With over 50 privacy coins on the market, purveyors of anonymous transactions are spoilt for choice. This smorgasbord of privacy-centric coins can be a little overwhelming though. To help you pick the best of the bunch, here’s our rundown of the main contenders.
How Privacy Coins Work
Bitcoin transactions are semi-anonymous: every transaction on the blockchain is broadcast publicly and visible for all eternity, but the owner of each wallet is unknown. Tying addresses to real-world identities is now relatively easy for the powers-that-be, because everyone has to cash out somewhere, and that usually involves linking bitcoin addresses to bank accounts.
Most privacy coins still rely on a bitcoin-style public ledger, but use technology that obfuscates the path of the transaction. It might still be possible to determine that a certain amount of cryptocurrency was sent, but the path leading from sender to recipient has been concealed. The way in which various privacy coins go about this differs considerably.
Everything You Ever Wanted to Know About Privacy Coins
Privacy Tech Algorithms
The three most common privacy algorithms are zk-Snarks, Coinjoin, and RingCT. The latter method is used in monero; Coinjoin features in dash and is also being trialed with bitcoin; and zk-Snarks are used by most of the Z coins including Zcash. Here’s how they work:
RingCT: Monero’s ring signatures allow the sender to hide their transaction among other outputs. In addition, RingCT makes it possible to hide the amount being sent. Coupled with a stealth receiving address, this makes for an extremely discreet way of sending funds. Transparency is optional with monero, which uses an “opaque” blockchain.
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https://news.bitcoin.com/everything-ever-wanted-know-privacy-coins/
