How does Iron Fish enable cryptocurrency trading to be privatized in a compliant manner?

Author: Lao Yapi

Introduction

Iron Fish is a brand new cryptocurrency that uses zk-SNARKs and the Sapling protocol to protect every transaction. Anyone can run a node and contribute to its codebase. This article is an original analysis of Iron Fish, recommended for reading. During World War II, the United States recruited Native Americans to send secret communications on the battlefield using their tribal languages, a method that remained unbroken until the late 1960s. When encrypting communication information, it had to be directly translated from English into common military vocabulary in Navajo. Some modern military terms do not have direct translations into Navajo, and in many cases, there are no corresponding words in the ancient language, forcing the U.S. military to improvise. Thus, the term "submarine" was directly translated as "iron fish."

Therefore, the project we are introducing today uses "Iron Fish" as its name, representing the power of cryptography, where a complex modern concept can be described with relatively simple words, and it even includes two tradable commodities (iron and fish) in its name.

Iron Fish is building a cryptocurrency that excels in privacy and accessibility. In our current lives, issuing currency is a primary function of modern governments, which formulate policies to maintain currency stability, allowing the national economy to function. Cryptocurrencies can serve as a hedge against the inflation or deflation brought about by traditional currencies. Iron Fish is a brand new cryptocurrency that uses zk-SNARKs and the Sapling protocol to protect every transaction. Anyone can run a node and contribute to its codebase. With continuously increasing functionalities, Iron Fish will become a shielding layer for many assets, even assets on different chains, and provide a true digital cash platform that will fully realize Satoshi Nakamoto's vision.

Transparent cryptocurrency systems like Bitcoin and Ethereum are inherently the least private transaction methods. The transaction validation of these systems relies on complete transparency. Bitcoin may sometimes be labeled as anonymous or pseudonymous, but that does not mean it is completely private; in fact, all Bitcoin transactions are designed to be fully traceable, and because their transaction validation methods depend on the complete transparency of accounts, Bitcoin and Ethereum transactions are fundamentally not confidential.

Let’s imagine a scenario where "Iron Fish" is even more necessary. Suppose that one day in the future, cryptocurrencies are used for everyday transactions. In this case, scammers could see people's anonymous yet public transactions and trace them back to a wallet, knowing where that person is, what they are doing, and even what they intend to do. Imagine you are purchasing a plane ticket from Beijing to Shanghai and booking a five-night hotel stay; at that moment, someone could guess that my home in Beijing is empty. For example, if I use my cryptocurrency to repair my damaged car at a dealership, then when I go to buy insurance, the insurance company might find that this expense has increased my costs for the next year. The Iron Fish team believes that privacy is a necessary condition for real business and user security. To achieve robust privacy protection, cryptocurrency protocols must prioritize privacy from the very beginning.

Many popular cryptocurrencies are permanent ledgers that can disclose all transaction details. The Iron Fish project team considers this issue very important; this method is equivalent to publishing personal bank statements on Twitter. However, if privacy is highly valued, participating in other coins' networks can be cumbersome for end users and miners. What the Iron Fish project aims to do is combine privacy with accessibility, meaning anyone, anywhere, can access private, decentralized currency.

Iron Fish uses cutting-edge cryptography: zero-knowledge proofs (ZKP), which are a groundbreaking tool in cryptography for proving computations. By using ZKP, private transactions can be constructed that completely hide the sender, receiver, and amount while providing proof of transaction validity. Every transaction on Iron Fish is private—unless the owner grants read-only access through a viewing key, no one can see the account details. This level of privacy is significantly advanced compared to other cryptocurrencies or traditional banking schemes.

It is worth mentioning that the project team has conducted thorough and extensive research on the advantages and disadvantages of PoW, Proof-of-Stake (PoS), and Delegated Proof of Stake systems. Ultimately, PoW systems are generally more secure, have better-understood attack vectors, and provide better pathways to achieve considerable decentralization. PoS systems can sometimes offer better UI/UX and faster block times, but overall, their algorithms do not have more advantages than disadvantages.

As a first-layer blockchain, Iron Fish supports new cryptocurrencies and serves as a privacy layer for other existing cryptocurrencies. Cryptocurrencies are the least private transaction methods, and the transparency of cryptocurrency transactions is the pillar of trustless verification. This means anyone can use data mining techniques to track individual cryptocurrency transactions in real-time. Because cryptocurrency digital wallets have unique addresses, their transactions can be traced by cross-referencing with personal data.

All transactions on Iron Fish are encrypted, hiding transaction information through a cryptographic technique called zero-knowledge proofs, protecting users. Ultimately, as Iron Fish matures and integrates with more existing blockchains, any cryptocurrency transaction can be privatized in a compliant manner. This means that one day, users can enjoy all the advantages of any cryptocurrency without the privacy issues that currently plague it.

The core team of Iron Fish has a motto: to make Iron Fish the "Apple of blockchain," something intuitive, easy to use, and ready to go out of the box. In future iterations, Iron Fish will be able to run directly in the browser without installation or disrupting router settings. At this stage, Iron Fish is a CLI tool designed to be intuitive and easy to use.

Initially, when the project launched, users would transfer their cryptocurrencies to the Iron Fish blockchain, obscuring their assets by anonymizing and encrypting their data, while miners adding to the blockchain would receive fees paid in Iron Fish tokens, $IRON. This incentivizes everyone who wants to transfer their currency to the Iron Fish blockchain to use IRON dollars.

The cryptocurrency community is still exploring the balance between privacy and minimizing the use of cryptocurrencies for crime. Cryptocurrency wallets typically have a private key, similar to a password, that allows users to spend their funds, and a public key that allows users to request funds. Most privacy-protecting cryptocurrencies, including Iron Fish, support viewing keys at the wallet level in addition to private and public keys. Initially, only the wallet creator can access the wallet's private, public, and viewing keys. Even in a fully private system, the holder of the viewing key can see all transactions associated with that wallet, allowing regulated entities to remain compliant and provide audits. The team is also working to increase control over how cryptocurrencies enter and exit the Iron Fish layer, which is a form of monitoring capability for bridges between blockchains to limit hackers' exploitation of the Iron Fish privacy platform.

In May of this year, the project team launched the second incentivized testnet for Iron Fish, a standard way to ensure the stability and bug-free nature of the new blockchain, where a working version of the blockchain is used by a limited queue that identifies issues in the code and attempts to stress-test the system. The second phase is coming to an end, and the third phase is set to launch in the first quarter of 2023, with the goal of launching the mainnet in the third quarter. Participants earn $IRON tokens in exchange for certain types of participation. So far, the second phase testnet has accommodated 11,000 concurrent nodes at its peak. In contrast, the most widely used cryptocurrency, Bitcoin, typically has about 15,000 concurrent nodes. This indicates that running Iron Fish is relatively simple and user-friendly.

Iron Fish aims to become the universal privacy layer for cryptocurrencies, the true SSL layer of blockchains. The first step to achieving this goal is to establish a solid foundation by delivering an easy-to-use, privacy-first first-layer blockchain. The project team's roadmap is also gradually formulated as progress is made. In my view, while Iron Fish has grand ideals, the future is promising.