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What are privacy coins and how do they differ from Bitcoin?

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Cryptocurrencies are typically pseudonymous, but not necessarily private. Bitcoin (BTC) and other assets run on blockchains, with each transaction posted publicly online. During a transaction between two or more parties, assets move to different wallets, each represented by a string of characters.

With these addresses and transactions visible to all, however, a certain level of trackability exists, especially if a wallet transfers funds to an exchange requiring Know Your Customer verification.

Certain crypto assets, which are often referred to as privacy coins, private coins or anonymous coins, attempt to hide information about transactions, giving users more privacy. Why might someone need privacy if they are not doing anything illegal? It could be preference or a view of privacy as a basic human right could be two reasons. Cash is largely private. Every transaction is not recorded somewhere for all to see with the click of a button.

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A number of possible methods exist for adding privacy to Bitcoin, including peer-to-peer trading, although multiple crypto assets focus on privacy more directly via their technology. Some familiar privacy assets in the crypto space include Monero (XMR), Zcash (ZEC), Verge (XVG), Beam and Grin. Dash also makes it on the list, as it allows for added anonymity, although the coin is not technically classified as a privacy asset.

Monero

One of the industry’s most well-known privacy-focused assets, Monero came on the scene about seven years ago, having spurred numerous headlines in the years since. Monero prides itself on decentralization, touting origins that back such stated values. “It was a fair, pre-announced launch of the CryptoNote reference code,” Monero’s website says. “There was no premine or instamine, and no portion of the block reward goes to development.”

Monero, a coin based on its own proof-of-work blockchain, touts multiple different privacy technology features, per its website, including stealth addresses and RingCT. Added to XMR in 2017, “RingCT, short for Ring Confidential Transactions, is how transaction amounts are hidden in Monero,” Moneropedia, the explanatory section of the asset’s site, explains.

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Monero piqued the interest of the United States government in the latter part of 2020. The Internal Revenue Service put out a bounty on the asset’s head, promising as much as $625,000 in exchange for cracking the coin’s privacy tech. Two blockchain analytics outfits, Integra FEC and Chainalysis, took home the prize just a few weeks after the IRS announced the bounty.

Zcash

Zcash hails as another popular privacy-focused asset in the crypto space. It started in 2016 and was initiated by the Electric Coin Company, which is headed up by cypherpunk Zooko Wilcox. Zcash stems from the same code as Bitcoin, according to the asset’s website. ZEC operates on its own blockchain with PoW mining consensus, separate from Bitcoin.

ZEC allows both private transfers, called shielded transactions, and public transactions. “Zcash gives you the option of confidential transactions and financial privacy through shielded addresses,” Zcash’s website explains, adding: “Zero-knowledge proofs allow transactions to be verified without revealing the sender, receiver or transaction amount. Selective disclosure features within Zcash allow a user to share some transaction details, for purposes of compliance or audit.”

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Dash (sort of)

Dash is another well-known cryptocurrency hosting privacy features. The entity managing the coin’s development, the Dash Core Group, however, clarified on several occasions that Dash is not a privacy asset, although it comes with elective characteristics for added anonymity.

“Dash is a payments cryptocurrency with a strong focus on usability, which includes speed, cost, ease of use and user protection through optional privacy,” the group’s chief marketing officer, Fernando Gutierrez, told Cointelegraph previously.

“Dash is not an AEC!” Ryan Taylor, CEO of DashPay, said in a January 2021 tweet referring to anonymity-enhanced cryptocurrencies, or AEC — a term used by U.S. regulating bodies. “As a literal fork of Bitcoin, all Dash transactions are completely transparent,” his tweet added: “All inputs, outputs, addresses, and amounts are recorded on each and every transaction and viewable – by anyone – on its public blockchain.”

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XCoin joined the crypto world as a 2014 Bitcoin fork, later rebranding as Darkcoin, and subsequently Dash. The asset is based on its own proof-of-stake blockchain.

The coin lets users transact anonymously, if they so choose, through what is referred to as PrivateSend. “The technology that Dash utilizes in our PrivateSend function is CoinJoin, which is a technique for complicating transactions to the point that they’re more difficult for analytics firms to analyze those,” Gutierrez explained, as previously reported.

Verge

A PoW asset running on its own blockchain, Verge exists as yet another cryptocurrency touting privacy capabilities. Verge started with a different name. “Verge Currency was created in 2014 under the name DogeCoinDark,” the asset’s website states, but was later rebranded into Verge Currency.

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An open-source asset, Verge enables private transfers through I2P and Tor tech, which conceal transactors’ locations (IP addresses), according to information from BitDegree, as well as previous Cointelegraph reporting.

Verge gained significant price traction in late 2017, hitting highs around $0.31, based on TradingView data. The asset currently trades at roughly $0.023.

Beam and Grin

Grin and Beam burst onto the crypto market in 2019, touting a different technology called Mimblewimble. A type of blockchain technology, the concept of Mimblewimble went public in 2016 as a PoW variation, according to a community submission article from William M. Peaster on Binance Academy.

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Grin and Beam launched based on Mimblewimble, although Litecoin (LTC), a long-time prominent asset in the crypto space, has been working on implementing the technology.

“In a MW blockchain, there are no identifiable or reusable addresses, meaning that all transactions look like random data to an outsider,” the Binance Academy article reads. “A Mimblewimble block looks like one large transaction rather than a combination of many,” the article adds, subsequently diving into other aspects of the technology.

