Intro to Blockchain: What are privacy coins and why do we need them?

This post is part of a broader series on blockchain technology. In prior posts, I’ve discussed the historical context of blockchain networks and have provided detailed explanations of protocols, DApps, and ICOs.

In my next few posts, I’m going to slightly shift gears and discuss the issue of privacy. This article will examine what it means to have privacy on the blockchain and provide an argument for why we need it. In follow-up posts, I’ll explain how the top privacy protocols work and debate the pros and cons of each. Alright, enough of the overview, let’s dive in!

What does it mean to have “privacy” on the blockchain?

In recent years, cryptocurrencies such as Monero, ZCash, and Dash have become increasingly popular by promising to provide users with “privacy” that public blockchains like Bitcoin and Ethereum cannot. But what exactly does it mean to have privacy on the blockchain? It means that users can (i) complete anonymous transactions and (ii) maintain private account balances.

Privacy coins provide these benefits by obscuring the sender’s address, the receiver’s address, and the transaction amount when executing each transaction. They do this by implementing a number of complicated cryptographic techniques…