Particl — Leaving the Shadows


TL;DR. Ecology:3. Technology:5. Decentralization:3. Valuation:5. Rating:4/10


(Update 2018-10-11: Please see the semi-annual ratings review of Particl here.)

Particl (PART) is a privacy focused platform with PPoS (Particl Proof of Stake) as part of its consensus mechanism. PPoS itself is an enhanced version of Blackcoin's widely used PoS3 algorithm. The platform aims at being a decentralized tool-kit of sort, where users among other things are or will be able to send PART anonymously, stake their PART to earn block rewards, use in-built encrypted chats and voting features, and trade anonymously with each other. Particl is an interesting project, but before delving deeper into the project, let's explore its early beginnings.

In July 2014, a BCT announcement thread about a new coin named SDCoin was posted by user sdcoin, which later proved to be the somewhat well-known altcoin developer rynomster (Ryno Mathee). The coin had a Bitcoin Core codebase like most altcoins back then. It had no premine and no ICO, and during the distribution phase it used Scrypt proof-of-work with low issuance for the first 120 blocks (one minute apart on average) as people configured miners, and higher issuance thereafter. At block 50 000 it was supposed to switch to Blackcoin's commonly used proof-of-stake algorithm, but due to intense ASIC mining on the chain, the developer team decided to cut that transition to block 31 000 instead which in practice was two weeks after genesis block. The reasoning behind the PoW to PoS roadmap was to achieve some degree of fairness in coin distribution before PoS started paying users just to own and stake coins (and automatically validate the blockchain).

During the same month of the launch, SDCoin seems to have been rebranded to ShadowCoin. At around the same time, the ShadowChat feature was added to the official wallet, enabling encrypted messaging. Shortly thereafter, in July, the ShadowSend feature was added. It introduced Anonymous Stealth Addresses as described in a paper by Bitcoin Core developer Peter Todd. Then in August the third feature was released: an Android phone wallet able to send coins, chat as well as stake. The SPV wallet ShadowLite was released in October 2014, and in December that same year ShadowCoin supposedly became one of the first cryptocurrency projects that supported anonymous transactions using zero-knowledge proofs. The implementation however was quickly criticized by the Monero lead developer fluffypony for not being as revolutionary as the ShadowCoin community hailed it to be. Another Monero developer compared it to a re-implementation of already existing CryptoNote technology. Finally, worth adding is that this new privacy implementation introduced a second token called Shadow, on the ShadowCoin blockchain. It was deemed essential for the anonymous transaction technology in this case. ShadowCoin remained pseudonymous like Bitcoin, while Shadow could be sent anonymously.

As 2015 arrived, ShadowCoin seems to have been renamed to ShadowCash. It was however not strictly enforced by the community and people used all three names for the coin continuously. At around the same time, ShadowMarket, a new feature of the core wallet, was being worked upon. ShadowMarket was as the name implies aiming to become a decentralized and anonymous marketplace for any product, i.e. drugs.

The anticipated marketplace was delayed time and time again. Then on February 11th 2016, new results by Monero researcher Shen Noether was published that apparently broke most of the anonymity of Shadow transactions. After initially doubting this claim, ShadowCash developers published a blog post (now taken down) with the title "All is not lost". The bug was patched with the help of Shen, bounty was paid, but most Shadow transactions that up until that time had occurred on the chain were de-anonymized. Not much more was said by ShadowCash developers on the issue. In March 2016, Blackcoin's PoS3 proof-of-stake algorithm was implemented. After this, not much happened in 2016 other than news about what was to be called the Umbra platform, basically consisting of the whole ShadowCash package (wallet, anonymous transactions, encrypted chat, in-wallet marketplace etc.). By this time, lead developer Ryno also started working on a new Ethereum based project called Blocktix which planned on holding a crowdsale in the future. The price of ShadowCash reached an all-time-high of almost 5 USD on 17th of March 2017. And the next day, it was officially announced by the ShadowCash developers that the whole platform as well as blockchain was to be completely restarted under the name of Particl. The price of ShadowCash immediately crashed 50%. And this is where the story of ShadowCash ends, and Particl starts. With controversy.

Two days after the Particl announcement, Ryno, representing Particl now, published some comments regarding the negative reaction to the new project and to the way it was announced. In it he stated that around 20% of all existing SDC had been converted so far. But the more important points from this second Particl posts as well as the first one were the following: For each SDC, the owner was entitled to one PART. SDC owners could optionally for each contributed SDC also contribute 0.15 USD worth of BTC in order to receive an extra 0.15 PART on the new chain. This optional 15% bonus was valid for 5 days after which it decreased. In Ryno's comments it was also made clear that an extra 15% tokens would be issued to the new Particl Foundation 9-10 months after genesis block, to pay for different expenses. After the swap deadline on the 15th of April, 77% of all SDC had been converted so a community initiative was initiated. In a later AMA, 83% of all SDC seems to have been converted.

