What is PIVX?
What is PIVX?
PIVX stands for Private Instant Verified Transaction. It is a cryptocurrency that aims to provide users with a borderless alternative to fiat currency that is fast, secure, private, and stable. Inspired by Bitcoin, PIVX leverages blockchain technology in an attempt to revolutionise the way transactions are done and business is conducted. Although Bitcoin paved the way, it has so far failed to become widely accepted and adopted as a currency. Instead, a myriad of cryptocurrencies popped into existence and as a result some have started to view the cryptocurrency space not as one that provides an alternative to fiat currency, but rather as a place of excessively risky investment.
PIVX wishes to bring cryptocurrency back to its roots while also improving on the protocol that Bitcoin introduced. Rather than aiming itself towards the tech-savvy, the PIVX team aims to bring transactions without middle-men to the larger public. Furthermore, PIVX aims to improve upon Bitcoin by providing truly private transactions, lower transaction fees, faster transactions, a model for distributed governance of the protocol, and a more environmentally friendly consensus algorithm. Let’s take a closer look at these features:
Truly Private Transactions
At its advent, Bitcoin was often hailed as a means of conducting anonymous transactions across the internet. The network allowed users to perform transactions between addresses on the blockchain. These addresses looked like seemingly random strings of characters and were seen as hard to link to an individual. This aspect of blockchain transactions gave users an illusion of anonymity. However, because all transactions are recorded on the blockchain indefinitely, it turns out that, once an address can be linked to a person, their transactions are no longer private. With some exceptions, many ways to acquire or sell Bitcoin require users to provide information regarding their identity. Once this is done, their identity can be linked to an address on the blockchain. Coins going through this address can then be traced indefinitely. From a privacy perspective, the Bitcoin network offers little protection that can be relied on. This is not just an issue for those who wish to hide funds, but can also cause innocent people to become implicated in crimes which had nothing to do with them. If coins that you own can be traced back to a wallet of someone who is known to have conducted illegal activities, you may end up being questioned by authorities. With such scenarios in mind, the PIVX team argues that privacy needs to be a central element of a digital currency.
PIVX aims to enable truly private transactions on its network using zPIV, which leverages the Zerocoin protocol. The Zerocoin protocol uses a coin mixing service with zero knowledge proof that severs any link between sender and receiver. To do a private transaction, the wallet converts your PIV into zPIV. These zPIV are pooled on the public ledger. The wallet can then send a zero-knowledge proof (a proof that does not require disclosure of information about the balance or associated addresses) to the blockchain. This zero-knowledge proof then allows zPIV to be converted back to PIV and sent to the target address. Through the use of this protocol, coins no longer have a history attached to them, because in the conversion from zPIV to PIV, completely new coins are created. Therefore, when you send zPIV, the target of your transaction instead receives completely ‘fresh’ PIV, thereby guaranteeing your anonymity. Furthermore, by using zero-knowledge proofs, zPIV allows users to mask the balance of their wallets, which helps them to avoid becoming a target of thieves and scammers.
Cheap and Almost Instantaneous Transactions
PIVX makes it possible for transactions to be broadcast and confirmed in less than one second using SwiftX. To accomplish this, PIVX uses master nodes for the verification of these transactions. Masternodes are special nodes with a balance of at least 10000 PIVX who will perform special actions on the network. A SwiftX transaction is quickly sent through the masternode network and achieves near instantaneous confirmation without risking double-spend transactions.
PIVX is run as a Decentralised Autonomous Organisation (DAO). The PIVX community governs itself and no single entity or small collection of entities have the ability to dictate the direction of the network and its growth. PIVX aims to have its members govern the network so that they can decide based on their collective best interests. This form of governance leverages the Masternode network by allowing masternode operators to vote on community proposals which are intended to improve PIVX. The network currently has well over 1000 masternodes in operation, which spreads power over the network across many different actors and makes a central authority unnecessary.
Masternodes can vote on proposals, but other actors are also free to influence the future of PIVX by offering their proposal for communication. With such a system, the PIVX network takes a bottom-up approach to the development of the network. Masternodes can be run by anyone, although 10000 PIV and a certain degree of technical knowledge is required.
Environmentally Friendly Consensus Algorithm
Bitcoin uses a so-called Proof of Work algorithm. This requires its ‘miners’ to spend resources to secure the network. These resources come in the form of computing power which requires a lot of electricity. Proof of Work algorithms use this expended computing power as a means to facilitate trust in the network, but it does so at considerable cost to our environment. To facilitate trust in a more efficient manner, PIVX uses a Proof of Stake algorithm. Similar to the rewards that miners receive in a Proof of Work algorithm when they work on the security of the network, a Proof of Stake algorithm rewards stakers for their efforts. However, the calculations that stakers need to do are far less complicated than those done by miners on a Proof of Work algorithm. Proof of stake does not use expended computer power as a way to facilitate trust, but rather has its stakers show ownership of coins in order to sign blocks of transactions. Introducing false transactions to the network successfully would require a prohibitively large number of coins to be held by a single malicious actor and thereby becomes too costly to attempt.
Besides the environmental aspect, proof of stake also requires much less sophisticated hardware. Where securing the Bitcoin network has become limited to the largest actors with the most funds available, Proof of Stake requires few resources to start staking. This opens up the possibility of earning rewards for securing the network to all users and investors. As such, anyone who can run the wallet software, something that can be done on practically any computer with an internet connection, can take part in securing the network and earn staking rewards because of it. Like interest on a bank account, owning coins on the PIVX network allows you to increase your funds over time through staking rewards.