At the beginning of the crypto market rise, many users believed that digital money automatically guaranteed anonymity. That is not true. At first, of course, few people knew which side to approach these cryptocurrencies. But over time, experts have learned to calculate users using blockchain analysis and additional information, such as data from centralized exchanges and exchanges. Therefore, it is worth remembering that most digital currencies do not provide anonymity but pseudonymity.
The state of affairs did not suit part of the crypto community. Gradually, coins began to appear that guaranteed real data privacy. Even though the target audience of such cryptocurrencies are the regulars of the darknet, technologies that support the anonymity and independence of users are necessary for the development of a digital society.
Here's a list of top five privacy crypto coins:
5. Zcash (ZEC) – $1,13 billion
The coin is based on the Zerocash algorithm, which evolved from another algorithm - Zerocoin. The latter was introduced in 2014 and was supplementary to Bitcoin. The stand-alone cryptocurrency Zcash appeared in 2016. Many people call Zcash the first truly anonymous cryptocurrency.
Data privacy in Zcash has been maintained thanks to a zero-knowledge proof cryptographic protocol (zk-SNARK). Thanks to this technology, it is possible to prove the truthfulness of information without itself. The system confirms the transaction without data on the transfer amount, sender, and recipient addresses. An outside observer can only see that the transfer has occurred.
ZEC coins do not differ from each other, they cannot be tracked, and only the sender and the recipient know about the fact of transfer under certain conditions. Users can hide or leave transaction details as they wish. At the same time, a transfer from an anonymous address to a public one will disclose the data, and from a public address to an anonymous one will preserve confidentiality.
4. Verge (XVG) – $1,19 billion
The Verge progenitor was introduced in 2014, called DogeCoinDark, and did not claim to be a big hit. However, in 2016, the coin underwent a rebranding and began to develop actively.
Verge developers guarantee privacy protection not through cryptography, like other coins, but obfuscation of IP addresses and geolocation. For this, Tor and I2P technologies are used. Tor's proxy server system encrypts traffic and sends it through a network of computers around the world. And the add-on from the anonymous I2P network further complicates the identification of users.
The Verge Wraith protocol allows you to send both private and public data. The cryptocurrency also supports atomic swaps - XVG can be directly exchanged for coins with other blockchains. In early April, the Verge network underwent a 51% attack. An unknown hacker exploited an error in the blockchain code and was able to mine coins without restrictions.
Against the background of the hack, the Verge team showed themselves. Not only did the developers implement an emergency hard fork of the system to fix the error. They also promptly released wallets for Android and macOS, announced the imminent release of a version for Windows. And also announced a partnership with TokenPay, thanks to which debit cards for XVG should appear. The developers' actions allowed stabilizing and raising the price of the coin, which began to fall after the news of the hack.
3. Bytecoin (BCN) — $1,2 billion
Bytecoin became the first coin based on the CryptoNote protocol. The project was presented in 2012.
With ring signature technology and one-time address keys, CryptoNote successfully hides sender and recipient data. Ring signatures are generated from user group data so that a specific person cannot be identified. The algorithm is complemented by obfuscation or code obfuscation. This technique makes it difficult to analyze transactions without affecting the throughput of the system.
The Bytecoin blockchain takes about 2 minutes to process the transfer. The developers argue that without the user's permission, third parties will not be able to obtain transaction data, and it will take "a lot of electricity and supercomputers" to hack the system.
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Bytecoin is an example of a project that is developing slowly but surely. The coin is traded on several major exchanges, supported by mining pools, a couple of online stores, exchanges, and playgrounds. After several years of silence, the team began to support, improve, and promote the cryptocurrency.
2. Dash (DASH) – $3,87 billion
Dash has gone through two name changes. At first, the coin was called XCoin, then Darkcoin. The modern version was approved in 2015.
The Dash platform operates through a two-tier structure. Nodes mine coins and keep the network secure. There is also a specific masternode that guarantees anonymity. For this, PrivateSend technology is used. Transactions are divided into parts and mixed until they are completely indistinguishable from each other.
Also, the Dash system runs the InstantSend service - masternodes can check and confirm transfers. If the transaction does not pass the verification of the node, then you have to wait for the standard procedure for inclusion in a new block through mining. Thanks to InstantSend, users can transfer digital money almost instantly.
Dash also differs from other cryptocurrencies in its consensus algorithm. The platform uses the X11 system, which includes 11 serial hashing protocols. Thanks to X11, mining DASH requires less power and wears out your hardware more slowly.
1. Monero (XMR) – $3,90 billion
The cryptocurrency appeared in 2014 after the hard fork of the old Bytecoin. Monero's anonymity is also built on the CryptoNote protocol and transaction code obfuscation. At the beginning of its journey, the coin was called BitMonero.
As conceived by the creators, Monero could be mined on video cards and processors. At the same time, the issue of the coin is not initially limited. After miners mine 18.4 million Monero, each new block will earn 0.6 XMR.
In March 2018, Bitmain presented an ASIC miner for Monero. However, project lead developer Ricardo Spagni said the new hardware could lead to centralization and jeopardize the system's anonymity. Therefore, on April 6, a hard fork occurred on the Monero blockchain. As a result, new cryptocurrencies appeared, and the original Monero became immune to mining on ASICs.
All Monero transfers are anonymous. However, if the system is subjected to a 51% attack, attackers will be able to reveal some of the data. That is why some of the developers have come out categorically against mining the coin on specialized ASIC chips.
The Monero team is regularly improving the project and actively interacting with users. Thanks to the active support of the community and constant improvements, the coin has become the leader in market capitalization among anonymous cryptocurrencies - it takes 16th place in the overall rating of digital assets.