Throughout the past few years, bitcoin has pillared a revolutionary financial concept of decentralization that relies on utilization of a peer-to-peer network to confirm transactions between trustless parties. However a feature, and to some flaw in bitcoin’s blockchain is a public ledger that stores every single transaction, allowing the records to be visible by anyone.
Even though your bitcoin address is a form of a “pseudonym”, this doesn’t provide total anonymity. The public ledger permits the linking of a transaction to a previous transactions originating from the same address. A number of approaches can be used, either independently or in a combined manner to deanonymize the sender and/or the receiver of a large percentage of bitcoin transactions. Some of the methods include Analysis of the Transaction Chain (ATC), IP address mapping, taint analysis, amount analysis, and time sequencing. Accordingly, anonymity is prominently one of the main drawbacks of bitcoin, which inspired the creation of a few cryptocurrencies that promote full anonymity.
Here are the top 5 coins that can provide maximum levels of anonymity across the blockchain technology.
Bytecoin was the first ever Cryptonote cryptocurrency to be released back in 2012. It provides high levels of anonymity via “ring signatures”. Although it reached mass adoption in 2013, today a single Bytecoin is worth around 5 satoshis.
Similarly to Bytecoin, ShadowCash utilizes “ring signatures” to maximize anonymity. What sets it apart is that it is considered the first coin to deploy “ring signatures” on bitcoin’s codebase. A single ShadowCash coin is worth roughly $1.35 on todays market.
Dash promotes anonymity via its “PrivateSend” feature which represents the developed version of CoinJoin, which is a bitcoin mixing concept. Along with CoinJoin’s mixing concepts, Dash implements a series of added features including decentralization, a chaining approach for maximizing anonymity, passive ahead-of-time mixing and denominations. Currently a single Dash is worth roughly $14.
Although Zcash has been launched in January, 2016, the technology behind this new cryptocurrency is getting appreciated more and more each and every day. Zcash has been described as the untraceable cryptocurrency due to its high levels of anonymity, mainly due to the implementation of zk-SNARK (Zero-Knowledge Succinct Non-interactive Argument of Knowledge) cryptographic model.
Without delving into technical jargon, zk-SNARKs represent proofs of work over given inputs without having to reveal all of those inputs. zk-SNARKS are not only ideal for promoting anonymity, but also permit reduction of the transaction verification costs when compared to smart contracts. Currently, Zcash is worth $47.83.
Monero is by far the cryptocurrency that provides maximum levels of anonymity. It is a CryptoNote coin and represents a rather new cryptocurrency concept. Although the basic framework of Monero’s blockchain and the structure of its transactions are the same as those of bitcoin, it utilizes a new concept of “ring signatures” and address derivation.
When Monero coins are transferred, the sender A will formulate a new address for the receiver B, which is based on the public key of B. The private key of the newly formed address can only be formulated by B’s private keys. When coins are spent, the transaction is signed and time-stamped with a “ring signature”. Ring signatures are verified against a group of public keys without having to reveal the used private key. Monero is currently worth $15.47 on today’s market.
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