Anonymous themed cryptocurrencies have become all the hype in recent months. Various projects are working towards achieving this goal moving forward, each one providing a unique implementation of untraceable transactions. Dash, Monero, and Zcash are the market leaders when it comes to privacy and anonymity, even though they are quite different from one another.
One of the new contenders in the privacy-centric cryptocurrency race goes by the name of PIVX. based on the current market cap for privacy-oriented currencies, PIVX is the fourth largest. The ecosystem works similar to Dash, as users can run a masternode to support the network. Running a PIVX masternode requires users to lock 10,000 coins into a wallet, compared to Dash’s 1,000 coin threshold. This also means a large part of the available PIVX supply is currently locked up in masternodes.
PIVX also provides instant transactions through the SwiftTX implementation. The community is governing the future for this currency, rather than leaving it up to just the developers. One thing all community members are looking forward to is the future implementation of the Zerocoin protocol. This feature will improve transaction privacy even further,
The Zcash development team uses zero-knowledge proofs to provide anonymity for its users. A zero-knowledge proof serves to allow for both the verification and the privacy of data at the same time. In the case of Zcash, this technology is used to encrypt the sender and recipient addresses, as well as transaction amounts. At the same time, all network transactions are validated by the blockchain, just like Bitcoin.
To get a bit more technical, Zcash uses zk-SNARKS to achieve this goal. Every transaction can contain a string of data provided by the sender – the zero-knowledge proof – as well as encrypted transaction data. This implementation also means senders can’t generate a specific string unless they own the spending key for that address. Moreover, the input values of both input and output need to be equal.
It is important to keep in mind this feature does not provide utter anonymity while using Zcash, though. It is still possible for blockchain analysts to correlate information through public transactions. Moreover, IP addresses of users are not obfuscated unless they use a routing service themselves. Personal identifiers linked to public data are not hidden by this protocol.
Monero has been a popular alternative cryptocurrency among enthusiasts who favor anonymity over privacy. Improved anonymity was added to the protocol just a few months ago, as Confidential Transactions were introduced in January of 2017. All of the network nodes have transitioned to accommodate for Confidential Transactions without any hitch. Ever since this implementation, the Monero price has started to rise a bit across exchanges.
Ring Confidential Transactions are designed to improve privacy and security. By bundling the sending and receiving of public keys with older network transactions, a “mixer” is created that is capable of obfuscating addresses. All of this makes blockchain analysis virtually impossible. Making Monero one of the most anonymous cryptocurrencies is still the primary objective, even though that has led to an increase in transaction size. This is not as big of a problem, though, as Monero has an adaptive blocksize.
On top of Ring Confidential Transactions, Monero makes use of ring signatures and stealth addresses to hide both the sender and the receiver in a transaction. Additional anonymity and privacy features are still in development, such as the Kovri router, which can conceal the origin node for transactions in I2P. Monero positions itself as a private and optionally transparent cryptocurrency.
A lot of people feel Dash provides them with anonymity as well, thanks to the PrivateSend feature. While it is true that this feature offers privacy to users, it is not anonymous in the traditional sense. PrivateSend is an improved version of CoinJoin, enhanced by features such as decentralization and a chaining approach. A decentralized mixing service built within the Dash protocol allows the currency to remain fungible, which is one of the features bitcoin lacks right now.
Moreover, using PrivateSend mixing requires at least three different participants which allow funds to be merged together and create obfuscated transactions. That is, assuming all users submit the same Dash denominations as inputs and outputs. There is a limit as to how much money can be sent per transaction using DarkSend, though, as the feature currently allows for 1,000 DASH per session. Additionally, several PrivateSend sessions need to be completed to achieve optimal anonymity and privacy.
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