FAQ

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Compared to other privacy coins, Veil offers an unprecedented level of always-on privacy and anonymity. With Veil, you never have to worry about accidentally making a non-private transaction. Furthermore, in the interest of long-term viability, the Veil network is designed to provide funding for its ongoing operations as well as continued research and development in the fields of cryptography and blockchain technologies.

In our view, the combination of industry-leading privacy technology, with a network designed for sustainability, makes Veil one of the most compelling cryptocurrencies in the world.

There are, in principle, four primary ways to obtain Veil:

  • You can mine Veil via its Proof-of-Work consensus system.
  • You can purchase Veil on a centralized or decentralized exchange.
  • You earn Veil by “staking” it in your wallet.
  • You can perform “bounty” work for the project, receiving Veil as compensation.

All other Zerocoin-based privacy coins have a transparent (public) “Basecoin” layer, meaning a user can inadvertently make a non-private transaction. Veil secures its Basecoin layer with RingCT, providing always-on full-time privacy for its users.

Another key difference is that the Zerocoin deterministic wallet will be integrated with Bitcoin Improvement Proposals 39 and 44 (BIP39/44). The seed for both the Zerocoin wallet and Basecoin wallet will be the same, requiring users to only backup a single seed. This stands in contrast to many other Zerocoin-based coins that either have a seperate backup seed for their Zerocoins, or none at all.

Veil was founded by James Burden, known as 4x13 in the project. James is a recognized industry expert in the area of crypto-privacy, and has a track record of founding and leading successful cryptocurrency projects, such as PIVX. Through bootstrap funding, James assembled a founding team of leading blockchain developers, designers and experienced operations staff, many of whom are profiled on our site’s Team page.

Veil currently uses the RSA challenge semiprimes for our Zerocoin accumulator setup. Researching ways to design a new, trustless setup (with comparable performance) is considered a top priority for future development by Veil Labs.

Our coin emission table is presented in the Technology section of the website, and is capped at 300 million coins.

In order to avoid an ICO and pre-mine, the Veil project has been pre-funded in excess of one million USD by its founder. As a mechanism to recover this investment, a founder’s reward is established, which tapers and expires over a five-year period.

The operations budget is established to fund the team (currently over 30 individuals), and the Labs budget is established to fund ongoing research and development in the areas of advanced cryptography and blockchain technologies.

The X16R hashing algorithm was introduced, by the Ravencoin project, in an effort to resist the development of dedicated ASICs, thereby increasing the decentralization of mining. For this reason, X16R was selected as the baseline for Veil’s time-limited mining phase.

Threatening decentralization, Field-Programmable Gate Array (FPGA) code for X16R is known to exist, and expected to become widely available soon. To address this risk, Veil has created an implementation of the algorithm, called X16RT, which preserves almost all the benefits of X16R, but with an added barrier against FPGAs. In particular, the ordering of blocks in X16RT have to follow different rules to be accepted by Veil nodes.

While mining pools, and even exchanges, will not have to make modifications on the software side, software that calculates block hashes and submits them to the network will.

In Zerocoin-based networks, Zerocoins exist in fixed denominations, e.g 10, 100, 1000, 10000, etc. Without going into detail, this provides anonymity in a similar way cash exists in fixed denominations. Basecoin is that portion of your wallet’s balance, that’s not convertible to Zerocoin denominations. Both Basecoin and Zerocoin represent the same token, in our case Veil, with the difference being that Zerocoin allows you to spend your Veil without having a link between yourself and the spend.

For example, say you had one 100 Zerocoin Veil, and purchased something that cost 7 Veil. Your 100 Zerocoin Veil would be sent to the network, and you’d receive 93 Basecoin Veil in return. Your Veil wallet would convert 90 of those Basecoin to nine Zerocoin denominations of 10, leaving 3 Basecoin Veil in your wallet. The Basecoin balance in your wallet is commonly referred to as your “change”.

In Veil your wallet will automatically mint your available balance into Zerocoins, the standard denomination for autominting is 10, but can be changed to 100, 1000 or 10000 based on user preferences. Any amount below 10 is not eligible to be minted into Zerocoins, and must be held as Basecoin intill atleast 10 Basecoin is acquired.

Something important to remember is that in Veil, contrary to other Zerocoin-based networks, the Basecoin state is also anonymized; in our case, with the use of RingCT technology. This results in what we call “always-on” privacy—such that the spending of both Zerocoin and Basecoin Veil are protected.

Veil’s hybrid consensus systems includes “Proof-of-Stake”, in which individual coin holders, who have “staking” enabled in their wallets, can compete to process the network’s transaction blocks. After each one-minute block processing period, for blocks eligible for Proof-of-Stake validation the network randomly selects a wallet for validation, based on the amount of Veil that is staked in the wallet. The chosen wallet, after successfully validating the current block of network transactions, receives new Veil as compensation (a “reward”).

What makes Veil’s PoS implementation particularly attractive to those who value anonymity is that it can exclusively be done through Zerocoin, allowing Veil users to earn a yield on their holdings, while keeping the amount staked private, through a zero-knowledge proof.

To stake, all you have to do is be fully synced and unlock your wallet for staking. This will allow your Zerocoin Veil to stake.

Most crypto “core” wallets store the full ledger of blockchain transactions locally, which for a coin like Bitcoin, requires hundreds of gigabytes of storage, and is continually expanding as new blocks of transactions are added to the ledger.

The Veil wallet offers an option (enabled by default) that removes—“prunes”—those ledger transactions that are not relevant to the wallet owner’s own history of transactions. While the Veil blockchain will be considerably smaller than Bitcoin’s for the foreseeable future, pruning will still save the user considerable local storage space.

Technical observers will rightly recognize that to secure the network, some nodes (wallets) need to maintain the full ledger of transactions. To incentivize for this, when a “full Veil node” processes a transaction block—i.e. a wallet owner willing to allow the local storage of the complete blockchain—that wallet, in addition to the normal staking reward, also receives the transaction fees present in the block (which would otherwise be burned.)

Dandelion is a transaction broadcasting mechanism that reduces the risk of eavesdroppers linking transactions to the source IP.

Dandelion alters the flow of transaction propagation through the network. By splitting the transaction into two phases, called the “stem” and “fluff” phase, it becomes very difficult to link transactions with their source IP.

During the stem phase, each node relays the transaction to a single peer. After a random number of hops along the stem, the transaction enters the fluff phase, which behaves just like ordinary flooding/diffusion. Even when an attacker can identify the location of the fluff phase, it is much more difficult to identify the source of the stem.

Illustration:

                                                 ┌-> F ...
                                         ┌-> D --┤
                                         |       └-> G ...
A --[stem]--> B --[stem]--> C --[fluff]--┤
                                         |       ┌-> H ...
                                         └-> E --┤
                                                 └-> I ...

Stealth addresses allow you to publicly post a static receiving address without anyone being able to see the associated transaction history. This is a big improvement over traditional Bitcoin addresses.

To preserve privacy in traditional Bitcoin addresses the receiver has to be careful to never link himself to any of his addresses and preferably generate a new address after every transaction.

With stealth addresses the receiver does not have to worry about generating a new address after every transaction, or having his name tied to his receiving address. This is achieved by deriving a new one-time public key as the destination for every transaction using the receivers address and random data generated by the sender. This makes it impossible to link any output(the one-time public key) back to the receiving address, allowing users to have a static receiving address linked to their name, without revealing their transactions.

At launch Veil will have stealth addresses for Basecoin transactions, with support for Zerocoin to be added at a later date.