The rise of cryptocurrencies has introduced a new era of anonymized currency trading which has changed the financial world in many ways. It all started with Bitcoin and now new altcoins are appearing in the market every week. Some of these altcoins are more specialized than others and have made privacy their main focus.
The Top 3 Cryptocurrencies for Maximum Privacy
Contrary to what is popularly believed, Bitcoin is not completely anonymous. It is, in fact, pseudo-anonymous which means that transactors cannot be directly traced but are not untraceable either. In fact, several high-profile cases like the owner of Silk Route, the online drug marketplace, were discovered through Bitcoin transactions.
The Best Cryptocurrencies for Online Transaction Privacy
Online transactors are also concerned about other security aspects and so, a new line of privacy-centric cryptocurrencies have emerged. These altcoins offer much better privacy and security to users and are sure to impact the cryptocurrency market. Here are the top anonymous cryptocurrencies in the market today.
Dash is the oldest of the three coins we are covering in our list today. It was launched in January 2014 and since then has enjoyed a steady stream of success. Trading under the moniker DASH, this altcoin currently has a US$2 billion market capitalization. It is also widely known for offering the highly popular crypto-coin anonymizing technique called Coinjoin.
Basically, Coinjoin allows altcoin users to pool their funds together and mix them in a digital bowl. The bowl is then stirred and shaken out to provide the fund holders with the exact same amount they put in. Of course, a certain and insignificant amount is deducted from each fund contributor for completing the process.
Once the funds have been returned to the owners, each Dashcoin they hold is different from the ones that they held before. Thus, anyone who had been tracking any transactions through the designated coin markers will lose their previous record.
This method of mixing and jumbling up the cryptocoins can be effective in dissuading any party to track transactions. This is so because once the coins have been put in the mixer, different coins will go to different people. Naturally, tracking them will prove futile. As such, the Coinjoin method of anonymization is a simple, effective, and fast method of getting rid of any tracking.
Dash does not have a very sophisticated privacy model but the fact that it is among the most popular means a lot. In fact, if thousands of people pool in and mix their currencies, then it becomes quite complicated to track any one of them at all.
Monero is another one of the earliest altcoins on the market having first been launched in April 2014. It goes by the moniker XMR and is currently capped at US$1.3 billion. Monero is widely known for its highly effective ring signatures. This privacy feature offers enhanced security and privacy to users by complicating the identification process.
A good way to understand how Monero works is by considering a line of suburban houses. Each house has furniture and other valuables stored within. Each individual among a group of people holds a key to one of the houses. However, his exact house they own or have access to cannot be deciphered by anyone other than them.
Also, when you transact with another person or party, only the person who you are transacting with will know about you. Anyone outside the transaction will remain unaware of the identity of each party involved. Further, only the value of the coins transferred will be known to any party at the other end.
All of these features mean that Monero offers one of the most methodical and effective means of securing your cryptocurrency investments. It does take some time to get a handle on the working process. However, once understood, the method provides a level of security which is barely matched by any other altcoins on the market.
Additionally, Monero can be mined using both CPUs and GPUs. This makes it highly popular among miners and traders alike and ensures it a popular spot among all privacy altcoins.
ZCash is one of the more recent additions to the privacy cryptocurrency market and has become popular in a very short time. Launched in October 2016, this altcoin has a market cap at US$600 million and trades under the moniker ZEC.
ZCash uses a relatively new model for securing transaction anonymity and privacy. Its method is called zero-knowledge proof. The best way to understand this method is to take the analogy of owning a vehicle. Now, if you have all the papers showing that you have a vehicle but not the details of its particulars, it is anonymous.
So, other people might know your address and be able to see that you have a garage. But they will not be able to figure out anything about the vehicle that is parked in it. This means that any ZCash users can retain a high degree of privacy since no one can see what account balances they have. This also means that no person will be able to see the identity of the individual behind the account itself. Thus, every ZCash user is effectively anonymous for any and all outsiders.
These are just three of the several cryptocurrencies in the market which focus on privacy. The nature of these cryptocurrencies can be contentious as they are not necessarily under the purview of authorities. While this does serve the original purpose of cryptocoins, which is to transact without control, it also levies some risk. Any person making use of cryptocurrencies, specifically ones focused on privacy, should understand all related processes and the dangers they bring.
With that said, cryptocurrencies are slowly but steadily being integrated into global finance and FinTech worldwide. As governments move to grapple with this increasingly popular financial investment tool, there are sure to be industry-defining changes. Now, with the demand for anonymity growing online, it is very likely that specific regulations which serve this demand are established. Meanwhile, cryptocoins can come under the minimal regulation of authorities as well. The future of cryptocoins is full of possibilities but it also brings concerns which every smart investor should understand fully.
Summer is an established author when it comes to everything tech. She frequently analyses various software and has reviewed many apps in the process. As a technology enthusiast, Summer has worked in many IT-related industries. She follows cybersecurity news closely and published articles related to the latest tech-trends from around the world.