CloakCoin (CLOAK) – Private, Secure, and untraceable
A listener recently asked to have some episodes about privacy coins. I decided to kick off this series with the focus on one of the lesser known privacy coins called CloakCoin.
Before diving into CLOAK let’s talk about why privacy coins exist in the first place
Why would you want a privacy coin?
When most people first hear about privacy coins their minds automatically think it’s for criminals. Well, it’s not.
Why would you want to hide anything? Ask yourself the following questions. Do you have curtains on your windows at home? Do you leave your bank account balance laying around at work for everyone to see?
The answer is no for most and that’s because we like privacy and it’s not because we are criminals.
Here are a few other scenarios that are possible in the near future.
- Hackers gather data from public blockchains and publish the history of everything you have ever purchased
- What if your workplace decides to fire you for shopping at a store that sells medical marijuana
- You donate money to a political cause and other services you want to use discriminate against you because of the purchase
I think you probably get the point and will probably agree this information is nobody’s business.
Many coins don’t provide sufficient privacy, which is why coins like Monero, Zcash, Verge, Dash, and Cloak were created.
What is CloakCoin?
CloakCoin is another cryptocurrency that has been around since 2014. It was started from a clone of Bitcoin and the Cloak team created several features on top of it to build what is known as Enigma and CloakShield.
In layman terms Enigma is the underlying system to mix the transactions and CloakShield is the encryption layer. Combined these are the technologies that Cloak uses to create a private, secure, untraceable, and decentralized cryptocurrency.
POS, Staking, Cloaking, Mixing
It uses (POS) Proof of Stake rather than Proof of Work (mining) to secure the network and validate the transactions.
By having CLOAK coins (Staking) y0u earn 6% of your total number of coins annually.
As a coin holder also known as a Cloaker. You can be part of the network (mixer node) that cloaks the transactions and receive 1.8% of the transaction fees as a result.
How does CLOAK work?
When you send a transaction to another person it gets routed through Cloakers to mix your transaction. I guess the best analogy would be that person A needs to pay person B $100. Instead of person A handing person B $100, person A gives out $1 bills to a bunch of people he/she doesn’t know, but can trust since they are rewarded by doing so. They all are guaranteed to deliver the total $100 to person B.
In this situation person B receives the total amount and has no idea who sent it.
The big question remains does it really live up to the hype. Well, the Cloak team had an audit done of their system by a third party auditor. The link is below to the full audit. To summarize they didn’t audit everything, but did prove some things worked as expected.
Other issues were found and Cloak teams resolved some already. I really really like the fact that this was done and it brings transparency and credibility to the project.
What I like
- Open Source
- Security Audit
- Resolved some issues from security audit only a few months ago
- Binance listing
- <100m Market Cap
- Small number of tokens ~5m
- Been around since 2014
What I don’t like
- Previously missed timelines, initially identified as scam
- Git repository has limited updates
- Reddit Commuity (1,273) rather small (this is both a pro and a con)
- Old fork of Bitcoin therefore inherited some vulnerabilities
- No Mobile Wallet (It is part of their roadmap)
- Unclear communication
- Not minting because you don’t have mature coins
- Unclear payout for Staking, Cloaking, Minting. In wallet, on exchange, when moving coins it resets. What is a good coin weight. All of these are questions the community has without clear answers