Privacy coins in Cryptocurrency

Anonymous Coins: Why is Anonymity Needed in Cryptocurrency?

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Cryptocurrencies’ main features being decentralized and traceable. However, the need for anonymous coins is rising to protect private data.

Bitcoin (BTC) and blockchain technology were created over ten years ago. Particularly, in order to help individuals send and receive payments without depending on a centralized authority. Moreover, this was very useful because all the digital payments processed until that time were done via an authorized third party.

Nowadays, things have changed. That means people can simply send money from one country to another by using a decentralized cryptocurrency. Although many consider that Bitcoin is anonymous to use, the truth is that it uses a system of pseudonymous. Meaning that Bitcoin addresses can be linked to personal information such as IP addresses. Additionally, email accounts or even a name and a surname aren’t 100% anonymous if the funds are moved from an exchange.

Basically, blockchain networks are open and can be analyzed by experts, companies, and governments. Although this could be good to capture criminals it certainly affects the privacy of firms and individuals that want to move funds privately.

In this article, we will share with you the benefits of using anonymous coins and how the market can improve over time with it. Also, users and investors can remain untrackable by just using these privacy coins. In fact, privacy coins have been around for a while now in the current cryptocurrency industry.

What Are Anonymous Coins?

Anonymous coins – also known as privacy coins – are virtual currencies that allow users to remain untrackable while handling transactions. In fact, this is very useful because it helps them protect their private and sensitive information. This is contrary to Bitcoin and other digital assets that do not provide these solutions.

In the next sections, we will be sharing with you details of some of the most popular anonymous coins in the space. Although these are not all the privacy coins available, these are the most recognized ones and those with the highest liquidity.

Monero (XMR)

Monero(XMR) anonymous coin

Monero is the largest of the abovementioned privacy coins. This is currently the 13th largest virtual currency and one of the oldest anonymous coins in the market. This cryptocurrency allows you to have complete control of your funds without revealing any information to other interested parties.

After being launched, Monero was able to attract a larger number of investors. In addition, these investors wanted to remain untrackable while handling virtual currencies. At the same time, Monero inspired many other projects to move forward and launch their own private solutions in the market.

In the future, Monero is planning to add new features. Additionally, they will improve their system to help users remain protected while managing their funds.

Dash (DASH)

DASH privacy coin

Dash is also an old and respected anonymous currency in the space. The project started in 2014, and it is offering optional privacy solutions for users. This is one of the main differences with Monero, that has integrated privacy solutions in all of its transactions.

Presently, this privacy currency does not only provide anonymity to users. Also, it has added other features that are as important as remaining untrackable. For instance, users can instantly settle payments with the InstantSend solution. In fact, this feature is unique while no other virtual currency makes use of this offer.

Furthermore, Dash is the only cryptocurrency in the world with a two-tier network. Moreover, it includes incentivized nodes and a decentralized governance model run by Masternodes.

PIVX (PIVX)

PIVX privacy coin

PIVX was one of the top 100 privacy coins between 2017 and 2019. The digital asset launched in early 2016 aimed at improving some of the previously released privacy coins in the market. Besides, licensed by the MIT, this blockchain project wanted to solve many known problems in the industry. In general, these problems are related to scalability, fungibility, and privacy, among other things.

At the time of writing this article, PIVX is the 170th largest cryptocurrency in the market. In addition, it has a market capitalization of $15.79 million. However, this promising project was among the largest cryptocurrencies a few years ago.

ZCash (ZEC)

ZCash(ZEC)

ZCash is the popular virtual currency created by Zooko Wilcox. Furthermore, this cryptocurrency offers users the possibility to privately send funds to others. Important to realize is the main difference between Monero and other crypto solutions in the market. In fact, this virtual currency uses a new technology called ‘zk-SNARKS’. Meaning, it works with shielded transactions implemented through zero-knowledge proof (zk-SNARKs).

This innovative technology provides users the possibility to improve their anonymity while making transactions. Also, with the zk-SNARKS, it is possible to prove that there are no users being dishonest with the transactions they are making.

Although this is a very secure option to send and receive cryptocurrencies anonymously, it is not 100% private.

Zcoin (XZC)

ZCoin(XZC)

Finally, Zcoin, which was launched in 2016 and it innovated with a system called Sigma. For instance, it allowed for improved scalability compared to other virtual currencies in the world. Zcoin has been working for a long period of time on improving privacy solutions in the cryptocurrency market. As a result, they created the Lelantus privacy protocol.

By using Zcoin’s implementation of Sigma, it is only possible for the sender and the receiver to validate the exchange of funds. Besides, it is worth pointing out that there are no links between the transactions processed. Also, previous movements of funds are untrackable on the blockchain.

Finally, there are other cryptocurrencies such as Litecoin (LTC) and Tron (TRX) that are currently working on privacy features. In fact, anonymity and remaining untrackable are important things for cryptocurrency enthusiasts. In order to protect their privacy and information.

Bonus video: What are privacy coins?

Final Thoughts and Projections for 2020 on privacy coins

The year 2020 just started and many coins surged double digits with Bitcoin leading the way. Also, what got the most attention was the impressive rise of DASH(140%), Zcoin(60%) and Zcash(60%). Moreover, and without coincidence, all these coins have one thing in common which is being privacy coins. Besides, many analysts think that these coins will be gaining popularity for the rest of 2020.

One of the main reasons is that the common internet user cares more about their private data. In fact, many individuals and authorities demand more privacy online, resulting in the gaining popularity of privacy-friendly applications like Telegram or Brave browser. Similarly, the demand for privacy-friendly coins like DASH, Zcash or XMR will be on the rise also. In general, when you are a cryptocurrency investor owning a few anonymous coins wouldn’t harm your crypto portfolio for the rest of 2020.

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Jelmer Steenhuis
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Jelmer Steenhuis

Online entrepreneur at uDigitize
Crypto believer and 'Hodler' of Bitcoin since the early days. Spreading the word about this exciting new technology..
Jelmer Steenhuis
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