Cryptocurrencies have gained popularity due to several factors, including privacy and anonymity. Some of them help users to conceal their identities and their transactions. Amid mounting concerns about the anonymity of early cryptocurrencies, such as Bitcoin, users are searching for new options.
Let’s take a look at some popular privacy-oriented cryptocurrencies, which have several built-in privacy features. These claim to offer enhanced security features or options that help to keep users' identities and activities concealed.
- Despite the sophisticated encryption and privacy features employed to protect user anonymity, full anonymity is unlikely to be guaranteed by any cryptocurrency as most blockchain transactions are recorded and accessible on the public ledger.
- Certain methods exist, such as the cryptocurrency mixer CoinJoin, to obscure one's identity or transaction history on Bitcoin, but this requires some technical know-how and comes with transaction fees.
- Several other cryptocurrencies have built-in privacy features or options that users can enjoy for more private online commerce.
Monero's (XMR) popularity has been on the rise, primarily due to its ability to help anonymize users. Monero transactions are much more difficult to trace because they use ring signatures and stealth addresses. These methods help to hide the identities of the sender and the receiver. Additionally, Ring Confidential Transactions, or RingCT, helps to conceal the transaction amount, providing more privacy.
Trading at $184.61 as of May 27, 2022, Monero was the 22nd-largest cryptocurrency by overall market value, coming in at roughly $3.4 billion.
Zcash (ZEC) defines itself as “If Bitcoin is like http for money, Zcash is https," underlining its enhanced security and privacy features. Zcash has implemented a cryptographic tool called Zero-Knowledge Proof and grants participants an option to shield transactions. It allows participants to transact without any of them revealing their addresses to the other(s). Zero-Knowledge Proof also obfuscates the transaction amount.
Zcash ranks at number 44 in the list of cryptocurrencies with a market cap of $1.22 billion and is trading at $84.54 per ZEC as of May 27, 2022.
Created in 2014, DASH is a cryptocurrency that allows the user to choose whether or not their transactions are anonymous and private using CoinJoin. The feature works by obscuring the origins of your funds. Choosing to use the feature will slightly raise the fee for the transaction. DASH achieves this through a mixing protocol utilizing an innovative decentralized network of servers called master nodes. Another feature DASH offers is Instant Send, which can process transactions as fast as a credit card.
As of May 27, 2022, Dash ranked 72nd by market cap with a total value of $590 million. At the time of writing, it is trading at around $55.00.
Horizen (ZEN) offers privacy shielded Z-Addresses and public T-Addresses that work similarly to Bitcoin. However, sending funds from a Z-Address to a T-Address will show the amount received. Horizen also boasts a vast node network, which helps to improve anonymity.
On May 27, 2022, Horizen traded at $18.77 and had a total market cap of around $234 million. That made it the 128rd largest cryptocurrency.
Instead of relying on cryptographic techniques, Verge (XVG) banks on the existing and tested technology of The Onion Router (TOR) and the Invisible Internet Project (I2P) to protect users' identities. TOR bounces a user's communications over a distributed network of relays and tunnels run by volunteers spread across the globe, thereby hiding the user’s identity. On the other hand, I2P encrypts user data before sending it through an anonymous, peer-to-peer, and volunteer-run globally distributed network. It allows hiding the locations and IP addresses of the transacting participants.
Verge made headlines when a popular adult website adopted it to start accepting cryptocurrency payments. The primary reason for the development was Verge’s privacy features.
As of May 27, 2022, Verge ranked 307th by market cap with a total value of $76 million and an exchange rate of $0.0046 cents.
Beam is a security-focused token with core features that include complete control over your privacy. All transactions are private by default and no addresses or other private information are stored on the blockchain. It claims superior scalability due to its compact blockchain size, opt-in auditability, support for online and offline transactions, atomic swaps, and hardware wallets integration.
As of May 27, 2022, Beam tokens were trading at $0.13, with a total market value of $15.3 million, making it the 667th most valuable cryptocurrency.
The Bottom Line
While privacy is a much-desired feature in the virtual world, it brings with it the perils of a large criminal element. Cryptocurrency operators have to fend off numerous hacking attempts by malicious participants. Law enforcement agencies and regulators are also more likely to investigate people with large transactions.
Although Bitcoin remains the most popular choice, it is by government agencies. They have become quite good at tracing Bitcoin transactions, creating a strong incentive to switch to more private cryptocurrencies. Bitcoin has been a popular choice to protect a user’s identity and as a result, transactions are constantly being targeted and monitored by government agencies. They have become quite good at tracing Bitcoin transactions, creating a strong incentive for users to switch to more private cryptocurrencies like those listed here.
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