You may not know this, but the very popular Bitcoin cryptocurrency isn’t really as anonymous as many people think.
So how is it that the original cryptocurrency, which has been published as anonymous, isn’t really as safe as we thought? Even though this lack of anonymity severely hinders the fungibility of Bitcoin, currently the developers responsible for maintaining Bitcoin aren’t paying much attention to this huge issue. It seems that they have a much bigger issue which they are dealing with: Bitcoin scalability.
Of course, this issue isn’t a secret and many have decided to take matters into their own hands and start developing cryptocurrencies which they deem to be truly anonymous in an attempt to regain full privacy and fungibility within their own cryptocurrency.
Since this is a pretty important aspect of any cryptocurrency, we have determined that the race to create a fully anonymous cryptocurrency has begun. At the moment there are a little more than about 10 different cryptocurrencies who all prioritize privacy, and each one is claiming that they are more private and secure than the others.
We think that it is absolutely vital for you to know what cryptocurrencies have the potential to be truly anonymous. More and more users are realizing that privacy and financial transactions go hand in hand. Inevitably this privacy will be sought after and that’s why you should keep an eye on the following cryptocurrencies and their anonymity status.
Here are the currencies you should be keeping track of is privacy and anonymity are a priority for you.
If you want true privacy when dealing with cryptocurrencies, Monero is hands down one of the best cryptocurrencies when it comes to keeping everything private.
In a standard blockchain, the amounts of coins that are being transferred are always visible. This isn’t the case with Monero. This cryptocurrency is so private that you can’t even see the amounts being transferred between different parties.
One of the examples of its privacy can be witnessed if you look back towards the shutdown of Alphabay in July of 2017. Alphabay is one of the world's largest markets on the dark web which was shut down by the US Government on the 20th of July, 2017. During the time of shutdown, the owner of Alphabay had assets in the form of Monero. Unfortunately for the law enforcement, Monero is so secure that they were not able to figure out how much Monero the owner actually had. The same couldn’t be said about other cryptocurrencies that the owner of Alphabay owned.
The keys behind Monero’s privacy are complex cryptographic methods like Kovri, Ring signatures, RingCT, and even Stealth addresses which protect the privacy of all the users who use Monero. Additionally, Monero was never pre-mined or insta-mined during its launch period, which adds more security to the cryptocurrency.
Unfortunately, there is a downside to Monero. Because of its complicated cryptographic methods, the transaction sizes for Monero are much larger than that of Bitcoin. This means that each transaction takes longer, something that some users aren’t willing to deal with. Although, many other users are fully willing to sacrifice a bit of time in order to gain a huge amount of privacy and security. Once more users realize how important anonymity really is, we are pretty positive that the growth of Monero will skyrocket.
Another cryptocurrency which is making its way towards anonymity is Zcash.
Even though it hasn’t been implemented yet, zk-SNARK is a zero-knowledge proofs protocol which is meant to make Zcash completely secure. However, at the given moment, Zcash does still use an open blockchain which is very similar to Bitcoin.
The biggest problem with zk-SNARK protocol is that any user who wants complete privacy with Zcash will have to have at the bare minimum 4GB of RAM. This is a huge barrier which is currently stopping Zcash from adopting this protocol. Luckily, there is a lot of research being done to make implementation of zk-SNARK a reality. When the inevitable happens and this protocol becomes a part of Zcash, it will also become one of the most secure cryptocurrencies on the market. Until that moment, keep an eye on Zcash and be ready for it to become one of the kings of anonymity.
Recently, PIVX has implemented the Zerocoin protocol, which has successfully given it an edge in the privacy field over other cryptocurrencies. PIVX is the first currency to use a proof of stake system. In short, and without much technical jargon, Zerocoin protocol allows for custom enhancements which improve blockchain level transactions through unlinkability, meaning that it’s impossible to link it to an entity. This is done by a mixing service which uses the zero-knowledge proofs to cut the link between the sender of PIVX and its receiver, thus effectively giving you full anonymity and intractability. This means that every coin sent through the system has no transaction history attached to it, which makes it 100% fungible.
Even though this implementation of Zerocoin is still new and there are many challenges facing the development team of PIVX, if successful and when combined with PIVX’s super-fast transaction speeds, PIVX can easily become a very powerful cryptocurrency.
Following the footsteps of Zcash, Komodo is another cryptocurrency which has implemented zk-SNARK to make it totally anonymous.
Komodo is somewhat an underground currency that is less known to many cryptocurrency enthusiasts. It actually forked from Zcash and implemented a much better proof algorithm for security reasons, which in turn made it even more privacy-centered than before. Unfortunately, because Komodo inherited its security essentially from Zcash’s zk-SNARK protocol, it also faces similar challenges when it comes to the necessary RAM requirements. However, their team is working diligently to try and solve this issue as best they can.
Overall, the Komodo project is very interesting. Besides the privacy goals they are also heavily focused on decentralized exchange as well as cross chain atomic swaps in an attempt to eliminate the problem of atomic cross-chain trading, which is an issue that two parties who own coins in separate cryptocurrencies face when they want to exchange these coins without the need to trust a third party. As you can see, the Komodo developer team is tackling some rather difficult dilemmas.
