In the field of cryptocurrency design, there is a critical question of whether we can build, or have already built, a cryptocurrency that both (1) is highly efficient at scale (i.e., capable of providing fast low-fee transactions to many users), and (2) affords its users "privacy."
For (1), I would define highly efficient at scale in a functional sense by benchmarking against the average transaction time and fee of Solana or other suitably efficient cryptocurrency for a given whole-network transaction rate or similar metric of network activity. For example, I would say that cryptocurrency C satisfies (1) if and only if its long-time geometric means of transaction time and fee at a transaction rate R are both at or below the corresponding values for Solana.
For (2), I see privacy as meaning, at a minimum, that (2.a) the transacted amounts are accessible only to the sender and recipient and (2.b) there is no way to identify a user except by detective work external to the cryptocurrency network (such as sending subpoenas to exchanges, searching physical property, etc.). Note that for both (2.a) and (2.b) I make two assumptions that are frequently implicit in reasoning about cryptocurrency design: I assume that the network is exactly as specified, so man-in-the-middle attacks are excluded. I also assume that transfers of private information external to the cryptocurrency network—such as through spoofing, keylogging, collusion, hacks of company databases, and so on—do not occur.
Property (2.a) has been called confidentiality, and property (2.b) has been called anonymity.
I am not an expert in individual cryptocurrencies, but as of November 2023 it appears that
- Solana satisfies (1) and (2.a) but not (2.b).
- Monero, Secret Network, and perhaps several other "privacy coins" satisfy (2.a) and (2.b) but seem less capable of satisfying (1).
- Many other cryptocurrencies appear to satisfy neither (1) nor (2.a) nor (2.b).
Any thoughtful additions or refinements to this summary would be appreciated.
My question is this: Can we achieve (2.b) for Solana (or any other cryptocurrency that satisfies (1) and (2.a)) simply by designing wallets and other cryptocurrency accounts to create a new public key for each transaction? Relatedly, is it technically possible and reasonable to use a new public key for each transaction at scale?