Privacy Coins: Which Cryptocurrencies Actually Offer Anonymity?

The cryptocurrency world claims to have secure technology as its backbone. Among the many cryptocurrencies in the market, Bitcoin is probably the most obvious choice as the most secure because of its massive hash rate or the computing power needed to verify and add to a cryptocurrency’s blockchain. As a hash rate scales up, it becomes increasingly difficult for hackers to attack the network.

However, the security of transactions is not the only thing that investors consider when acquiring and holding digital assets; Investors are also concerned about the degree of anonymity a cryptocurrency provides. The need for anonymity is something that Unijoin can provide through its technology that does not require logs, leaving no room for hackers to get to your personal information.

Wallets do not typically include the user’s basic information like name and physical address. However, they are easily traceable because the wallet comes with a code that includes a series of numbers and letters. This traceability makes it easier for hackers to target wealthy investors to steal digital assets.

More popular cryptocurrencies like Bitcoin and Ethereum are not by all means anonymous. They are simply pseudonymous, meaning investors can change and mask their wallet addresses to make it difficult to trace and analyze their digital assets. The transactions are guaranteed to be real despite the challenge of tracing the owner of the transactions or cross-referencing transactions if any of the multiple assets belong to the same person.

Bitcoin has become massive over the years despite the foreseen limitations of its private network. Governments and private firms are already analyzing and keeping close surveillance on the blockchain for several reasons, such as the use of blockchain technology to move funds meant for illicit activities. But investors and merchants find ways to properly anonymize their transactions through CoinJoin and coin burning.

In this article, we are going to explore available cryptocurrencies that offer real crypto anonymity without using third-party methods like CoinJoin and their features that are way better than most digital assets.

Popular Privacy Coins

Monero (XMR)

Monero’s white paper specifically emphasized that the most important aspect of its development is security and anonymity. This altcoin is one of the earliest cryptocurrencies to advertise its enhanced anonymous network.

Unlike most blockchains, where the complete information of each transaction is stored in a public ledger and can be accessed by anyone, Monero’s blockchain network, XMR, is not available to the public.

Monero also provides the investors automatic generation of new wallet addresses for each transaction, which is a significant advantage to most cryptocurrencies that still need the presence of third-party services like CoinJoin or coin mixing. Meanwhile, wallets are not the only ones hidden within XMR’s transactions but also the number of coins sent by investors.

Hiding user information is made possible by Monero through a technology called Ring Confidential Transaction, or RingCT. It follows the same mechanics as ring signatures, a technology also implemented by Monero to hide the digital signature by mixing it with decoys so the verifiers can’t identify which of the signatures sent the money.

RingCT is an improved version of ring signatures. While ring signatures can hide the user's wallet address, RingCT makes it possible for users to hide the amount of Monero coins they are sending and receiving.

PIVX (PIVX)

Private Instant Verified Transaction (PIVX) is an open-source blockchain network with Shield's security features. Like any other anonymous blockchain network, PIVX uses the cryptographic proof zk-SNARK or Zero-Knowledge Succinct Non-interactive Argument of Knowledge. This cryptographic proof makes use of a secret key developed before a transaction happens. The key makes it possible for users to complete their transactions by proving that the users have certain information without letting on what that information is.

Although Bitcoin and Monero’s proof of work systems are undoubtedly secure, they eventually become inefficient in terms of energy when they grow to a certain size. On the other hand, PIVX uses a proof of stake to reward the miners. The proofs needed for PIVX transactions are considerably lightweight, having only about 144 bytes generated by low-powered computing systems. This is a huge advantage in space efficiency and speed, compared to Bitcoin’s proof size, which can go up to 1 megabyte.

While most anonymous crypto are commonly used by savvy investors, PIVX aims to optimize its user navigation by simplifying the options of transparent or shielded transactions. However, once a shielded transaction is done, the user can still reveal the information about the transaction, like the wallet address and amount of coins sent to a trusted party.

Zcash (ZEC)

Although not as efficient as PIVX, Zcash also runs on the zk-SNARK protocol. The user also needs at least 4Gb of RAM to enable the hidden transaction feature of the coin. Open ledger is still the default transaction option of Zcash. Still, it is a much more flexible option than the popular cryptocurrency, Bitcoin, because of its fungibility and coin interchangeability.

There is dedicated hardware for Bitcoin mining called ASIC, or Application-Specific Integrated Circuit. Zcash, on the other hand, is ASI-resistant, meaning transactions do not rely on specifically designed hardware. This is advantageous because more people can jump into mining Zcash without worrying about the required hardware specs.

Users can reveal information via encrypted memos to a trusted party for each successful transaction. Although it is revealed to the receiver, how the memo is sent is protected and not revealed to the public.

Dash (DASH)

Being the first private cryptocurrency created in 2014, Dash has been around for most that cryptocurrency broke into the financial spotlight. It was formerly called DarkCoin, but was later rebranded to DASH as an abbreviation for “digital cash.”

Dash supports public miners, but it also has “masternodes.” Masternodes receive about 45% of all the mining rewards because beyond verifying transactions and concealilng user information, these masternodes perform other functions that speed up transactions, e.g. instant transfers.

However, the presence of masternodes also means that the blockchain network of Dash is somewhat centralized. But there is a tradeoff to this disadvantage. Since Dash runs on a dedicated masternode, the speed at which the transactions are done is significantly faster than most cryptocurrencies. The fees are also lower, charging only $0.01 to $0.02 for every transaction, compared to Bitcoin transactions that range from $1 to more than $30 per transaction.

Dash has several features, including the InstantSend. More importantly, there’s also PrivateSend, which uses the masternodes and acts like the CoinJoin or coin mixing that purposely obscures the origin and destination of the coin/s.

Verge (XVG)

Verge is probably one of the unique cryptocurrencies because it does not rely on cryptographic techniques to verify transactions. Instead, Verge uses established technologies like The Onion Router (Tor) network and Invisible Internet Project (I2P). Verge is specifically geared towards serving those who seek anonymity, above all.

Tor bounces off the information into multiple global servers via network relays and tunnels to hide transactional information. I2P, on the other hand, works much more similarly to mining, only that its main function is to encrypt the information using a peer-to-peer communications network.

Aside from hiding the wallet address, it also hides the user's IP address, so that hackers have no way to trace the coin's origin.

Conclusion

Digital assets by themselves are secure, but the identity of the owners of those digital assets are not entirely anonymous, especially with the recent movements of national governments and their agencies to regulate cryptocurrency.

New technologies are still being developed to improve cryptocurrency further, and the presence of such technologies like proof of stake and zk-SNARK makes it possible to initiate anonymous transactions while reducing energy consumption.

Cryptocurrencies, such as Monero, Dash, PIVX, Verge, and ZCash have paved the way for anonymity in cryptocurrency. It won’t be a surprise if other cryptocurrencies follow suit.

Meanwhile that only a select few cryptocurrencies offer anonymity, you may rely on a trustworthy bitcoin mixer platform like UniJoin, whose CoinJoin services prevent the risk of unauthorized access to your records.