XRP May Embrace Privacy Characteristics: Ripple's Proposal Suggests a Yes-And-No Scenario
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The XRP Ledger, a leading blockchain platform, is set to enhance its capabilities with the introduction of Confidential Multi-Purpose Tokens (MPTs). Proposed by Ripple engineers Murat Cenk and Aanchal Malhotra, this new amendment aims to provide privacy, auditability, and policy controls in the realm of institutional tokenization.
The Confidential MPTs adopt a split-balance model, separating a holder's encrypted funds into a spendable "Spending" balance and an "Inbox" for new incoming transfers. This model is commonplace in high-throughput confidential systems, suggesting the authors are mindful of user experience and wallet-developer realities.
Confidential MPTs offer confidential transfers and balances while preserving XLS-33 semantics and public auditability. The system ensures public auditability by maintaining issuance limits enforced by the network, preventing the silent minting of new tokens, even if individual balances are encrypted.
The proposal uses EC-ElGamal encryption and Zero-Knowledge Proofs (ZKPs) to provide verifiable binding of optional auditor copies of the same ciphertext. It includes two auditor models: an on-chain, trust-minimized approach, and a simpler issuer-controlled "view key" option.
The ledger would continue to expose supply caps and enforce invariants even as per-account balances become opaque. The system enables "flexible auditability" while keeping private balances "encrypted under the holder's key."
Issuer-only freeze and clawback capabilities over confidential balances are proposed as compliance tools, not discretionary surveillance. The design leans on a practical architectural compromise, with issuers maintaining a second account for both public and confidential balances.
The debate on introducing privacy protection functionality on the XRP Ledger is ongoing. The discussions focus on balancing enhanced privacy features while maintaining transparency and regulatory compliance. It's important to note that the Confidential MPTs extend the XLS-33 model, not replace it.
The XRPL already equips the ledger with a more compact, compliance-aware fungible token primitive through the multi-purpose token standard (XLS-33, "MPT"). The proposal is different from privacy chains like Monero or Zcash as it includes selective disclosure and issuer controls.
At press time, XRP traded at $3.01. The XRP Ledger Standards (XRPLF) discussion was opened on September 13 by Ripple engineers Murat Cenk and Aanchal Malhotra. The future of the Confidential MPTs on the XRP Ledger is a promising development in the world of blockchain technology.
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