Privacy coins or anonymity-enhanced cryptocurrencies (AECs) are a class of crypto coins that protect the anonymity of users and transaction amounts. AECs are like other crypto in that they run on blockchains maintained by validators, but they are distinct from the others because of the techniques they are using to preserve privacy.
These are the top five privacy coins in market capitalization as of July 26, 2022, according to CoinMarketCap.
No. 5 – Horizen (ZEN)
Robert Viglione and Rolf Vesluis introduced ZenCash in 2017. ZenCash is a fork of ZClassic that is also a fork of Zcash. In 2018, ZenCash rebranded itself to Horizen to mark its evolution from a simple crypto coin to a privacy coin focused on scalability. Horizen uses commercial content distribution networks (CDN) and Hypertext Transfer Protocol Secure (HTTPS) to make sure that transfers are secure. It uses zk-SNARKS cryptography to make transactions and users anonymous. Aside from the crypto ZEN, Horizen offers a host of blockchain-based tools that give freedom and privacy to publishing documents, messaging, and bypassing geographical restrictions.
No.4 – Oasis Network (ROSE)
The core developer of the Oasis Network is Oasis Labs that was founded by Dawn Song. It is a privacy-focused smart contract platform that uses the Cosmos SDK, which promotes data privacy and user confidentiality. Oasis Network promises to redefine DeFi, open finance, and Web3. ROSE is its native token launched in 2020. It is used to for transaction fees, staking and delegation at the consensus layer of this privacy-enhanced blockchain.
No. 3 - Decred (DCR)
Jake Yocom-Piatt founded Decred in 2016 with security, adaptability, and sustainability as its three main pillars. The Decred Digest states the mission of the project was “to develop technology for the public benefit, with a primary focus on cryptocurrency technology.” Its blockchain uses a combination of proof-of-work (PoW) and proof-of-stake (PoS) that delivers a layered consensus mechanism, which provides security other networks don’t have.
In 2019, the coin added privacy features based on CoinShuffle++ paper by Ruffing, Moreno-Sanchez, and Kate. Decred offers opt-in privacy on all transactions. The identities of users are hidden through Decred’s servers, which mix up transactions and keep customer information private.
No. 2 – Zcash (ZEC)
A group of scientists who wanted to create a crypto like Bitcoin with enhanced security for users and anonymity developed Zcash. It started as Zerocash. The Electric Coin Company improved Zerocash and renamed it Zcash. The coin uses the zk-SNARK security protocol to verify transactions, revealing no information on the parties involved. Developers of Zcash advocate for compliance with regulatory requirements and users can opt for full transparency when using the coin.
No. 1 – Monero (XMR)
Monero is not only the top privacy coin in terms of market cap; industry experts consider XMR to be the best privacy coin. Its cryptographic technologies guarantee privacy. RingCT obscures the amount of transaction. Ring signatures shields the sender by concealing which output was spent. Stealth address ensures that recipient’s address is not on the blockchain. Kovri cuts the link between transactions and your physical location.
XMR transactions are safe from hackers because their transactions are secured from public leaks made possible by Monero’s proof-of-work system and blockchain that rules out transaction spoofing or serious DDoS attacks. Monero is a completely decentralized blockchain, making it more stable and trustworthy. It is truly fungible. There’s no way to trace Monero because there are no serial numbers and all transactions are anonymized. XMRs will never be tainted or blacklisted. Its robust community comprising miners, pools, users, and developers is constantly working on innovative projects that improve the network’s security and its users’ privacy.
The privacy that these AECs offer also makes these coins the focus of governments and regulatory authorities. South Korea and India have banned local crypto exchanges from trading privacy coins. Some countries like Australia and Japan are putting pressure on exchanges against offering these coins, resulting in exchanges delisting them. Despite these, crypto enthusiasts who value privacy continue to buy them to use as currency or investment tools. Jake Chervinsky, Head of Policy for the Blockchain Association, states, “Privacy is a constitutional right, not a crime.” He goes on, “It’s deeply disappointing to see exchanges remove assets just because they have privacy-preserving features. There’s no law or regulation requiring this, just DOJ’s opinion that privacy is ‘indicative of possible criminal conduct.’”
If you want a diversified digital portfolio and you also value privacy, think about adding privacy coins. As with all investments, do your own research and weigh the gains and risks before jumping in. For your safety, make sure that your devices are virus and malware-free and your network is secure. For additional security, consider getting both online and offline wallets to store your assets. You can store your Monero in XMRWallet. It’s web-based and provides an open-source environment. There’s no need to download any software. It has multiple language support, and it’s absolutely free, even the import of past transactions.