What’s the point of using DeFi? A straight answer would be anonymity and privacy. Digital currencies based on Blockchain technology usually allow users to hide their identity and transactional info.
In general, all cryptocurrencies are private since they are not controlled by anyone. But one needs to take a closer look if one wants to understand how far a cryptocurrency is private or not. But, not all cryptocurrencies are private in a concrete sense of the word.
If you want to know what those qualities and characteristics are, you have to read the following article.
What Is A Private Cryptocurrency?
Al the decentralized payment methods are controlled by no one, hence they are private. However, private cryptocurrencies are a little different. Cryptocurrency transactions can mask their origin and destination, hiding the information of the user’s real wallet balance and address. These transactions also mix different transactions with each other eluding the chance for chain analysis on the blockchain.
While popular cryptocurrencies like Bitcoin offer transparent transactions, private coins or private cryptocurrencies do not. This is where they set them apart from non-private currencies like Bitcoin.
Due to the transparency of the non-private tokens, anyone in the network can view the public addresses, and track a user’s deposits and withdrawals, and run chain analysis. But private cryptocurrencies offer untraceability and anonymity, making it impossible for any third parties to trace back to the user.
In simple words, private cryptocurrencies stop the possibility of third parties from running chain analysis, which is impossible for non-private tokens. In doing so, private coins offer ultimate secrecy of transaction.
How Does Private Cryptocurrency Work?
In addition to the features common among different non-private cryptocurrencies, there are some exclusive features and strategies that private cryptocurrencies follow. Some of those strategies are – stealth addresses, CoinJoin, ring signatures, and Zk-SNARKs.
Here is how private cryptocurrencies use these strategies to work on the platform –
Stealth Addresses: one of the most amazing features of private cryptocurrencies is the stealth address. This strategy helps such coins maintain their anonymity by allowing the senders to generate new addresses for separate transactions. Monero (XMR), a well-known privacy coin, is known for the use of the unique DKSAP (dual-key stealth address protocol).
Ring Signature: the other feature of the private cryptocurrency is the ring signature. This strategy allows the private coin users to combine their signatures with the other users. This allows the users to mask their identities on the platform. With a high number of additional parties in the blockchain ring of signatures, the chance of tracing the sender will be lower.
CoinJoin: Coinjoin is a coin-mixing strategy that mixes the transactions from multiple people to one single transaction. Then it distributes the transaction to respective users through new addresses. This allows the transactions to stay hidden.
Zk-SNARKs: This is a way of validating private cryptocurrency transactions while also not giving away any critical information critical for identifying the users or the transaction. This is a way of concealing the information regarding the parties and their account balances.
Most Private Cryptocurrency: A List Of 5 Private Cryptocurrencies
So, what is the most secure cryptocurrency? Here is a list of some of the best private cryptocurrencies that offer the utmost security to users.
1. Monero (XRP)
Itcoing might be priced higher compared to the likes of Monero, but Monero excels in terms of high-level transactions and as a P-2-P private cryptocurrency. Monero is a privacy-oriented cryptocurrency and is growing in popularity in the crypto community due to its anonymity.
When using nonprivate cryptocurrencies, the users are provided with a public address called the key. This allows the sender to view the recipient’s asset holdings. However, even though the sender has the recipient’s key, they cannot view the recipient’s holdings when they are using Monero. It is one of the best private cryptocurrencies.
2. Zcash (ZEC)
ZCash came into existence in 2016 when a group of developers planned to create something similar to Bitcoin but with some extra features. They used a blockchain split of Bitcoin with an improved level of anonymity and security. Although it was called Zerocoin initially, the name eventually became Zcash. Instead of removing the transaction information, ZCash prevents third parties from ever accessing the transaction information. The ZCash Blockchain has encrypted thanks to the zk-SNARK strategy it uses. The anonymity of this private cryptocurrency makes it an interesting one for the Crypto community.
When introduced in 2014, the main purpose of Dash, also called Xcoin, was to protect the user’s information and maintain their privacy. Dash has great encryption capabilities, and it intends to be your cash, credit card, and your go-to mode for daily transactions.
Using the instant send by Dash, users can send money as fast as credit cards. Dash currently ranks 85 by market cap in 2023. The highest price of this private cryptocurrency, as noted on 24th April 2023, is $50.69.
Have you heard of the Mimblewimble protocol? It is a strategy to conceal the metadata and transaction values during a transaction. This protocol also thins out the blockchain & enhancing scalability. This technology is used in the private cryptocurrency named Beam.
This private crypto coin has set out to offer people control over their own finance. It also has a self-governing community that supports the coin and fosters its growth.
5. Verge (XVG)
Another open-source, decentralized private cryptocurrency is Verge. The specialty of this private coin is that it allows users to make their transactions anonymous by masking their IP address.
IP address, or the numeric identifier that is connected to all the computers and mobile phones, allows third parties to track back to the user. But Verge’s feature of Obfuscating IP addresses allows it to keep the transactions completely anonymous. Cryptocurrencies like Verge are making private cryptocurrencies more popular with their features.
While talking about cryptocurrencies, and the virtual world, the anonymity of the coin and the transactions become an integral part. Thanks to private cryptocurrency coins such as the ones listed here, users have more anonymity in their cryptocurrency transactions.
I hope that this article provides you with the necessary information. In case there are other queries related to the same, reach out to us through the conversation section below.