DARKCOIN

Darkcoin - DRK

Darkcoin is an open source peer-to-peer cryptocurrency that uses a system called Darksend to add privacy to transactions. Darkcoin uses a chained hashing algorithm approach called X11 for the proof-of-work. Instead of using the Secure Hash Algorithm (SHA) 256 or scrypt it uses 11 rounds of different hashing functions.
With chained hashing, high end CPUs give an average return similar to that of GPUs. Another side effect of the algorithm is that GPUs run at about 30% less wattage than scrypt and 30% to 50% cooler, putting less stress on the computing setup and ensuring lower energy bills for miners.
We engineered Darkcoin to be a digital version of cash. When sending Darkcoin, you choose whether the transaction is private or public. Your Darkcoin are stored in a digital wallet that you own and control. Transactions are anonymous “from the wallet” meaning you don’t have to trust a third party to make the transaction private.

Overview

Darksend

Darksend has made some significant advances, and we’re happy to say that we’re closing in on a finished product.
With the introduction of Release Candidate 4 (RC4), the Darkcoin client will store pre-mixed, denominated Darkcoins in the user’s wallet, to be used instantly at any time the user desires. The mixing and denomination process is seamless, automatic, and requires no intervention on the part of the user. The 10 DRK limit in place with Darksend v1 will be permanently removed. With RC4, the amount that users can send via Darksend is limited only by the available balance in their wallet.
Here’s how it works:
Every 10 blocks, user clients network-wide will send any unmixed, traceable Darkcoins in their possession through an anonymization phase. In this phase, Masternodes are used in chained succession to mix the coins they receive from the network and break them down into homogenous denominations. After being processed by a minimum of 2 Masternodes, the coins are either sent to the next Masternode in the chain or back to the user’s wallet at randomly generated change addresses.
Depending on the desired depth of security and privacy, users may select between 2 and 8 “hops” to successive Masternodes before their coins are sent back to the client. Hops are made every 10 blocks, so anonymization at a depth of 2 hops will take 2*2.5=5.0 minutes, 3 hops 3*2.5=7.5 minutes, and so on. The desired mixing depth can be selected in the client GUI.
At the end of the anonymization phase, the user’s coins are returned to their client at randomly generated change addresses. When the user wishes to make a transaction, the client forwards the intended amount from these anonymous change addresses directly to the intended receiver’s address. There is no direct involvement of of Masternodes in the final person-to-person transaction.
Proof of payment will work as it always has: a user can see the send transaction with the receiver’s address in their own wallet, and the blockchain will show that the receiver’s address received an input in the corresponding amount.
Masternode count by country (as of September 2014)
Darksend is a coin-mixing service originally based on CoinJoin. Later iterations used a more advanced method of pre-mixing denominations built into the user’s wallet.
In its current implementation it adds privacy to transactions by combining identical inputs from multiple users into a single transaction with several outputs. Due to the identical inputs, transactions cannot be directly traced, obfuscating the flow of funds.

Masternodes

Darksend’s mixing is performed by Masternodes, servers operating on a decentralized volunteer network which have the responsibility of signing the transactions. For each round of Darksend, the user selects two to eight rounds of mixing which vary the degree of anonymity achieved. Random Masternodes are then elected to perform the coin mixing. Masternodes are trust-less, in the sense that they cannot steal user coins, and the combination of multiple Masternodes ensures that no single node has full knowledge of both inputs and outputs in the transaction process.
To avoid a “bad actor” scenario, in which many Masternodes are operated by an adversary who wants to de-anonymize transactions, a deterrent has been put in place in which 1000 Darkcoins are required to own and operate a Masternode. As an incentive for operating a Masternode, chosen nodes earn 20% of the mining rewards.
Masternode count by country (as of September 2014)
Source: wikimedia.org

X11

X11 is a widely used hashing algorithm created by Darkcoin core developer Evan Duffield. X11’s chained hashing algorithm approach utilizes a sequence of eleven scientific hashing algorithms for the proof-of-work. This is so that the processing distribution is fair and coins will be distributed in much the same way Bitcoin’s were originally.
With chained hashing, high end CPUs give an average return similar to that of GPUs. An added benefit of the algorithm is that GPUs require approximately 30% less wattage and run 30-50% cooler than they do with scrypt.

Dark Gravity Wave (DGW)

Dark Gravity Wave (DGW) is a widely used mining difficulty adjustment algorithm created by Darkcoin core developer Evan Duffield to address flaws in Kimoto’s Gravity Well. It uses multiple exponential moving averages and a simple moving average to smoothly adjust the difficulty, which is re-targeted every block. The block reward is not adjusted strictly by block number, but instead uses a formula controlled by Moore’s law: 2222222/(((Difficulty+2600)/9)^2).
Source: Wikipedia