Cryptocurrencies are usually pseudonymous, but not necessarily private. Bitcoin (BTC) and other assets run on blockchains, with each transaction being publicly published online. During a transaction between two or more parties, assets are moved to different wallets, each represented by a character string.
However, with these addresses and transactions visible to all, there is some degree of traceability, especially when a wallet is transferring money to an exchange that requires verification of your client.
Certain crypto assets, often referred to as privacy coins, private coins, or anonymous coins, attempt to hide information about transactions in order to provide more privacy to users. Why might someone need privacy if they are not doing anything illegal? It could be a preference or a view of privacy as a basic human right could be two reasons. Cash is largely private. Every transaction is not recorded somewhere for everyone to see at the touch of a button.
There are a number of possible methods of adding data protection to Bitcoin, including peer-to-peer trading, although several crypto assets focus more directly on data protection through their technology. Some well-known privacy resources in the crypto space are Monero (XMR), Zcash (ZEC), Verge (XVG), Beam, and Grin. Dash makes it on the list too, as it allows for additional anonymity, despite the fact that the coin isn’t technically classified as a privacy object.
One of the industry’s best-known privacy-conscious assets, Monero hit the scene about seven years ago and has made numerous headlines in recent years. Monero prides itself on its decentralization and touts origins that support such values. “It was a fair, pre-announced launch of the CryptoNote reference code,” says Monero’s website. “There were no rewards or instamines, and no part of the block reward goes into development.”
Monero, a coin based on its own blockchain for proof-of-work, advertises various data protection technology features on its website, including stealth addresses and RingCT. XMR was added in 2017: “RingCT, short for Ring Confidential Transactions, describes how to hide transaction amounts in Monero,” explains Moneropedia, the explanatory section of the asset’s website.
Monero piqued the US government’s interest in late 2020. The Internal Revenue Service put a premium on the asset’s head, pledging up to $ 625,000 in exchange for cracking the coin’s privacy technology. Two Blockchain Analytics outfits, Integra FEC and Chainalysis, took the award home just a few weeks after the IRS announced the bounty.
Zcash is considered another popular data protection asset in the crypto space. It started in 2016 and was initiated by the Electric Coin Company run by Cypherpunk Zooko Wilcox. Zcash comes from the same code as Bitcoin, according to the asset’s website. ZEC works with its own blockchain with a PoW mining consensus separate from Bitcoin.
ZEC allows both private transfers, so-called protected transactions, as well as public transactions. “Zcash enables you to ensure confidential transactions and financial privacy through protected addresses,” explains Zcash’s website, adding: “Zero-knowledge proofs allow transactions to be verified without revealing the sender, recipient or transaction amount Selective disclosure functions in Zcash allow a user to release some transaction details for the purpose of compliance or verification. “
Dash (kind of)
Dash is another well-known cryptocurrency that hosts privacy features. However, the company that manages the coin’s development, the Dash Core Group, has made it clear on several occasions that Dash is not a privacy object, even though it has optional features for added anonymity.
“Dash is a payment cryptocurrency with a strong focus on ease of use that encompasses speed, cost, ease of use and user protection through optional data protection,” Fernando Gutierrez, the group’s chief marketing officer, previously told Cointelegraph.
“Dash is not an AEC!” Ryan Taylor, CEO of DashPay, said in a January 2021 tweet he was referring to anonymity-enhanced cryptocurrencies, or AEC – a term used by U.S. regulators. “As a literal junction of Bitcoin, all Dash transactions are completely transparent,” added his tweet: “All entries, expenditures, addresses and amounts are recorded with every transaction and can be viewed by anyone on the public blockchain.”
XCoin joined the crypto world as the Bitcoin fork in 2014, later as Darkcoin and then as Dash. The asset is based on its own blockchain to prove its use.
The coin allows users to conduct transactions anonymously if they so choose, through what is known as PrivateSend. “The technology Dash uses in our PrivateSend feature is CoinJoin, a technique that makes transactions so complicated that they are more difficult for analytics firms to analyze,” Gutierrez said, as previously reported.
Verge is a PoW asset that runs on its own blockchain. It’s another cryptocurrency that touts privacy features. Verge started with a different name. “Verge Currency was created in 2014 under the name DogeCoinDark,” says the asset’s website, but was later renamed Verge Currency.
Verge is an open source asset and enables private broadcasts via I2P and Tor Tech that hide the locations of the transactors (IP addresses) according to information from BitDegree as well as previous Cointelegraph reports.
Verge saw its price spike at the end of 2017, hitting highs of $ 0.31, according to TradingView data. The asset is currently trading at around $ 0.023.
Beam and grin
Grins and rays invaded the crypto market in 2019, extolling another technology called Mimblewimble. The concept of Mimblewimble, a type of blockchain technology, was published in 2016 as a PoW variant. This emerges from a community post by William M. Peaster about the Binance Academy.
Grin and Beam was launched on top of Mimblewimble, despite Litecoin (LTC), a long-time leader in the crypto space, working on implementing the technology.
“In an MW blockchain there are no identifiable or reusable addresses, which means that all transactions look like random data to an outsider,” says the article by the Binance Academy. “A mimblewimble block looks more like a large transaction than a combination of many,” the article adds, then goes into other aspects of the technology.
Privacy coins and regulations
Government oversight of privacy coins has increased in recent years, as evidenced in part by the efforts of the IRS against Monero technology. References to privacy coins also appeared in the December 2020 regulation on self-hosted crypto wallets proposed by the U.S. Financial Crimes Enforcement Network.
“Different types of AEC (e.g. Monero, Zcash, Dash, Komodo and Beam) are enjoying increasing popularity and employing different technologies that affect the ability of investigators to identify transaction activity using blockchain data,” it said the December document with reference to anonymity. improved cryptocurrencies. In addition, South Korea banned anonymity goods in November 2020.
Some crypto exchanges have delisted the above assets. In October 2019, OKEx Korea stopped trading on its platform for Monero, Zcash, Super Bitcoin (SBTC), Dash and Horizen (ZEN). BitBay removed Monero in early 2020. Bittrex removed Zcash, Dash and Monero from the exchange in January 2021. A number of other crypto platforms have also delisted assets with enhanced privacy in the past year or two, including ShapeShift.