What are Privacy Coins?

What are Privacy Coins?

A privacy coin is a cryptocurrency that hides data about its users. At a minimum, privacy coins hide the identity of participants in a transaction. They can also hide the amount of cryptocurrency traded and held in wallets. Bitcoin is not a true privacy coin. Bitcoin users can be identified by their public address and programs exist which can link public addresses to identities. Bitcoin transactions and wallets are publicly visible data. However there are numerous true privacy coins, such as Zcash, Dash and Monero to name 3 of the most popular ones.

What is the most private Cryptocurrency?

Many consider Monero to be the most private cryptocurrency. It’s certainly the most popular of the privacy coins. A little-known fact is that Monero is actually a fork of Bytecoin (BCN) which has been around since 2012 and the two are in fact very similar. Monero and Bytecoin both implement the ring signature technology to sign the transactions of a given user on behalf of the group. This results in a robust and completely anonymous payment scheme. In regular blockchain, anyone can see the payments you have received and determine your income. Monero and Bytecoin eliminate this by providing users with multiple, one-time addresses derived from the user's public key. This makes linking transactions impossible.

Is Cryptocurrency really anonymous?

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Anonymity is important to many in the holding and use of cryptocurrency. However cryptocurrency in its own right does not mean that transactions are anonymous. Traceability depends on the token you use. Each cryptocurrency has its own attributes and only some – the privacy coins – are designed to offer privacy and anonymity.

Is Monero the best privacy coin?

most popular privacy coin

It's a matter of choice, but Monero is the most popular privacy coin with the largest market capitalisation. Monero is untraceable. Sending and receiving addresses as well as transacted amounts are obfuscated by default. Transactions on the Monero blockchain cannot be linked to a particular user or real-world identity. Monero uses ring signatures, ring confidential transactions and stealth addresses to obfuscate the origins, amounts, and destinations of all transactions.

Is Monero illegal?

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Monero is a legal and popular cryptocurrency. However Monero’s emphasis on privacy, anonymity and security does lead to it being used by all types of people for all manner of online activities. As you can imagine, Monero is widely used on darknet markets, as payment method for numerous nefarious activities.

Monero (XMR)

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  • Monero is an open-source cryptocurrency created in 2014 that focuses on fungibility, privacy and decentralisation.
  • Why is Monero untraceable? Monero is a “Privacy Coin”.
  • Monero uses an obfuscated public ledger, meaning anybody can broadcast or send transactions, but no outside observer can tell the source, amount or destination.
  • Monero is a decentralised cryptocurrency, meaning it is secure digital cash operated by a network of users. Transactions are confirmed by distributed consensus and then immutably recorded on the blockchain.

Zcash (ZEC)

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  • What is Zcash?  Zcash is a cryptocurrency aimed at using cryptography to provide enhanced privacy for its users, compared to other cryptocurrencies such as Bitcoin. Zcash is one of a number of “Privacy Coins”. Shielded Zcash transactions are completely private.
  • Like Bitcoin, Zcash transaction data is posted to a public blockchain; but  it differs in the fact that Zcash ensures your personal and transaction data remain completely confidential. Zero-knowledge proofs allow transactions to be verified without revealing the sender, receiver or transaction amount.
  • Selective disclosure features within Zcash allow a user to share some transaction details, for purposes of compliance. Zcash affords users the option of "selective disclosure", allowing a user to prove payment for auditing purposes. One such reason is to allow private transactors the choice to comply with anti-money laundering or tax regulations.
  • Zcash also allows for transparent transactions to accommodate for wallets and exchanges that don’t support private transactions.
  • Like Bitcoin, Zcash has a fixed total supply of 21 million units.

Dash (DASH)

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  • Dash is an open source cryptocurrency and an altcoin that was forked from the Bitcoin protocol.
  • Is Dash a privacy coin? Launched in 2014, Dash was originally known as Darkcoin and was designed to ensure user privacy and anonymity. The currency permits transactions that can be untraceable.
  • DASH now aims to become a digital currency for daily transactions.
  • DASH is also a decentralised autonomous organisation (DAO). Governance is handled through a DAO in which decisions are made on a blockchain via masternodes.

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