What do you know about privacy coins?

Privacy coins are cryptocurrencies that preserve anonymity by obscuring the flow of money across their networks. They make it difficult to work out who sent what to whom – which is useful if you don’t want anyone snooping on your financial activity.

Take away the privacy-preserving technology, and privacy coins appear pretty similar to coins like bitcoin. They run on blockchains – decentralized ledgers – and are maintained by a network of anonymous validators. But it is the advanced privacy techniques that distinguish privacy coins from the rest of the pack. The largest privacy coins by market capitalization are Zcash and Monero.

$DASH

Dash originally started life as a privacy-focused coin named “Darkcoin,” but rebranded in 2015 and opted to focus on digital payments instead. Though the project boasts its own branded coin joining feature, CEO Ryan Taylor asserts Dash should not be construed as a privacy coin.

$XMR

Monero is one of the only privacy coins that is private by default. Unlike Zcash, you can’t turn its privacy functions off. To hide transaction data, Monero uses one-time-use “stealth addresses” for each transaction; “ring signatures”, which group genuine transactions with old “decoy” transactions to make it difficult to work out which transaction is legitimate, and “ringCT”, which hides the amount of Monero sent in a transaction.

$ZEC

Zcash is a privacy coin that also allows for transparent transactions. Private transactions use zero-knowledge proofs: a type of mathematical calculation that signals to the network that something is definitely true – like the validity of a transaction – without publishing additional information about that transaction, like the addresses and the transaction amounts.