction that occurs is logged in a web-based ledger with blockchain technology.These then must be approved by a disparate network of individual nodes (computers that maintain a copy of the ledger). For every new block generated, the block must first be authenticated and confirmed ‘approved’ by each node, which makes forging the transactional history of cryptocurrencies nearly impossible. The World’s First CryptoBitcoin became the first blockchain-based cryptocurrency and to this day is still the most demanded cryptocurrency and the most valued. Bitcoin still contributes the majority of the overall cryptocurrency market volume, though several other cryptos have grown in popularity in recent years.Indeed, out of the wake of Bitcoin, iterations of Bitcoin became prevalent which resulted in a multitude of newly created or cloned cryptocurrencies. Contending cryptocurrencies that emerged after Bitcoin’s success is referred to as ‘altcoins’ and they refer to cryptocurrencies such as Bitcoin, Peercoin, Namecoin, Ethereum, Ripple, Stellar, and Dash. Cryptocurrencies promise a wide range of technological innovations that have yet to be structured into being. Simplified payments between two parties without the need for a middle man is one aspect while leveraging blockchain technology to minimize transaction and processing fees for banks is another. Of course, cryptocurrencies have their disadvantages too. This includes issues of tax evasion, money laundering, and other illicit online activities where anonymity is a dire ingredient in solicitous and fraudulent activities. By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the networks which are used to authenticate blockchain technology. Cryptocurrencies can be thought of as systems that accept online payments which are denoted as “tokens.” Tokens are represented as internal ledger entries in blockchain technology while the term crypto is used to depict cryptographic methods and encryption algorithms such as public-private key pairs, various hashing functions, and an elliptical curve. Every cryptocurrency transaction that occurs is logged in a web-based ledger with blockchain technology.These then must be approved by a disparate network of individual nodes (computers that maintain a copy of the ledger). For every new block generated, the block must first be authenticated and confirmed ‘approved’ by each node, which makes forging the transactional history of cryptocurrencies nearly impossible. The World’s First CryptoBitcoin became the first blockchain-based cryptocurrency and to this day is still the most demanded cryptocurrency and the most valued. Bitcoin still contributes the majority of the overall cryptocurrency market volume, though several other cryptos have grown in popularity in recent years.Indeed, out of the wake of Bitcoin, iterations of Bitcoin became prevalent which resulted in a multitude of newly created or cloned cryptocurrencies. Contending cryptocurrencies that emerged after Bitcoin’s success is referred to as ‘altcoins’ and they refer to cryptocurrencies such as Bitcoin, Peercoin, Namecoin, Ethereum, Ripple, Stellar, and Dash. Cryptocurrencies promise a wide range of technological innovations that have yet to be structured into being. Simplified payments between two parties without the need for a middle man is one aspect while leveraging blockchain technology to minimize transaction and processing fees for banks is another. Of course, cryptocurrencies have their disadvantages too. This includes issues of tax evasion, money laundering, and other illicit online activities where anonymity is a dire ingredient in solicitous and fraudulent activities. Read this Term like Monero and Zcash.
The plan is described in a document called the 'Small Business Innovation Research (SBIR) FY19 Pre-Solicitation'. The document proposes a number of areas in which the department could spend its massive budget in 2019. The proposals are open to consultation until the 18th of December.
Phase I, II and III
It intends to "design a blockchain analysis ecosystem or modify an existing one" in 'Phase I'; 'Phase II' involves demonstration of a prototype, in which a number of representative transactions would be analysed; 'Phase III' is the application of the system.
Anonymity and the blockchain
There is a widely held misunderstanding that cryptocurrency transactions are anonymous - in fact, they are pseudonymous. Transactions are openly recorded and cannot be deleted, and the contents of all wallets are open to public view. However, the identity of the owner of a wallet need not be disclosed.
It was in January 2018 when a product for tracking Bitcoin first emerged. Crystal, released by San Francisco-based blockchain software company BitFury, allows law enforcement to detect suspicious behaviour on the blockchain and determine wallet ownership, providing evidence that can be used in court.
Monero and Zcash came about because of market demand for anonymity. XMR, Monero's cryptocurrency, offers users the option of hiding transaction amounts, creating stealth addresses, and obfuscating the path of a transaction. Note that illegality is not the only reason that someone might have for wanting to hide their transactions; avoiding the taxman could be a reason, as could belief in the principle that a person should be able to exchange their money without being watched (as people can currently do with cash).
However, as blockchain businesses aim are increasingly accepted into the mainstream, and big-money investors get involved, anonymous coins begin to stand out as being in defiance of existing financial law. In Japan, for example, these coins have been banned by the cryptocurrency industry's own self-regulatory organisation.
The DHS is the youngest branch of the American government, created after the attack on New York on September 11, 2001. It is also one of the largest, with a budget of $44.2 billion in 2018. It has requested a 7.8 percent increase in 2019.