Bitcoin, as great as it is as a cryptocurrency, is not a very good coin if you want privacy. Transactions are all public, which makes tracing the identity to a wallet easy with a little bit of work.
Fortunately, there are cryptocurrencies that have a focus on privacy. This article will cover some of the best privacy coins.
The Best Privacy Coins
Here is our list of the best privacy coins. There are more privacy coins than those listed, but we omitted those privacy coins because they simply are not that popular and are simply a derivative of the more popular privacy coins.
Monero is the most popular privacy coin. It has a market cap of $1.5 billion, which makes it the cryptocurrency with the 15th highest market cap.
Anyway, Monero is certainly a privacy-minded coin. It uses stealth addresses and ring signatures as a default when sending transactions.
Both those features make it extremely difficult to track.
Additionally, Monero uses RingCT to hide the amount in a transaction to add an extra layer of security.
In terms of security, Monero (XRM) is the most popular and well-known privacy coin. It’s not perfect, no privacy coin is perfect, but it’s privacy is assured against all but the most persistent trackers.
DASH is a fairly standard cryptocurrency, but it does have a privacy feature that allows senders to anonymously send transactions.
This is done by breaking up a transaction into separate sending wallets for additional security. Of course, a private transaction does cost a little more in fees because it uses more resources, but the extra cost is worth it for the additional privacy.
Dash has the 33rd largest market cap of any cryptocurrency with a market cap of $1.2 billion.
ZCash is another privacy coin. The difference with ZCash is that it uses a different method than other privacy coins to ensure privacy.
That method is a cryptographic strategy named Zero-Knowledge Proof. Basically, this means that miners, and the blockchain, do not need to know the actual wallet address to confirm a transaction.
This obviously obfuscates the wallet address, which makes it borderline impossible to track. Many have compared this type of encryption to an SSL certificate on a website.
ZCash has a slightly smaller market cap than DASH at $1.13 billion and a market cap ranking of 35th. However, ZCash is a little more popular and well-known than DASH because ZCash focuses exclusively on privacy similar to Monero.
Verge is another privacy coin. But it is not particularly popular with a market cap of $104 million and a market cap ranking of 111.
We are including Verge, however, because it relies on Tor to keep users anonymous. That is very creative of Verge to use an existing technology to ensure user privacy.
Of course, there are many questions about Tor’s privacy because anyone, including governments, can set up a Tor node and sniff for incoming and outgoing traffic.
That said, Verge is still a decent privacy coin. It’s just a little too small and unknown to be of much use.
Privacy Coins – Frequently Asked Questions
Why use privacy coins?
People associate privacy coins with illicit transactions. And that is true, privacy coins are frequently used for illicit transactions.
In fact, that is probably the most common reason someone would use a privacy coin.
However, it is not the only use for a privacy coin. Many people use privacy coins because they do not like the idea of their transactions being tracked.
We like to view privacy coins as cash while public coins such as Bitcoin are more similar to a credit card with the amount of tracking that they offer.
Will privacy coins get outlawed?
A common concern those in the cryptocurrency have with privacy coins is that they will become illegal at some point in the future.
This is a valid concern – privacy coins are difficult to track and tax, so governments have an incentive to outlaw them.
The problem with outlawing privacy coins?
They are private, which makes them difficult to track.
That said, privacy coins will likely face more regulation as they become increasingly popular. It’s just hard to regulate something that focuses on privacy.
Are privacy coins really private?
Another common concern for anyone that uses privacy coins is how private are privacy coins.
The simple answer is that everything can be tracked with enough resources. But privacy coins make tracking so difficult that it’s not worthwhile to track for all but the most serious reasons.
There’s also an easy way to make yourself more difficult to track while using privacy coins. Simply send the coins to a few different wallets.
This works because the privacy increases with more transactions because of how the blockchain works for these privacy coins. For instance, Monero users will often send their coins to a few different, new wallets to make the transaction practically impossible to track.
It’s an easy way to make your use of privacy coins even more private. And it’s the strategy that most users of these privacy coins use, so it’s what we recommend.
Can Bitcoin be made private?
Bitcoin can be made private with something called a bitcoin mixer. A bitcoin mixer is basically an automated program that mixes bitcoin from unrelated wallets together with the intention of making it difficult to track.
The problem with bitcoin mixers is that they’re expensive to use, can still be tracked, and may even be scams.
We do not recommend using a bitcoin mixer to make bitcoin anonymous for those reasons, but it is possible for a good bitcoin mixer to make your bitcoin anonymous.
Privacy coins are an increasingly popular part of cryptocurrency. Unfortunately, they are often associated with illegal activity, which draws the attention of regulators and law enforcement.
That said, privacy coins stick to the principles of a decentralized, anonymous currency much better than the more popular cryptocurrencies like Bitcoin, Litecoin, and Ethereum.
Overall, if privacy is important to you for whatever reason, then using a privacy coin is the only choice.