When Bitcoin came out, it revolutionized the way we think to transact. This would be the first time where you don’t need a trusted third party (bank) to validate your transaction. Instead, the transaction occurs on the blockchain where your public key data is logged on a public ledger. But what happens if you wish to be anonymous? Enter privacy coins.
Privacy coins keep the identity of the transactors concealed. Why might we need privacy coins (besides for hypothetically for illicit activities — not an advocation here!)? Perhaps you’re a business with transactions with a vendor that you want to stay secretive for a product launch. Or, perhaps you wish to make anonymous donations to charity and frequently use a pseudonym. Regardless of the reason, privacy coins are on the rise. I’ll go into the top three that are battling for crypto super dominance.
I evaluate crypto projects by network effects and clear adoption. The one that can achieve both will be the one that is super dominant one that may yield in investment returns.
Dash
Released in 2014, Dash was created from a Bitcoin fork. To create privacy, it uses “PrivateSend” mechanism that mixes your transactions with other users and coins to cloak your actual transaction. Dash is based on a proof of work systems that when a miner validates the block, the block reward is split between the miner, master node, and a development treasury.
Zcash
Launched in 2016 and also a fork from Bitcoin, Zcash uses zero-knowledge cryptography. Essentially it allows validation of transactions by the nodes without revealing any transaction data except for the time stamp. The rest of the data (sender, receiver, amount) is shielded. Some of the transactions occur in the transactions are shielded yet the majority are not. Zcash gives the option for both.
Monero
Like Dash, released in 2014, Monero is an open source privacy coin that issues transactions with Ring Confidential Transactions. Unlike Dash or Zcash where privacy is an option, Monero is anonymous first. All transactions remain anonymous, untraceable, and unlinkable. I like Monero because it ensures complete fungibility. It’s also the coin that I mine!
Out of all these coins, Monero is my preferred coin because privacy isn’t an afterthought — it’s baked in. There have been some reports that Zcash is becoming centralized. I’ll need to further investigate.