- Blog


1. Abstract
CloakCoin is a cryptocurrency designed to facilitate private, secure and untraceable
decentralized transfers with Enigma.
Cloak is a dual PoW/PoS (Proof of Work, Proof of Stake) coin, which is now in the
Proof-of-Stake (interest bearing) stage.

Enigma is CloakCoin’s private, secure and untraceable payment system, that forms the
basis of future development and provides the underlying transaction system for the
decentralized applications running on the CloakCoin network.
Privacy today is perhaps more important than ever. The thundering pace of technological
advancement has rapidly broadened our horizons and connected the world like never before.
Thanks to Bitcoin’s introduction in 2009, cryptocurrency is steadily moving into the mainstream
and we can now transfer digital currency securely across the globe in an instant, using the power
of the blockchain. As cryptocurrency adoption becomes more widespread, increased regulation is
inevitable. It remains to be seen what form this regulation will take, but many are concerned it
may be overly draconian and designed to stifle some of the more libertarian aspects of

Due to Bitcoin’s quest for ubiquity, anonymity for users has never been a priority for the core
Bitcoin developers. This has led to the emergence of a number of privacy-centric, alternative
cryptocurrencies, designed with anonymity in mind. There are many different methodologies and
approaches to solving the problem of anonymous transactions, and in this document we present a
full overview of CloakCoin’s Enigma system.
Enigma is at heart a decentralized, off-blockchain mixing service which allows users on the
CloakCoin network to transmit Cloak privately and securely to each other. It has been designed to
ensure the mixing process is both secure and untraceable to third party observers. This ensures
a user’s Cloak coins are kept safe during transfer and that the sender and receiver cannot be tied
or associated. Cloak coins are never transferred to an intermediate party during Cloaking, so
coins remain safe. We have also worked hard to ensure the Enigma system rewards users who
assist in Cloaking transfers and will continue to improve the process and further incentivize active
participants. Anyone with Cloak coins can participate in Cloaking operations, which allows them
to leave their wallet running in Staking/Cloaking mode to allow it to passively assist in Cloaking
and earn significant rewards.

2. Enigma v1.0 Overview
Enigma is the first public iteration of Cloak’s private, secure and untraceable payment
system. Enigma transactions are ‘cloaked’ by other users, who receive a reward for their
assistance. The other users provide inputs and outputs to the Enigma transaction making it
impossible to determine the true source and destination of the cloak transfer. All Enigma
messages on the network are hashed and encrypted for the recipient using CloakShield to
ensure data security and integrity. Please see Section 3 – ‘CloakShield’ for more details.

2.1. The Enigma Process (for Enigma enabled nodes)
Enigma Announcements
Enigma nodes communicate over the Cloak network and a node will keep track of other active
Enigma nodes. Enigma Announcement Broadcasts alert other Enigma nodes of our public
session key and current Enigma cloaking balance.

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