People are generally careful about how much of their personal information is made available to the public. Likewise, major institutions are also very cautious about losing the private data of their customers to hackers and unauthorized persons. Financial transactions are one area where the need for data protection should be given top priority because of the security risks it poses.
With the advent of cryptocurrencies and the popularity they have generated in recent times, users have come to understand that despite the anonymity claim by major currencies like Bitcoin and ethereum and their underlying technologies, they, however, do not protect users’ data completely. Due to this realization, cryptoanalysts assert that Bitcoin is not entirely anonymous but pseudonymous. This is because although transactions with Bitcoins do not require you to disclose your real name and location, all transactions can still be traced back to you even after many years. The reason behind this is that your transactions remain public and once you relate your Bitcoin public key to a person, your balance and transaction history can always be checked. Remember also that most exchanges require you to provide your real identity which automatically links you to your transactions.
The need to ensure the privacy of crypto users and their transactions has necessitated the creation of privacy-focused cryptocurrencies. Although some of these coins are purported to aid illegal financial activities like money laundering, yet their usefulness in data protection outweighs this belief. Quite a number of these privacy coins exist, with different privacy attributes and accomplishments. A good understanding of them and their features will always aid crypto users in making informed decisions while choosing the coins that suit their diverse needs.
This article outlines 8 most popular privacy coins.
1. Monero (XMR)
Monero is unarguably the most private cryptocurrency. So when next you are looking for a coin that will give you total privacy over your transactions, you will never go wrong with Monero. It hides details the identities of the involved parties, transaction amount, the source of funds and amount in the wallets. Launched in April 2014 as a fork from Bytecoin, Monero leverages on the concepts of ring signatures and stealth addresses as its backbone to completely hide transaction details like the identities of the sender and receiver. Furthermore, Ring Confidential Transactions (RingCT) is used to hide the transaction amounts. All transaction details are kept entirely private, anonymous and untraceable by third parties. Due to the privacy accomplishments of Monero, it is considered in many quarters as a currency used to perpetrate financial crimes like money laundering and buying of illegal goods and services. Also, Monero’s transaction charges are relatively high making it undesirable for small transactions. These uncomplimentary comments on Monero notwithstanding, it still remains a popular coin largely because of the relative ease in its mining process using CPU and GPU and also the privacy and anonymity it affords some legitimate transactions that require secrecy.
2. Verge (XVG)
Verge employs Invisible Internet Project (I2P) and The Onion Router (TOR) as against cryptography to ensure that its transactions are kept private and to also hide traffic. It bounces transaction data back and forth among a network of servers, thus making it hard to monitor and trace. Also, it conceals the location and IP addresses of users and ensures that the same route is not used to send a message and receive its response. Verge which was initially launched in 2014 as DogeCoinDark, a fork of Dodgecoin became known by its present name in 2016. XVG is however not without limitations as there are often cases where its privacy can be compromised.
3. Zcash
Zcash is not a private coin by default but rather gives the user the option to choose whether transaction details should be public or private. This open-source currency provides privacy to its users using the Zerocoin protocol and zero-knowledge proof cryptography called zk-SNARKs. It verifies that the information being sent is correct without broadcasting the confirmed information. It hides such transaction details like sender and receiver’s details and transaction amount.
4. Dash
Launched in 2014 as a Bitcoin fork and initially known as dark coin, Dash is not entirely a private cryptocurrency. Its privacy is optional and is achieved using the PrivateSend an improved version of Bitcoin’s CoinJoin method. Hence it is loosely referred to as the modified version of Bitcoin. This method entails making joint payments by merging multiple transactions and making transaction details like amount exchanged and the destinations hidden from third parties. A minimum of three people are required for this process, and a server known as master node is responsible for the transaction merging. The server is expected not to record transaction details especially the amounts and recipients’ addresses. The master node requires 1,000 Dash coins per session to operate, thus making it impracticable for a third party to create the same number of nodes to record or intercept the transaction details.
5. PIVX
PIVX is an acronym for Private Instant Verifiable Transaction. Initially launched as a Dash fork, PIVX has a lot of similarity with Dash in the provision of privacy for its transactions. Just like Dash, it employs the multiple transaction mix similar to CoinJoin. PIVX operates on Proof-of-Stake mechanism and like Dash uses master nodes for the verification of the multiple transaction mix. However, unlike Dash which requires 1,000 tokens to command one of the master nodes, PIVX requires 10,000. This implies that PIVX asides from having a higher threshold, a large portion of its coins locked up in master nodes.
6. Aeon
Loosely referred to as “the little brother of Monero,” Aeon provides privacy to its transactions in similar ways like Monero. It is not conventionally a private coin, but rather allows its users the option to choose when to reveal their transaction details or not. Like Monero, it can be mined with relative ease using CPU and GPU. However, unlike Monero, its transaction charges are cheaper. The cheaper transaction charges make Aeon preferable to Monero especially for transactions involving small amounts while its relative ease in mining is very much responsible for the popularity of the relatively new coin.
7. Komodo
Komodo, a fork of Zcash ensures that transaction details like the identity of sender and receiver as well as the amount are completely kept private without any link to them by third parties. It achieves this using the zero-knowledge proof protocol and provides even more security using the Delayed Proof of Work (dPoW) protocol. Komodo’s blocks are hinged on immutable Bitcoin blockchain using the dPoW protocol, making it impractical to modify any transaction details. This is an additional security advantage for Komodo because modifying its transactions would entail the almost impossible task of modifying Bitcoin’s blockchain.
8. Navcoin
This cryptocurrency has code similar to that of the Bitcoin. In addition to blockchain, it employs NavTech – a sub-chain which is responsible for providing privacy to its transactions through transaction mix technique. It eliminates the privacy limitation of the blockchain which leaves its data public, making them susceptible to attacks from malicious users. Launched in 2014, Navcoin, a fork of Bitcoin has its transactions anonymous, cheaper and faster than those of Bitcoin.
