What are privacy coins and how do they differ from Bitcoin?



Cryptocurrencies are usually a nickname, but they are not necessarily private. Bitcoin (BTC) and other assets are run on the blockchains, with every transaction publicly posted online. During a transaction between two or more parties, assets are transferred to different portfolios, each represented by a series of letters.

With these addresses and transactions appearing to everyone, there is a certain level of traceability, especially if the wallet is transferring funds to an exchange that requires KYC verification.

Some crypto assets, often referred to as privacy coins, private coins or anonymous coins, attempt to hide information about transactions, giving users more privacy. Why would someone need privacy if they didn’t do something illegal? It could be a preference or perception of privacy as a basic human right that could be for two reasons. The criticism is largely private. Not every transaction is logged somewhere for all to see with the click of a button.

There are a number of possible ways to add privacy to Bitcoin, including peer-to-peer trading, although the various crypto assets focus on privacy directly across its technology. Some of the familiar privacy assets in the crypto space include Monero (XMR), Zcash (ZEC), Verge (XVG), Beam and Grin. It is also included on the list, as it allows anonymity, although the coin is not technically classified as a privacy asset.

Monero

One of the most popular privacy-focused assets in the industry, Monero has been on the scene for nearly seven years, after making several headlines in the years that followed. Monero prides itself on decentralization, and promotes assets that support these stated values. “It was a fair, previously announced release of the CryptoNote reference code,” the Monero website says. “There was no bremen or an instamin, and no part of the block reward was going into development.”

Monero, a proof-of-work blockchain-based coin, promotes many different privacy technology features, to all of its website, including stealth addresses and RingCT. Added to XMR in 2017, “RingCT, short for Ring Confidential Transactions, is How to Hide Transaction Amounts in Monero,” explains Moneropedia, illustrative section of the asset site.

Monero caught the interest of the US government in the latter part of 2020. The Internal Revenue Service placed a bonus on top of the asset, promising up to $ 625,000 in exchange for breaching the currency’s privacy technology. Two blockchain analytics groups, Integra FEC and Chainalysis, received the award a few weeks after the IRS announced the award.

Zakash

Zcash is another popular privacy-focused asset in the crypto space. It was started in 2016 and started by Electric Coin, which is headed by cypherpunk Zooko Wilcox. Zcash originates from the same Bitcoin token, according to the parent site. ZEC is working on its blockchain with a PoW mining consensus, separate from Bitcoin.

ZEC allows private transfers, which are called protected transactions, and public transactions. The Zcash website states that “Zcash gives you the option of confidential transactions and financial privacy through protected addresses,” adding: “Zero-knowledge proofs allow verification of transactions without revealing the sender, recipient, or transaction amount. Selective detection features within Zcash allow the user to share some details Transactions, for compliance or auditing purposes. “

Dash (kind of)

Dash is another popular cryptocurrency that hosts privacy features. However, the entity that manages currency development, the Dash Core Group, has made it clear on several occasions that Dash is not a privacy asset, although it does come with optional added anonymization features.

Group Marketing Head, Fernando Gutierrez, previously told Cointelegraph: “Dash is a payment cryptocurrency with a strong focus on usability, which includes speed, cost, ease of use, and user protection with optional privacy.”

“Dash is not AEC!” DashPay CEO Ryan Taylor said January 2021 tweet Referring to anonymized enhanced cryptocurrency, or AEC – a term used by US regulatory agencies. “As a literal fork of Bitcoin, all Dash transactions are completely transparent,” he added in his tweet: “All inputs, outputs, addresses and amounts are recorded in each transaction and can be viewed – by anyone – on the public blockchain.”

XCoin joined the crypto world as a fork of 2014 Bitcoin, later renamed Darkcoin, and later Dash. The asset is based on the proof of stake blockchain.

The currency allows users to conduct transactions anonymously, if they so choose, through what is referred to as private posting. “The technology that Dash uses in our private posting function is CoinJoin, which is a technology that complicates transactions to the point that it’s difficult for analytics companies to analyze,” explained Gutierrez, as previously reported.

edge

PoW origin running on its blockchain, Verge exists as another cryptocurrency that promotes privacy capabilities. Verge started with a different name. “Verge Currency was created in 2014 under the name DogeCoinDark,” according to Asset Site, but was later rebranded to Verge Currency.

Verge, which is an open source asset, enables private transfers via I2P and Tor tech, which anonymize parameter locations (IP addresses), according to information from BitDegree, as well as Cointelegraph’s previous reports.

Verge gained significant price momentum in late 2017, reaching highs of around $ 0.31, based on TradingView data. The asset is currently trading at approximately $ 0.023.

A beam and a smile

Grin and Beam took off in the crypto market in 2019, promoting a different technology called Mimblewimble. A type of blockchain technology, the concept of Mimblewimble was introduced to the public in 2016 as a PoW variety, according to a community-submitted article by William M. Peaster at Binance Academy.

Grin and Beam was launched based on Mimblewimble, although Litecoin (LTC), a longtime prominent asset in the crypto space, is working on implementing the technology.

The Binance Academy article reads: “On the MW blockchain, there are no addresses that can be identified or reused, which means that all transactions appear to be random data from an outside person.” The article adds, “The Mimblewimble block looks like one large transaction rather than a mixture of many,” and then dived into other aspects of the technology.

Currencies of privacy and regulation

Government surveillance of privacy coins has grown in recent years, as partly evidenced by the IRS’s efforts against Monero technology. Privacy coin references also appeared in the U.S. Financial Crime Enforcement Network’s proposed regulation on self-hosted cryptocurrency wallets in December 2020.

“Several types of AEC (such as Monero, Zcash, Dash, Komodo, and Beam) are growing in popularity, and different technologies are used that prevent the ability of investigators to identify transaction activity using blockchain data,” the December document, citing anonymity, said. Enhanced cryptocurrencies. Additionally, South Korea banned anonymous assets in November 2020.

Some cryptocurrency exchanges have removed the aforementioned assets from the list. In October 2019, OKEx Korea stopped trading on its Monero, Zcash, Super Bitcoin (SBTC), Dash and Horizen (ZEN) platform. BitBay removed Monero near the start of 2020. Bittrex removed Zcash, Dash, and Monero from the exchange in January 2021. A number of other crypto platforms have also removed privacy-enhanced assets over the past year or two, including ShapeShift.



Related Posts

Leave a Reply

Your email address will not be published. Required fields are marked *