Bitcoin was created to offer decentralization and anonymity to asset holders to enable transaction between two individuals without the direct intervention of a third party. This transactions are direct and unregulated, but are visible and traceable as the blockchain is an open ledger. While there is no real identity behind addresses, it's possible to link transaction together and have this provides a level of security risk.
This is the problem that privacy coins tackle.
What are privacy coins?Privacy coins offer private transactions which are not transparent. It blurs certain information, such as amount transferred, address of individuals invloved or amounts held in the wallets. This provides coin holders with a level of privacy and security.
Privacy coins is not a new technology, Monero; one of the most popular privacy coin was created in 2014 as a fork of bytecoin.
Check out this thread:
[ANN][BMR] Bitmonero - a new coin based on CryptoNote technology - LAUNCHED. It was previously known as Bitmonero. Other privacy coins include, DASH, ZCASH and the more recently launched BEAM.
On the downsides, privacy coins has been identified by some as a medium for corrupt practices and money laundering with transactions that are difficult or impossible to trace. Although this has been a popular criticism for all other cryptocurrencies including Bitcoin. Considering that fiat currency can also be (and is) used for illegal activities as well,
Another con is the problem of scalability. It takes a lot of data to obfuscate transactions and some privacy coin networks also mixes up the transactions being confirmed by miners to make it more difficult to trace at the cost of scalability.
There's also the problem of the security of the network, and it's imperviousness to attacks.
Which is your favorite privacy coin?
Would you, or do you use privacy coins over utility and security coins?