Which is the best privacy-focused cryptocurrency?
Decentralization and security are the staple of blockchain values. Additionally to these two, a cherished value in the ecosystem is also privacy. It is very common to hear about big corporations losing user’s private data to hacks, or the recent drama around Cambridge Analytica and the exploitation of Facebook data used for political purposes. As users of these services, it is a natural shock and true exposure when we lose our private data due to third-party negligence. When it comes to money, privacy is also of immediate concern. Nobody goes around life telling everyone what is their bank account balance, why? For safety. After people understood that once you relate a Bitcoin public key to a person, you can always check his balance and spending, privacy became a serious concern. Contrary to popular believe, fiat cash is ostentatiously more anonymous than Bitcoin. Having in mind the creation of digital cash, several privacy-focused cryptocurrencies came to existence. In the following article, we present you four of the biggest ones, including our favorite in the sector.
Zcash
This project takes an interesting approach in order to attain privacy and anonymity. Zcash uses zero-knowledge proofs that encrypt the sender address, the recipient address, and the transaction amounts while still validating the transactions on the blockchain. The transactions can be registered in the blockchain because Zcash uses zkSNARKs proofs, which is a proof construction where one can prove possession of certain information (e.g. a private key) without revealing additional information or without the need of interaction between prover and verifier. The block time is 2.5 minutes, and transaction time is not so remarkably fast.
Monero
If Bitcoin is the genesis of Blockchain, Monero is the genesis of privacy-focused cryptocurrencies. Besides privacy, this project has a strong emphasis on anonymity. It gives users the possibility of using Ring Confidential transactions. This works by bundling, sending and receiving public keys with older network transactions, which obfuscates the addresses and makes the blockchain analysis impossible.
Besides all these qualities, Monero also uses Stealth addresses, creating further anonymity to the sender and receiver. Besides the good feats in terms of privacy and blocksize, the focus on anonymity over privacy has also had a negative impact in Monero as a token and community. Due to the difficulty of tracing it, it has become the preferred cryptocurrency to purchase illegal goods and services.
Dash
This token offers privacy to its users, but is not anonymous in the traditional sense. It uses a feature called PrivateSend in order to anonymize transactions. PrivateSend is a mixing service that the Dash protocol has already built in. Multiple transactions are merged into one master transaction which is signed by each sender before being broadcasted to the network.
Dash also introduced the concept of masternodes. After meeting certain points, a normal node would become a masternode to replace centralized servers. Given certain incentives for masternodes that the protocol gives, Dash has one of the fastest growing peer-to-peer networks.
PIVX
PIVX is an open source cryptocurrency that is focused on privacy, speed, and low transaction fees. What sets PIVX apart from other privacy-focused cryptocurrencies is that it uses the custom Zerocoin protocol, zPIV. Previous privacy tokens using PoS would not permit anonymous staking, which created a big disincentive to stake and secure the network. This provides three additional benefits for all users:
- A higher block reward compared to staking PIVx.
- Allows you and your coins to remain private while staking.
- Helps with constant generation of new mints in the zPIV pool (accumulator) greatly increasing its liquidity for future zPIV spends, as well as obscurity.
PIVX is a fork from DASH, so it already inherits all of its technical features including masternodes, instant transfers and private transfers. The network has a block time of 60 seconds with fixed block rewards. The future for PIVX is even brighter. With a very active community and the additional implementation of protocols like SwiftX, which is for instant transactions. In addition to all this great features, PIVX is a delightful zPoS token. There is no delegation in the coin, since this is considered a point of centralization.
Here at Pool of Stake, we are honored to be working on the development of the pool for dPoS blockchains. We have specified in our roadmap that the launch for our dPoS platform will be in Q4 2018. We are looking forward to implement several interesting platforms that run on dPoS.
