Cryptocurrencies and privacy have been in existence for over a decade but in recent times, much popularity and importance have been attached to them. More investors are taking advantage of the benefits and lucrativeness of these coins.
Unlike the initial stages of cryptocurrencies, much emphasis are now being laid on anonymity and privacy. These features are considered paramount as they afford the user a required level protection and their transactions are also concealed.
Data privacy has become critical for users in this digital age but in the crypto currency world, there seems to be a solution with the integration of the privacy feature.
The regulatory moves from the government, specialized law enforcements and well as banking institutions have compelled the diverse cryptocurrencies to hurry towards the adoption of a privacy-centred approach.
The legal actions and new practices that have resulted in some cryptos being shutdown has forced investors to opt for a coin that guarantees the confidentiality of their transactions.
Choosing the coin that protects your identity can be quite tricky. Amidst the numerous cryptocurrencies that exist, the following have adopted highly-encrypted techniques to secure the anonymity of the users.
Monero – XMR
Monero has gained a widespread popularity and has been favoured by users due to its anonymity. An improved anonymity was added to the protocol a couple of months ago following the confidential transactions introduced January 2017.
The network nodes have been tweaked to accommodate confidentiality in transactions without any hassle. Since the implementation of this new look, the price of Monero has dramatically risen across exchanges.
Monero may be considered as arguably the most private coin in circulation today. The sources and destination of these transaction are untraceable.
The CrptoNight Proof-of-Work protocol that employs the use of ring signatures to ensure that the ledger transactions are muddled is made accessible to block chain by default. This also means it is impossible to ascertain the number of XMR coins held by a particular node.
Monero was the most popular crypto used for transactions the largest market place on the Darknet – AlphaBay.
Zcash – ZEC
The Zcash team of developers make use of the zero-knowledge proofs to ensure that their users stay totally anonymous. The zero-knowledge proof makes provision for both the verification and the privacy of data.
Zcash provides for the encryption of the sender and recipient’s address via a technology that also foils the transaction amounts. Just like the usual practice, Blockchain validates all network transactions, similar to Bitcoin.
Zcash most prominent features remains its enhanced privacy and security features. The fact that users can transact without revealing their addresses to the others is a top feature of the coin.
Amidst the belief that most people use privacy coins for shady activities, the marketing director of Zcash states that legality is not directly related to privacy. This explains why Zcash has two types of transaction options – one that happens on the public ledger and the other that keeps the address of the user from public glare, allowing for anonymous trading.
Although the transaction is usually encrypted, Zcash complies with regulatory agencies at the level of cryptocurrency exchange, where AML/KYC controls take effect at the exchange point between fiat and ZEC.
This ensures that criminals are not helped but rather, law abiding citizens are protected from perpetrators
Dash, one of the oldest privacy coins has had its name changed twice since 2014. Initially called Xcoin, it was later called Darkcoin before finally adopting its current name – Dash.
The coin is related to Bitcoin and its privacy feature is regarded as an added component. Going by the name PrivateSend, the feature is optional and is capable of shielding chosen transaction data within its entire setup.
The PrivateSend feature of DASH is an upgraded version of CoinJoin and is enhanced by features like decentralization and a chaining approach.
The decentralized mixing feature incorporated in the Dash protocol allows the currency remain interchangeable, which is one of the features missing in Bitcoin.
The CoinJoin feature initially known as Darksend guarantees the anonymity of all transactions executed by the users. It obfuscates the details of the transaction by mixing them with diverse participants and projecting them as a sole transaction.
For instance, if a transaction involves A to B, G to Q and V to Z, Dash then muddles everything up so they can appear on the Dash blockchain as A,G,V to B,Q,Z. This technique ensures that it becomes virtually impossible to know who sent what and how much was sent.
Amongst the list of the privacy coins currently in the market Verge is relatively new. Verge offers privacy via TOR and I2P routing to convolute traffic and mask a user’s IP address during transaction.
Rather than rely on cryptographic techniques, Verge explores existing and tested technology of the onion router (TOR) aswell as the invisible Internet Project (I2P) to protect a user’s identity.
TOR bounces the communication of users over a distributed network of relays including tunnels managed by volunteers spread across the globe. This therefore conceals the user’s identity while I2P encrypts the data of the user before sending via an anonymous, peer-to-peer and also volunteer-run globally distributed network.
TeleCoin – TELE
TELE, owned by TeleCoin is a community project with the aim of building a peer-to-peer network that is totally anonymous. It is premised on Dash and PivX projects.
TeleCoin’s ability to implement features of all other projects under a single project is what makes it special.
Proof of Stake, private transactions, masternode capabilities aswell as a decentralized blockchain voting system are the major pivots of the TELE network.
Asides the network, TELE seeks expansion of its use cases towards micro-transactions via the development of the Trend-Setter platform – which is an affiliate network reward platform targeted at business and individuals as well.
It is common to find privacy coin users complaining about inability to spend their tokens, TELE owners however enjoy a huge benefit from this.
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Privacy has become a much sought feature in the virtual world but it also makes digital activities susceptible to criminals. Cryptocurrency operators are constantly resisting several attacks by suspects and all anonymous users can be investigated by the law enforcements.
On the bright side, privacy coin provides the users with anonymity and protection required in business.