Particl was described as being a continuation of the Umbra client for ShadowCash; an all-in-one decentralized wallet-, chat-, voting- and market platform, focused on privacy and anonymity. In June it was announced that Confidential Transactions, architectured by noted Bitcoin developer Gregory Maxwell, was being implemented. This meant that Particl would have CryptoNote ring signatures as well as Confidential Transactions, which is similar if not the same privacy technology as Monero. Shen's RingCT combination was still on the implementation roadmap for 2018.

On July 15th Particl launched the new blockchain. Inflation was set to 5% for the first year, to be received by stakers, and would later decline with one percentage point per year until reaching to the inflation floor of 2%. Worth noting is that 10% of all staking rewards are sent to Particl Foundation to ensure a steady income stream. On 10th of November 2017, cold staking was introduced, meaning PART owners could stake from empty addresses, reducing the overall security risk. In the end of that year, a 35 000 USD grant was given to NJIT for peer review of RingCT technology, and as soon as the review is done, RingCT is supposed to start being implemented on mainnet.


Let's first go through the basic checks, then focus deeper on some community related blunders. The Particl Reddit is somewhat inactive. Their Twitter handle is very active. Particl seems to have a community and the developer team is interacting with it in a good manner with AMA threads, livestreams and a blog among other channels. On-chain activity seems very limited so far.

Moving on to the history of Particl that was outlined in the introduction, we will go through it critically in a chronological order. First off, having so many different names associated with a coin is generally not a good property for it to have. As stated in earlier posts, BD Ratings is not fond of a cosmetic focus in the cryptocurrency ecosystem; there is now plenty of investor money to go around without it. A coin needs history and consistency to slowly build the three properties of money. To ShadowCash's defense, the different Shadow rebrands came quite naturally, partly because the community did not refer to the initial project as SDCoin, and partly because the two-token system of their anonymity technology. The more unclear rebrand was that of the Particl launch. It was announced very abruptly, and to add to the confusion, lead developer Ryno had recently been involved in the Blocktix project despite earlier promises from the team that he would work fulltime on ShadowCash.

What was not smooth about the ShadowCash - Particl transition? For one, the 15% PART bonus described earlier was only valid for 5 days after the announcement (initially 3 days but that was changed after some criticism). During this time, people with coins on exchanges reported that they hit max withdrawal limits. And maybe even more serious is the fact that many passive coin owners were not even informed that any coin swap was occurring. Some of them must have missed the bonus, and many others surely missed the four week migration period altogether, resulting in their SDC being useless and their unclaimed PART being confiscated and re-distributed to the new Particl foundation (20%) and the rest of the migrating users (80%). These distribution numbers were initially 100% to the foundation but that changed after criticism as well.

Another probably unintentional aspect of the bonus option during the coin swap was the soft peg between the price of SDC and USD. On the 17th of Mars 2017, SDC was worth over 4 USD. Consider a hypothetical SDC holder of 100 coins just after the Particl announcement. He can perform the conversion without adding 15 USD worth of BTC, thus receiving 100 PART three months later at mainnet launch. Or, he converts 13 of his 100 SDC to around 52 USD worth of BTC, converts his remaining 87 SDC while adding 13 USD to qualify for the bonus. The end result of the second scenario is that he will receive 100 PART three months later, while also pocketing around 39 USD. It should now be obvious that the Particl conversion scheme led to systemic sell pressure on SDC, which partly explain the 50-60% drop in matter of days.

As the one month swap period came to an end, the price of SDC naturally plummeted as no development happened any longer on that chain, and SDC holders were no longer eligible for the 1:1 conversion. Here the Particl team, probably in an attempt to please SDC holders that missed the deadline, started the voluntary extended swap initiative. The swap ratio between SDC and PART was set to 2:1 instead of 1:1 (with limited supply of PART donated by the community and matched by the Particl team) as not to reward the people lazy or unlucky enough to have missed the first deadline. This whole routine was possible because of added conditions that coins must not have moved since the deadline (it would otherwise have created heavy incentives to buy cheap SDC after the 19th and then convert them to x0.5 PART). Yet it is also mentioned in the swap initiative that SDC moved after the 19th might become eligible later on. This might explain the sudden 300% price increase of what ought theoretically to be a dead coin. It is just a mess, and even if BD Ratings deem the front-running probability low in this case, a smart team member could take advantage of this. It is stupid to open up for this kind of attack surface.

