One of the factors influencing the rising popularity of digital currencies is the anonymity of their transactions. Although blockchains are usually anonymous, there are several ways of enhancing the privacy of transactions. Naturally, some methods are considerably more effective than others. The most appropriate means of achieving anonymity include:
Anonymous Virtual Currencies
The most deal way of upholding confidentiality and anonymity in crypto transactions is using the lesser known coins, rather than the mainstream options such as Bitcoin and Ethereum. Despite the widely held perceptions, cryptocurrencies with the higher market caps, i.e. BTC and ETH do not adequate infrastructure to guarantee the utmost privacy of their users. Nonetheless, there are some altcoins that have this functionality inbuilt to their networks, although the popularity is negligible when compared to that of Bitcoin and Ether.
Dash, Zcash, OIVX, Monero and many other altcoins are among the cryptocurrencies that have reliable anonymity features. Notably, these coins leverage various mechanisms to achieve their objective. Therefore, it is recommendable to assess the perks of each coin before transacting with them.
New Addresses For Transactions
As of now, most of newbie cryptocurrency users have the habit of reusing their digital wallet addresses in multiple transactions. While this practice is not entirely wrong, it hinders the pseudonymity that is supposed to characterize digital currency transactions. Hence, it is advisable to create a new wallet address for every separate transaction as a measure of enhancing privacy.
Surprisingly, a majority of virtual currency traders often overlook stealth addresses. Also known as ‘throwaway’ addresses, this technology allows transactions to go through while concealing the balance of an individual’s wallet throughout the process. Mostly, stealth addresses are generated using the elliptic curve Diffie-Hellman algorithm, since it has the privacy features required to make it work accordingly.
Tor And Virtual Private Networks (VPNs)
Tor and VPN software can also be used to offer privacy and anonymity. Currently, this is the most prevalent means of securing the identity used by cryptocurrency traders. The preference of this methods due to the fact that it shields the entire connection, even where digital currencies are not involved. Furthermore, Tor and several VPNs are available for free, meaning that they are readily available to many clients. However, it is worth noting that botch solutions cannot provide anonymity at the coin’s protocol layer. Although this aspect limits their effectiveness substantially, it still useful to deploy Tor and VPN software.