A new coin has begun swimming in the privacy coin pool. Iron Fish ($IRON), which protects transactions using zk-SNARKs, is launching its public testnet today, the culmination of nearly two years of building. Anyone can now run and mine a full Iron Fish node.
With $5.3 million in funding behind it from the likes of Electric Capital, Slow Capital, Juan Benet and Balaji S. Srinivasan, Iron Fish is betting there is still a demand for privacy coins in a crowded market.
An allusion to the power of cryptography to protect and defend, the name Iron Fish comes from the U.S. Navajo Code Talkers who, in World War II, used it as a codename for a submarine.
“Iron Fish is a new privacy-focused cryptocurrency where every transaction is private, using the strongest privacy mechanism known today based on zero-knowledge proofs,” Elena Nadolinski, CEO of Iron Fish, told CoinDesk exclusively in an email. “As we continue to add features, Iron Fish will become a shielded layer for many assets, even ones on different chains, and provide a platform for true digital cash (via fully private stablecoins).”
Zero-knowledge proofs
Iron Fish uses zk-SNARKs, a type of zero-knowledge proof. A zero-knowledge proof (ZKP) is a cryptographic technique used to prove and verify a statement without revealing the underlying data. Essentially, zk-SNARKs shield Iron Fish users’ balances and user identities.
“In Iron Fish, zero-knowledge proofs allow you to make a transaction without revealing your balance, or the recipient, or even who you are — instead, there’s a cryptographic proof accompanying an encrypted transaction that simply proves you have enough funds to cover it,” said Nadolinski. “In contrast, Bitcoin or Ethereum transactions are a permanent ledger of all your transactions in plaintext.”
Iron Fish also uses the Sapling protocol, developed by Zcash, for constructing and verifying shielded transactions in the context of a blockchain.
“I believe that over the next few years, zk-SNARKs and privacy technologies will unlock previously inconceivable design spaces,” said Jill Carlson, a principal at Slow Ventures. “Elena has a pragmatic vision for how to get there. Iron Fish promises to fill the digital cash void that crypto has so long promised to us.”
Nadolinski said she wants developers, cryptographers and crypto enthusiasts to come join the Iron Fish discourse. This is in part why Iron Fish uses a modern, easily extensible codebase to whichg anyone can contribute, according to Nadolinski. Iron Fish uses Rust coding language for the cryptographic aspects and Typescript for everything else.
“Iron Fish makes it easy for developers to work with zero-knowledge in crypto,” said former Coinbase CTO Balaji Srinivasan. “This is no small feat and due to Elena’s engineering prowess and that of her team.”
Why now?
There are already large privacy coin projects on the cryptocurrency scene, such as Monero and Zcash, as well as improvements being actively developed to make Bitcoin more private.
Nadolinski said despite there being a huge demand for privacy, no privacy coin has “won” yet.
In a blog post announcing the Iron Fish testnet launch, she notes that in 2021 alone, the private messaging app Signal saw installs skyrocket after Whatsapp announced changes to its terms of service around data use. Encrypted email service ProtonMail saw a threefold rise in usage and privacy-focused search engine DuckDuckGo’s growth has “become exponential.”
A page on the Iron Fish website compares its privacy features to other cryptocurrencies like zcash, grin and bitcoin.
“Existing privacy coins all have drawbacks on privacy, accessibility or both,” said Nadolinksi. “Iron Fish does not compromise on privacy, while [being] fully focused on making it accessible/easy to use and expanding it to support multiple assets and bridges to other chains, and provide a platform for true digital cash.”
Privacy coin delistings
Iron Fish also enters the scene amid a rash of privacy coins being delisted, but Nadolinski remains unconcerned.
“We’re bringing the same expectations around financial privacy that you have in the analogous world to crypto,” she said. “Regulatory concern with privacy coins arises from the myth that law enforcement won’t be able to catch bad actors. But just like in the real world when law enforcement would go acquire records when a suspicion of a crime occurs (e.g. acquire bank records for an organization or individual), so can law enforcement go to an exchange or other crypto-issuing body and acquire ‘view keys’ for an account (which Iron FIsh supports).”
These “view keys” give the holder read-only access to all activity associated with that particular account. Iron Fish (and other privacy coins) also support encrypted memo fields facilitating compliance with the FATF rule (Travel Rule) for Virtual Asset Service Providers (VASPs) by allowing them to keep a record of information for the reason behind transfers.
Nadolinski stresses that, compared to other cryptocurrencies, privacy coins give users an experience more similar to the one they would have in the real world when it comes to privacy expectations.
“Privacy coins have a bad case of bad marketing, that they are something nefarious and only to be used for illegal activity, but that’s not true,” she said. “Take doors on houses or passwords for bank accounts, both of which are precautions most people take even though they might say they have nothing to hide.”