As if the above Particl launch problems were not enough, it was defined upon announcement that an extra 15% PART would be issued 9-10 months from the genesis block, and given to the Particl foundation to pay for research, development, salaries, legal costs etc. Since Particl is in all but name a rebrand (the same ShadowCash developer team is working on the project) this 15% extra issuance can be seen as an inflation tax on all coin holders; the tax was plainly decided and the community was never asked about it how it felt. Sort of like good old seigniorage.

Anyway, the integration of a marketplace into the client is rather exciting but also narrows the focus of the coin somewhat if the approach is not generalized. As an example, Ethereum interacts with dapps partly through independent initiatives like Metamask where the user visits dapps through their web browser. The Ethereum Mist client is also communicating with dapps in a generalized way rather than having specific "hard coded" integrations. But the Particl approach is anyway an interesting one. It introduces the MAD escrow (Mutually Assured Destruction) as a process to get buyer and seller to complete the trade with no third parties. It means both buyer and seller put funds in a contract that no one owns, and those funds are destroyed unless the trade is completed. So both buyer and seller have incentives to actually do what was agreed upon.

Finally on the Ecology issue, there is always the threat of Bitcoin or Ethereum implementing the same or higher level of privacy down the road. That would be a non-fatal blow to most privacy focused coins, and they would have to find some nisch around the subject.

Grade: 3/10.

Reasons: Average to low community activity. Not very high economic activity. Community communication by Particl team has improved. Rebrands and extremely unprofessional coin migration from SDC to PART.


The developer team seems competent enough in that with ShadowCoin, they independently managed to implement was is essentially CryptoNote technology, without just copying code or using CryptoNote as code base. The user tecnovert has been put forward a couple of times as a Bitcoin Core contributor. However, tecnovert merges Bitcoin Core code to Particl. He is not found under the Bitcoin Core contributor list. The Particl GitHub is active, with a handful of people contributing consistently.

Since Particl is built on the Bitcoin Core code base, it is able to port changes in that code to the Particl code in a time efficient way. This means Particl utilizes the high quality code development of Bitcoin, including SegWit, and is ready to implement future advancements like Lightning Network. The continuous porting of code is seen on GitHub. Particl was apparently the first project to introduce the Confidential Transaction (CT) and RingCT technology on Bitcoin codebase. The fact that RingCT is well on its way and that the team want proper peer review before taking it live is a sign of professionalism.

The cold staking feature of the protocol is very useful as long as it is safe. It also attests to competence in the team as it is not the norm among PoS coins. Having an inflation curve going from 5% down to 2% seems acceptable; it is quite uncontroversial to say that PoS offers chain security to a lower cost in certain aspects. Having a 2% issuance may also be acceptable to regular coin holders, partly because they can participate and stake as well, and partly because this number can always be reduced should the chain attract heavy usage and with it transaction fees.

Grade: 5/10.

Reasons: Good Bitcoin code is continuously utilized. Technology is peer reviewed before being implemented.


BD Ratings deems the launch of Particl's predecessor ShadowCoin to have been fair. Since there was no premine or crowdfund, SDC coins were distributed to all that participated in the mining during the initial two weeks. This distribution result is obviously somewhat reflected in the Particl coin distribution because of the 1:1 conversion during the migration.

When looking at the rest of the whole ShadowCash to Particl relaunch however, it is not an understatement to call it a disaster in terms of establishing a strong decentralization property to the project at large. No one in the ShadowCash community had a say in the matter, and the launch of Particl and sudden stagnation of the old chain was fully decided upon by the ShadowCash developer team, with ruthless financial punishments should you miss this transition. Anyone holding PART tokens must know that this is a real risk going forward.

Another somewhat worrying fact is that Ryno was contracted to work on Blocktix despite promising full commitment to ShadowCash. Ryno is of course entitled to work wherever he wants, but the lack of communication on the matter was not very professional.

The project did not seem to have many core developers initially, and of the developers they had during launch, most were specialized in their work tasks which always creates some dependencies. tecnovert seems to have been the only cryptographer on the team. As Particl grew during 2017, the team expanded somewhat and a handful of them are active on the project GitHub repos.

Grade: 3/10.

Reasons: Fair launch. Few developers for core client but growing team. History of strong centralization.


The valuation of around USD 100M puts the project far under the Monero and Zcash valuation. As soon as RingCT is implemented, Particl might be on its way of being as secure as the other top anonymity focused cryptocurrencies, from a code perspective. Given the low inflation and active development, BD Ratings do not deem 100M unreasonable compared to other coins.

Grade: 5/10.

Reasons: Adopting code from many solid and peer-reviewed projects. Most coins are minted.