by Nicolas van Saberhagen | Oct. 17, 2013
CryptoNote is a privacy-centric protocol that serves as the basis of several cryptocurrencies, most notably Monero. The paper begins by outlining some of the drawbacks inherent in Bitcoin, namely the traceability of transactions, the proof-of-work function, a predetermined emission rate, hardcoded constants, and bulky scripts. It presents the CryptoNote protocol as a way to address many of these shortcomings.
Unfortunately, Bitcoin suffers from several deficiencies. For example, the system’s distributed nature is inflexible, preventing the implementation of new features until almost all of the network users update their clients. Some critical flaws that cannot be fixed rapidly deter Bitcoin’s widespread propagation. In such inflexible models, it is more efficient to roll-out a new project rather than perpetually fix the original project. In this paper, we study and propose solutions to the main deficiencies of Bitcoin. We believe that a system taking into account the solutions we propose will lead to a healthy competition among different electronic cash systems. We also propose our own electronic cash, “CryptoNote”, a name emphasizing the next breakthrough in electronic cash.