Privacy coins emerged as a revolutionary solution for security concerns in the crypto world. If those coins are in your investment target, this article is here to help.
The importance of privacy cryptocurrency
Privacy coins were invented to help its users obscured their identity and data of digital assets. As being known, the transactions of classic cryptocurrencies, like Bitcoin, are traceable by anyone in the blockchain. Even though the deals do not accompany any personal information of traders, the public addresses in there are often more than enough for other parties to track the transaction.
In contrast, privacy coins employ a wide range of protocols and technologies to conceal all of the details related to both involved parties of the transaction. Users can be self-assured when trading privacy coins because no addresses or transaction amounts are recorded. Therefore, their identity and the value of their digital assets are also hidden in the shadow. In short, privacy coins bring an anonymous crypto environment for investors to trade and claim full control over their assets.
Although there are a lot of concerns about criminal activities associated with the use of privacy coins, the benefits they offer to crypto investors are undeniable. That’s why they are increasingly popular in recent years, regardless of criticism. This popularity facilitates the creations of many privacy coins in the market, including those five introduced below.
Top 5 Privacy Coin in 2020
Monero is one of the most popular names among the privacy coins segment. In spite of its popularity, interestingly, most founders of this famous coin don’t want to cover themselves with fame. Five among seven original Monero’s developers decided to hide their identities to the public. This quite aligns with this coin’s characteristics.
The main thing that makes Monero outstanding is its privacy-focused features. The first thing to mention is Ring Signature which enables traders to hide among a group of users who share keys. The transaction is approved through a signing key that can be made from any member in a particular group of account holders. The outsiders who want to observe transactions will only be able to see those electronic signatures without identifying the identity of an individual signature. This means that it is much more difficult to link the specific account holder to any transaction.
Besides obscuring user’s addresses, Monero also released a new technique call RingCT (Ring Confidential Transactions), which adds an additional layer of privacy by hiding the transaction value. Moreover, this privacy coin is also enhanced with the use of the stealth address. It is a one-time address that produced randomly every time transaction is made. Thanks to these features, the transactions are kept completely secret and can not be exploited by anyone outside.
Zcash is also the name that investors may hear regularly when talking about privacy coins. The creation of this coin is mainly inspired by Bitcoin. The developer of Zcash made some changes in the original Bitcoin code to create a new and more private cryptocurrency. Hence, Zcash is also called as a fork of Bitcoin.
The most innovative feature of Zcash compared to Bitcoin is privacy. Not only concealing the addresses of transaction recipients, but Zcash is also so private that the only information revealing in the transaction is date and time. The secret behind is Zero-knowledge Proof. To briefly explain, this is a technology that helps sender and receiver verify the transaction without disclosing any personal information. The use of this technique helps prevent all the cases that transaction details are shared publicly in the blockchain, or recipients’ information is stolen and exploited.
Apart from privacy protection, Zcash is also more scalable with the ability to deal with more transactions at one time. Additionally, one more advantage of Zcash is a quick transaction processing time. The time for Zcash system to confirm a new block, which carries new transactions, is only 2.5 minutes, whereas, Bitcoin takes 10 minutes to do the same.
Another Bitcoin’s fork in the list of privacy coins is Bitcoin Private. Actually, Bitcoin Private is the product of fork-merge between Bitcoin and Zclassic, and of course, the main purpose is also to create a more privacy-centric coin.
The outstanding technology used by Bitcoin Private is zk-SNARKs (Zero-Knowledge Succinct Non-Interactive Argument of Knowledge). Simply, zk-SNARKs is an advanced version of Zero-knowledge Proof, by both of which transactions are confirmed without necessary reveals of personal information. Additionally, with zk-SNARKs, the interaction between prover and verifier is also eliminated. This technology also obscures transaction metadata, which can be used to identify transaction recipients. Therefore, the transaction details and identity of both parties can stay anonymously and safely.
Similar to Zcash, Bitcoin Private also shows an advantage over Bitcoin by performing a faster transaction process with only 2.5 minutes. In addition, it utilizes a larger block size to 2MB, instead of 1MB as original Bitcoin.
Beam belongs to the young generation of the privacy coins market which is enhanced more privately and efficiently in comparison to predecessors. Beam is developed with a new technology used for the first time in the crypto world, which is Mimblewimble blockchain protocol.
Mimblewimble integrated both Confidential Transactions (CTs) and Pedersen Commitments Scheme in order to complement each other. This combination generates a “blinding factor” that helps both parties hide the exact amount of funds in the transactions by multiplying the transacted amount with a random value. In addition, this “blinding factor” also plays a role as the signing key for the transaction. By these, the transaction details are secured completely and prevented from being traced by the prying eyes.
Moreover, Mimblewimble can overcome the drawback of CTs, which is the cumbersome transaction process, by combining blinding factors and dummy outputs. As a result, the use of CTs in Mimblewimble still reaches the highest level of privacy for users without lower productivity of the whole system.
Apollo Currency has claimed itself as a revolution in the privacy coin market. Taking the advantage of a young coin, Apollo was designed with the best of forerunners by combining various features of 20 existing cryptocurrencies in one system, in order to become “all-in-one cryptocurrency, as to how the founder talks about this coin.
Apollo Currency was built based on a totally brand new system called Olympus Protocol. This protocol is the aggregation of many functions that have been seen in the other altcoins before, such as low transaction fees, fast transaction time, multi-platform wallets, and many more. Among those features, there are several that integrated for privacy purposes.
The first worthy to mention is Coin Shuffling. This feature allows account holders to hide the owning funds and transaction details by mixing up the coins between users. Additionally, IP Masking collaborated with the use of the Tor network, which is another privacy-focused feature to provide the implementation of untraceable transactions. These integrations create a very high level of anonymity that can satisfy investors who are considering investing in this coin.
Privacy wallet: another optimal solution for the identity-hiding issue
If privacy coins do not align with the investment desires of crypto holders, a privacy wallet like Incognito Wallet is another wise choice. With Incognito, users can invest in any cryptocurrency as they want without concern about privacy problems. This is achieved thanks to privacy-oriented features that the wallet offer to help users send and buy crypto anonymously.
Incognito Wallet also integrates Zero-knowledge Proof which is also used by many popular privacy coins mentioned previously. This technology allows the wallet to implement untraceable transactions to keep information confidentially for users. Incognito Wallet is designed with Incognito mode to help crypto traders trade anonymously. By connecting to the public blockchain via a trustless portal, users can exchange their original coins to the privacy version at the rate 1:1. This version of the private coins will let traders implement transactions in complete anonymity and avoid any tracing activities from onlookers.
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