The Concept of Private Cryptocurrencies

The huge popularity cryptocurrencies have gained over time has been as a result of their privacy and anonymity features.

These features were designed to aid users conceal their identities and hide their transactions. Popular coins like Litecoin, Bitcoin, and Ethereum were created with special anonymity features from the onset, but the level of their privacy have reduced overtime because of their increasing user base and popularity. However, many complaints have been put forward by most cryptocurrency users in relation to privacy of their data which hatched the concept of private cryptocurrencies that are purpose-built.

Since all cryptocurrencies are not equal, some of them built anonymity and privacy confidence compared to others. According to Crypto Rocket, the features of a coin determine its level of privacy on the Blockchain even though the number one principle of cryptos is absolute privacy. Identities of users can easily be revealed by Blockchain forensics when data is not hidden. Especially when cryptocurrency exchangers imposed the new know-your-customer (KYC) law. Of all the private cryptocurrencies, there are two with the most anonymity and privacy namely- Monero (XMR) and Zcash (ZEC)

Monero (XMR)

• Unlike Bitcoin and other cryptos, this coin uses CryptoNight-Proof-of –work algorithm. Some of its outstanding features include the use of stealth addresses, ring confidential transactions, ring signatures to safeguard the Monero Blockchain in order to foil any attempt from observers in detecting the amount in a single account or where tokens are sent from.
• Monero’s privacy is enabled by default which equally ensures the safety of all transactions is assured on similar private network. The major challenge with Monero is that their private transactions attract huge fees as they pressure the network with more workload and it is steadily enhanced by developers.
• The effort they have invested in security, anonymity and privacy is what every user requires from a cryptocurrency. Cryptorocket discovered that due to it high level anonymity, Monero is being used mainly as means of payment for ransomeware attacks on darknet/darkweb markets and also in cryptojacking programs where they are easily mined without traceable tokens.

Zcash (ZEC):

• In order to protect their users, Zcash uses Zero-Knowledge Proofs also known as zero-knowledge succinct non-interaction argument of knowledge (zk-SNARK ) protocol. This cryptographic feature heavily conceals the address and real identities of two users engaged in a transaction. After every transaction, Zcash secures all the final addresses to shroud the records of any payment.
• Zcash also operates with an open ledger that is encrypted, only users with the accurate encryption key can explore a specific transaction once the Blockchain ledger is open. This means that if your recipient and you have access to the encryption keys to a transaction, then no one else sees it which in turn is a protective measure. Transactions on Zcash are also transparent; you can successfully run a transaction with other exchanges and wallets without revealing your identity.

Conclusion

Private Cryptocurrencies are ideal for users who love anonymity and privacy when transacting online and according to cryptorocket’s analysis, Monero seems to be the best private cryptocurrency.