Blockchain is a digital ledger that shares records of transactions transparently. Thus, the details of financial transactions on a blockchain are open for all to see. While this is an advantage, it could also limit privacy. With innovation, though, all problems can have a solution. Privacy coins are the solution to blockchain’s transparency which some users deem excessive. With privacy coins, the details of your financial transactions can be concealed. Here are five privacy coins and how they are used to achieve privacy.
Monero has achieved a high level of popularity due to its privacy-oriented features. Monero’s blockchain is built to be opaque. This is done by making transaction details, such as the sender and receiver’s details, and the amount of the transaction anonymous by disguising the participant’s address used by the parties involved.
Monero eases privacy issues through the use of ring signatures and stealth addresses. Ring signatures give room for a sending participant to hide his identity from other participants in a group.
Ring signatures are anonymous digital signatures from a member of the group. It protects the sender’s identity by concealing to whom the signature belongs. Monero has a non-traceable transaction history that provides participants with a safer network that protects them from having their units blacklisted by others. Transactions on Monero cannot be traced or linked.
Zcash was created in 2016 by cryptographers who loved bitcoin but wanted more private transaction options. They enhanced the bitcoin open source code with Zero-knowledge proof technology resulting in Zcash. It is a cryptocurrency with strong privacy features. With zero-knowledge proof, participants can hide transaction details. These details include the destination address, the amount of the transaction, and the date and time of the transaction.
Zcash provides options that allow participants to choose if they want their transactions to be transparent, just like bitcoin, or if they want them private. To do this, a participant can create public or private Zcash transactions. It gives users the freedom to choose what to reveal about themselves. It was designed for privacy, and it also offers choice.
Dash was launched in 2014, about five years after bitcoin. Dash requires computational power to be mined into existence. The team behind Dash aimed to improve Bitcoin by including faster transactions and optional privacy.
Dash master nodes store the Dash blockchain data and make decisions on distributing the DASH development fund. Dash was one of the first cryptocurrencies to recognize the importance of privacy, and the “private send” feature tackles this issue. It mixes transactions and sends the coins to different addresses to protect user identity. In recent years, Dash has been adopted as an alternative currency in countries like Venezuela, Colombia, and Argentina. Dash users in countries like Nigeria can pay for everyday goods with Dash through third-party apps.
It is a cryptocurrency that focuses majorly on security and confidentiality. It has unique features that give users complete control over their privacy. Automatically, all transactions are private, so wallet addresses and other confidential information cannot be found on the blockchain. It also offers offline and online transaction services, hardware wallet integration, and more.
Horizen is a cryptocurrency and a blockchain network with its main focus on privacy. It was formerly known as ZenCash, now rebranded as Horizen. Since its introduction as ZenCash, it has adopted zero-knowledge proofs to ensure that its ZEN currency remains untraceable between its users.
Horizen has the largest node network on the blockchain. It has a massive network of about 46,000 active nodes, exceeding both Bitcoin and Ethereum – its nearest rivals in active nodes. This plays a major role in its goal to ensure privacy. These massive node networks are geographically dispersed and help improve the network’s reliability, speed, and security. Horizen uses a multi-tier node network. This means that nodes may perform different roles. It consists of three types of nodes – regular full nodes, secure nodes, and supernodes.
The regular full nodes on Horizen work like those on Bitcoin or Ethereum. They contain a complete duplicate of blockchain data and network transactions.
Horizen currently has about 41,816 secure nodes. At the core, Horizen’s secure nodes are regular full nodes. What makes them secure is the addition of special encryption that protects interaction between nodes. Secure nodes use distinct enhancements that facilitate the security and flexibility of the Horizen network. This makes them more efficient than a regular or master node, thereby improving decentralization and point-to-point encryption.
Finally, Horizen has about 4,467 super nodes. They are robust, secure nodes with the role of hosting Horizen sidechains. They empower a sidechain platform for an infinite number of DApps and blockchains, bringing huge advancements to the Horizen ecosystem. Additionally, they facilitate secure node payment and tracking to be shifted in protocol or on-chain.
Since its time as ZenCash, Horizen has evolved a lot. Currently, the Horizen team focuses on building sidechain technology which can be used to build DApps connected to the Horizen mainchain. Dapps created on the Horizen mainchain would enjoy the security benefits that come with its network.
Why Use a Privacy Coin?
While it is often assumed that privacy coins are used by criminals for illegal transactions, there are a series of legitimate reasons to use privacy coins. With cryptocurrencies, it has become easier to study behavioral patterns and connect between addresses. If you do not like your data analyzed by companies in a bid to identify your purchasing patterns, you may use privacy coins.
In summary, cryptocurrencies and blockchains have revolutionized the internet, playing an integral role in the decentralized web. With web3 users passionate about data ownership and control, privacy coins are becoming more useful than ever. Privacy coins will play a huge role in making the internet more secure.