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Cryptocurrencies that focus on the privacy of their users or, simply, on private currencies, have attracted the interest of many different people, all with a single priority: no one should know how they spend their money. Bitcoin may not be as anonymous as most people think, but there is a number of coins that focuses on that problem first and foremost. Private coins are often considered to be the ones that really follow Bitcoin's original ideas about anonymity and decentralization.
However, not everyone is decentralized or even completely anonymous. They have all their strengths and weaknesses, and understanding exactly what you need – and how they fit into that – is your first step in the search for the currency you want. Here, we will take a quick look at the first five private currencies by market capitalization, their attributes and points of interest.
You may want to note that "cryptographically private" means that the ways of maintaining privacy have been incorporated into the product based on cryptography. This makes it impossible for someone to track down transactions as there is no way for them to know that it is the transaction to start with – an important point to consider when choosing a coin for privacy.
Top 5 coins for privacy
Monero (XMR)
Market Cap: 1.9 billion dollars (4 October)
Rank: 10th (by market capitalization)
private life: cryptographically private
Decentralization: decentralized
OverviewConsidered to be the safest and most anonymous privacy currency currently available on the market, Monero allows users to hide the amount of digital money they send and receive, the source of funds, recipients and amounts held in their portfolios. It is cryptographically private by default, using various privacy features, in particular invisible addresses and ring-based confidential transactions (RingCT).
Points of interest: The centralization of mining activities is a possible weakness; the popularity of the currency on the dark web gives it a bad reputation; a possible advantage is that the currency has a dedicated hardware portfolio.
Dash (DASH)
Market Cap: 1.5 billion dollars
Rank: 12th
private life: not cryptographically private; privacy through mixing
Decentralization: partially centralized
Overview: Dash promises privacy through mixing, using a modified version of CoinJoin, a method initially created to "anonymise" Bitcoins. Dash works similarly to Bitcoin, as the blockchain is transparent by default while offering optional privacy via mixing. A masternode is required to speed up the mixing process, which in turn requires users to believe that the server is not recording details of where each user's output ends.
Points of interest: The Masternode network makes it semi-centralized but allows for the inclusion of innovations such as InstantSend, PrivateSend and Dash Budget System; not completely without any confidence as there is nothing to prevent the details from recording the masternodes; it takes seconds to confirm a transaction.
Zcash (ZEC)
Market Cap: 645 million dollars
Rank: 21st
private life: cryptographically private; but not private by default (ie privacy must be enabled, otherwise the transaction is public)
Decentralization: partially centralized
Overview: Zcash leverages the Zerocoin protocol and zero-knowledge encryption called zk-SNARKs to provide financial privacy to its users by allowing them to hide information about the sender, recipient and transaction amount. At the basic level, evidence with zero knowledge proves that the information sent to the other party is true, without having to transmit this information beyond the fact that it is true.
Points of interest: Creating a secure transaction is computationally heavy (although an upcoming hard fork promises to solve this problem almost completely); Unshielded transactions may, in some cases, disclose information about secure transactions.
Verge (XVG)
Market Cap: 232 million dollars
Rank: 40th
private life: not cryptographically private; privacy through the Tor browser, used by many to protect their online identity and I2P routing
Decentralization: decentralized
Overview: Verge offers only "privacy" through the routing of Tor and I2P, to obfuscate traffic and hide the IP address of the user during the transaction. There are no privacy encryption features regarding the blockchain, linkability and traceability of transactions and addresses, nor the concealment of the amounts subject to transactions. The currency also lost its credibility at the start of 2018 after having suffered two 51% attacks.
Points of interest: 51% attacks are considered a major safety problem; there have been promises of network and underdeliveries by the team that have been considered unprofessional.
Komodo (KMD)
Market Cap: 124 million dollars
Rank: 52nd
private life: cryptographically private; but not private by default
Decentralization: partially centralized
OverviewKomodo uses zero evidence of knowledge to provide users with financial anonymity. In addition to offering greater financial privacy through its KMD digital currency, the Komodo platform also offers the launch of decentralized ICOs, a decentralized exchange and blockchain development solutions, among other services.
Points of interest: The scaling solution called Peerchains, where the sibling chains (different assetchain) on the KMD platform can form a blockchain network that operates alone and does not inflate the Komodo blockchain; interoperability between different blockchains; passive income, where keeping tokens in a KMD portfolio generates a 5% KMD in the year by simply sending the coins to your address; however, the community is rather inactive.
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