Zerocoin protocol is yet again being used in this anonymous cryptocurrency to achieve anonymity and privacy. It’s a fantastic cryptographic method which has been acknowledged by many developers as the perfect way to give your currency more security.
Even though the Zcoin project is very interesting and unique when compared to many other cryptocurrencies, there are some things that we don’t necessarily like about it. One example is the ‘trusted setup’ which was implemented during the beginning of the project. The ‘trusted setup’ means that you have to choose to trust a specific group of people during the launch of the cryptocurrency to set certain parameters in a specific way so that it’s fair to all users who chose to participate in the project. The problem is that if there is anyone in this group of people who decides to corrupt the project, there is a potential for that person to be able to print coins out of thin air without any accountability.
Thankfully, the developers of Zcoin have agreed that this can be a huge issue and have come to the conclusion that this trusted setup needs to be removed in the near future. After the removal of the trusted setup, Zcoin should become a very secure and private cryptocurrency.
NAV Coin is most likely one of the most undermined and overlooked fully anonymous cryptocurrencies out there. The main reason for this is because, even though it’s very precise and simple, their approach to full anonymity has some serious issues with centralization.
Unlike other anonymous cryptocurrencies which use cryptography to gain their anonymity, NAV Coin uses super-complicated obfuscation techniques within an additional sub-blockchain which runs parallel to the main blockchain and is capable of granting privacy. These techniques make binary and textual data completely unreadable and very difficult to understand. They are achieved by NavTech servers and aren’t distributed. Unfortunately, the use of NavTech servers is also why the cryptocurrency is easily centralized and can become compromised through attacks on the server.
However, the NAV Coin team is vigorously working to attempt to use the NavTech servers in the full node, a program that fully validates transactions and blocks, which would give this coin all the distribution and decentralization it needs to become a very secure cryptocurrency.
Remember the zk-SNARK protocol we mentioned earlier? ZenCash is another fork of Zcash that uses this protocol to gain full anonymity. They also ended up using the trusted setup we mentioned earlier when we talked about Zcoin, which means their developers also have to eliminate this setup in the future.
Just like Zcash and Komodo, ZenCash has that pesky requirement for minimum dedicated RAM, which is needed to send transactions that are completely shielded. With the help of 64-bit processors running 64-bit operating systems, this requirement is currently sitting at about 3.2 gigabytes of dedicated RAM. This is something that will have to be handled in the future for the coin to become more optimized.
However, the development team of ZenCash isn’t focusing much on legitimizing such a high use of RAM, and instead, they are focusing on constructing wallets which are running constantly on secure nodes and thus using a base layer of shielded transactions to help other users achieve anonymity through their own secure nodes. It’s a very interesting idea, but at the moment 100% up-time of server nodes is somewhat difficult to achieve, although as technology grows and expands it should become much easier to accomplish.
Say hello to a truly unique cryptocurrency that doesn’t use cryptography to achieve its anonymity. Instead, Verge focuses on using the Tor Network and I2P Network to gain total privacy and security.
Launched in October of 2014, Verge was once known as DogeCoinDark. Their idea was to create a cryptocurrency based on the very well known Dogecoin, but with enhanced security features. They re-branded in February of 2016.
The anonymity-centric networks such as Tor and i2P are capable of offering shielding from cookies and web tracking. This makes it very difficult to link transactions with users. The blockchain still remains public because the developers of Verge believe that users need access to the public ledger to verify that their transactions are being sent and received.
Even though many of you have most likely heard of DASH and know its huge success as a cryptocurrency of 2017 which has claimed to be completely private, there is a reason why we have decided to list them last on our list of anonymous cryptocurrencies.
DASH uses a very basic privacy feature that closely resembles a very simple form of coin mixing service which is performed by a master node on the network. DASH has decided to call this privacy form PrivateSend. However, the problem is that this type of privacy is analyzable and with enough time you can easily find out the real sender and receiver for each transaction through the use of metadata.
Technically speaking, the implementation of this simple coin mixing service does provide some type of anonymity, but it is very limited. Keep in mind that even though their privacy features aren’t as high-end as other cryptocurrencies, that doesn’t mean that DASH isn’t a good currency. All we are saying is that they can definitely seek to improve their security a bit more. When it comes to other aspects of this cryptocurrency, we are glad to report that it is a very promising currency that has huge potential in the anonymity department, especially considering its wide use and popularity.
9 Anonymous Cryptocurrencies Conclusion
There are many different cryptocurrencies out there, and some of them are more secure than others. In order to figure out how private a cryptocurrency really is, you will need to look at the protocols and privacy features that each currency uses. Additionally, you will have to see how the currency was set up during its launch period.
Keep in mind that anonymity and privacy aren’t free and often come with a price attached to the currency. This means that usually, currencies that are truly anonymous have additional ‘attachments’ that can make them less desirable. Longer transaction processing time is often one of them.