Privacy coins and regulation

Government overwatch on privacy coins has grown in recent years, as shown in part by the IRS’ efforts against Monero’s technology. Privacy coin references also surfaced in the U.S. Financial Crimes Enforcement Network’s proposed regulation on self-hosted crypto wallets in December 2020.

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“Several types of AEC (e.g., Monero, Zcash, Dash, Komodo, and Beam) are increasing in popularity and employ various technologies that inhibit investigators’ ability both to identify transaction activity using blockchain data,” the December document said referring to anonymity-enhanced cryptocurrencies. Additionally, South Korea outlawed anonymity assets in November 2020.

Some crypto exchanges have delisted the abovementioned assets. In October 2019, OKEx Korea ceased trading on its platform for Monero, Zcash, Super Bitcoin (SBTC), Dash and Horizen (ZEN). BitBay removed Monero near the beginning of 2020. Bittrex removed Zcash, Dash and Monero from its exchange in January 2021. A number of other crypto platforms have also delisted privacy-enhanced assets over the past year or two, including ShapeShift.

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Bitcoin Drops as China Declares Crypto-Businesses Illegal

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  • China declared that cryptocurrency-related businesses are illegal
  • Bitcoin, Ether, and stablecoin Tether do not qualify as legal tender in China
  • BTC drops in price as the announcement went out

Once again, China reiterated its antagonistic stance on Bitcoin and the cryptocurrency industry as a whole.

In an announcement, the People’s Bank of China (PBOC) mentioned that BTC, ETH, and USDT are not legal tenders in China. They added that these cannot be used in the currency market.

Additionally, the central bank deemed all crypto-related businesses as illegal. This includes overseas exchanges serving residents within China and derivative transactions.

Following the news, Bitcoin’s price fell by almost $2,000 as the news circulated. This has been a common pattern whenever China FUD comes out.

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Earlier, China also reiterated its stance on crypto trading and mining while testing the Digital Yuan. According to the PBOC, it will continue releasing regulatory pressure over the crypto trading industry.

Despite the negative news, many analysts remain bullish on Bitcoin and the cryptocurrency industry as a whole. According to analyst Lark Davis, this is not new and will happen again in the future.

In a tweet, Davis mentioned that “The year is 2025, #bitcoin has just corrected from 400k to 250k on China banning BTC fears.”

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Can Bitcoin Surpass $6,000,000? Ethereum and Polkadot Creator Details Possible Future of Crypto

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Early Bitcoin developer and co-founder of Ethereum and Polkadot, Gavin Andresen, is outlining a future where BTC rises to a staggering $6,000,000 per coin.

Gavin Andresen, who took over as Bitcoin’s lead maintainer from founder Satoshi Nakamoto in 2011, just published a new blog post detailing how BTC’s theoretical evolution could look.

Andresen describes a “possible” scenario where Bitcoin hits a price tag of $6,000,000 by 2061, transaction fees 326x higher than they are now, and the blockchain is used chiefly by whales.

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“Imagine: it is the year 2061. The BTC price is six million US dollars – equal to about a million 2021 dollars because of inflation.

Miners are being rewarded 0.006103515625 BTC per block, plus transaction fees of about 5 BTC for 4,000 or so transactions ($7,500 per transaction).

But most BTC transactions don’t happen on the BTC network. Most BTC is locked up in multi-signature outputs secured using multiparty computation and mirrored on another chain as ‘wrapped’ tokens.”

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In his scifi scenario, Andresen says those who do remain on Bitcoin’s network will be incentivized to keep it alive.

“The transactions that do occur on the main BTC network are high-value, mostly between super-whale-size holders…

These whales maintain the BTC network forever. They are the miners and the transaction creators; they don’t care how high transaction fees go, because they receive as many fees as they pay.”

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However, Andresen says that by 2100, even those users would likely leave the blockchain.

“In the year 2100 the whales notice that the mining reward is basically zero… Eventually, there are zero new BTC being produced on the BTC network, and zero BTC circulating on the BTC network. There is nothing left to secure, and the chain stops.”

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Top Analyst Maps Bitcoin and Cardano Price Trajectories, Warns Best Entry Point for ADA May Be Gone

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Top Analyst Maps Bitcoin and Cardano Price Trajectories, Warns Best Entry Point for ADA May Be Gone

Crypto trader Michaël van de Poppe is looking at what’s ahead for Bitcoin (BTC) and the smart contract platform Cardano (ADA).

The analyst tells his 420,000 Twitter followers that the best entry point for Cardano may be gone after the asset bounced off a key support level at $1.86.

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“If you want to get into Cardano, this was the region where you would want to get into it, and the higher low that might be created.

So based on the daily timeframe, the best entry might be gone, but you’re still getting a better entry than the ones who have been buying around $2.80.”

Van de Poppe is now looking to see if ADA can turn resistance at the $2.37 level into support.

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If the markets correct further, he is keeping an eye on the $2.15 level as a potential buy zone.

“When you’re looking at the four-hour time frame, I think you’re getting the exact same view as what you have right now on Bitcoin and [Ethereum], actually. So you’re going to look for an entry point which is around the fact of $2.15, so anything in this region might be a good entry point if we get a corrective move.”

Looking at the Bitcoin pair, van de Poppe thinks that ADA will most likely consolidate briefly after retesting support at its previous all-time high.

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“We can see that we’ve had a beautiful retest of the previous high here too, and therefore some consolidation is most likely going to take place before we’re going to have new impulse waves.

So both the USDT and BTC pair are looking for continuation, and I think that’s just great, and I think that’s just what we want to see with the markets right now.”

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