Jul 28, 2014

Johns Hopkins Team Creating Zerocoin to Compete with Bitcoin

A team at Johns Hopkins University in Baltimore is working to create a digital currency system that is totally anonymous. The idea was spurred by problems with Bitcoin.

Johns Hopkins Team Creating Zerocoin to Compete with Bitcoin

Researchers at  Johns Hopkins University in Baltimore are working to create a digital currency -- Zerocoin -- an untraceable currency that would compete with other virtual moneys such as  Bitcoin, reports  The Baltimore Sun.

If you haven’t used it, Bitcoin’s website describes it as a way to manage financial transactions with no central authority or banks.

Some critics say Bitcoin and similar digital systems enable money laundering and other criminal activity, the Sun says.

Matthew Green, the Hopkins assistant professor of computer science leading the Zerocoin project, told the Sun there is a need for anonymous financial transactions. The goal of his team’s work is to create a computer code that provides the same level of privacy that people have when exchanging traditional forms of money. 

Two Bitcoin executives have been arrested in recent months as part of the fallout of  Silk Road, a $1.2 billion online marketplace for illegal drugs, the newspaper says. Prosecutors in Maryland and New York charge that Bitcoin was used to make purchases on Silk Road.

According to  Bloomberg News, Charlie Shrem, the vice chairman of the  Bitcoin Foundation, was charged by federal prosecutors with conspiring to launder more than $1 million in the virtual currency.

Virtual currencies are "mined" when computers compete to solve complex mathematical formulas — the first to solve a formula is rewarded with 25 Bitcoins. The Sun says Bitcoin transactions are recorded in a public ledger which shows the size, time and number of Bitcoins sent to prevent duplication

The Johns Hopkins team says patterns in the ledger can be traced back to the user, so it isn’t truly anonymous.

Zerocoin was envisioned as computer code that would add anonymity to Bitcoin transactions, the newspaper says, but after resistance from some Bitcoin advocates it is being developed as a separate currency.

>>Read the Baltimore Sun's full story on the creation of Zerocoin at:  http://www.baltimoresun.com/news/maryland/bs-md-hopkins-bitcoin-20140201,0,1223396.story

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