ENIGMA – A Unique, Advanced, Private & Secure Transaction System From The Cloak Team

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Below is our recent interview with Harry Sidiropoulos from Cloakcoin:

Harry Sidiropoulos

Q: Could you provide our readers with a brief introduction to Cloak?

A: Our Digital Privacy Currency CloakCoin enables fast, secure and untraceable transactions with Enigma. Enigma is the heart of CloakCoin and is responsible for the private transactions. CloakCoin offers a 6% interest rate per year through the environmental friendly Proof-of-Stake (PoS) system.

Q: What is Enigma and how does it work?

A: If you need the ultimate in transaction privacy, you need ENIGMA, a unique, advanced, private & secure transaction system from the Cloak Team allowing Cloak Coins to be sent anonymously, while avoiding the need to ‘trust’ other nodes not to steal funds or leak sensitive information.

Alice wishes to send a 100% private currency transaction. In order to do this she uses the wallet to enable ENIGMA alongside CloakShield to supply an extra layer of encryption which elects a series of decentralized ENIGMA nodes to add an additional, untraceable layer of privacy.

Alice’s Cloak wallet then automatically sends a request to the network for other Cloak wallets who have elected to become ENIGMA mixer nodes to obfuscate her transaction. All of this is done privately and securely throughout with no identities or true IP addresses revealed.

Bob has cloaking mode enabled in his wallet and the wallet generates a secure CloakShield encryption channel for communications with Alice’s wallet. Bob’s wallet sends Alice a secure connection, containing encrypted inputs and outputs to commence the transaction.

With this confirmed, Alice, with full anonymity, creates an encrypted ENIGMA transaction containing her true inputs and outputs and Bob’s cloaking (obscured) inputs and outputs. Bob and Alice both sign the ENIGMA transaction before it is submitted to the network for inclusion into a PoS block.

The transaction rewards Bob with his ENIGMA cloaking fee and outputs payment to Alice’s intended recipient. All participants remain fully anonymous and the entire process takes place without need for interaction from wallet holders – only using participants who have elected to do so in order to earn additional rewards.

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Q: Where do you see the cryptocurrency market going in 2018?

A: After crypto assets had an enormous price rally until the end of 2017 we are seeing a correction since the beginning of 2018. BTC corrected from 20,000$ to as low as 6,000 $. There is a chance that BTC could find its bottom there and from there a rally could start any time soon. First targets would be the ATH at about 20,000 $ with a volatile up-trend.

Sadly, there are a lot of scams in the crypto space. User have to be very careful and double check where they want to invest their money. Currently cryptos have nearly no regulations but in our opinion a little regulation would be good for the market but we do not recommend over-regulation.

ICOs are the new IPOs, it’s a great way for startups to collect funds and give out „shares“, the tokens. For users it has to be clear that this kind of investment is very speculative because most ICOs only have an idea and no product on the market.

Well established projects will have a bright future and with time the mass adoption will go forward. With some more regulations the purchase and use of crypto-assets will become easier for the masses. Privacy is a big goal that was and is slightly reduced in recent years. That is why we see a strong need for crypto currencies offering more privacy in transactions that will give freedom to the users.

Q: How do you provide secure communication between nodes?

A: Cloak uses the Enigma system in order to facilitate private/secure transactions.

How does this work?

CloakShield- Node to node communications

On startup, each Cloak wallet generates a [NID_secp256k1] key pair (Cloaking Encryption Key / CEK) to enable them to derive ad-hoc secrets using ECDH with their private key and the recipient’s public key. This communication forms the basis on all node-to-node communications relating to Enigma. This ECDH based encrypted communication is also utilized for onion-routed data, which is handled by CloakShield. CloakShield is a nice name for this collective functionality relating to encrypted node communications.

When onion routing is enabled, the client will attempt to construct a valid onion route for the data using the list of Enigma peers that it is aware of. The node may not have a direct connection to the Enigma peers, but that is not necessary as CloakData (data packed for routing with CloakShield) packets are relayed peer-to-peer. An onion route will typically consist of 3 distinct routes to the destination node, with 3 node hops per route. Multiple routes are used to cope with situations where a routing node drops offline.

Nodes periodically send out an Enigma Announcements to peers to advertise their services for onion routing. Other nodes on the network store the announcements (until they expire or are replaced with an update) and use them to construct the onion routes.

Q: How are stealth and Enigma transactions detected/received?

A: All incoming transactions are scanned. Stealth transactions are scanned for first (using the default ephemeral pubkey contained in a random OP_RETURN TX output). After this, Enigma transactions are then scanned for. Enigma transactions also use the standard ephemeral pubkey, but payments use an additional step involving a further derived key. Enigma outputs are generated using a hash of the ephemeral pubkey, a private stealth address hash and the output index.

When scanning for Enigma transactions, the zero-index payment addresses are generated for each owned stealth address [HASH(ephemeral_pubkey, hash_stealth_secret, 0)]. If a match is found for the zero-index of a stealth address, additional addresses are generated for the remaining indexes [num_tx_outputs] and these are scanned against to detect payments. See “FindEnigmaTransactions” in wallet.cpp for more info.

A similar scanning method is employed by Cloakers prior to signing an Enigma TX to ensure they are getting reimbursed correctly. See “GetEnigmaOutputsAmounts” in wallet.cpp for more info.

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Q: What is on the roadmap for Cloak moving forward?

A: 1) DevelopmentFund
Hence Cloak never had a pre-mine nor was an ICO, funds were always limited and carefully used. With the upcoming dev fund a partial share of every stake will go to a Cloak fund wallet. The funds will be used for further development, marketing & pr and partnerships activities to ensure a healthy development of CloakCoin. Of course the fund will also include a voting system and the community is highly encouraged to take part in the votes where the fund should invest for the future of the Project.

2) Switching to LTC Codebase:
This will enable us to provide Atomic swaps and access to the Lightning network.

3) More Exposure
We are constantly increasing PR & marketing activities and trying to get more merchants accepting payments in CLOAK as well as building up further long-term partnerships.

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