What You Need to Know About Privacy Coins
Disclaimer: Edited on May 30, 2022
Main Takeaways:
Privacy coins are an emerging crypto asset class.
Their advanced cryptographic methods are what distinguish privacy coins from bitcoin and other altcoins.
Regular crypto coins aren't completely private, as blockchain transactions are recorded on a public ledger and open for anyone to see. While such a system provides several advantages, it doesn't offer users full privacy and anonymity, making it easier to link an identity to someone’s address.
In this article, we will take a deep-dive into what privacy coins are and how they work.
What Are Privacy Coins?
Privacy coins are a class of cryptocurrency built on two main principles: protecting privacy and ensuring strong data security.
How Do Privacy Coins Work?
Similar to other cryptocurrencies, privacy coins also use blockchain technology as a distributed ledger. While crypto transactions are usually public, privacy coins are designed in a way that makes it challenging to connect transactions.
What sets private coins apart from regular crypto is that they use cryptography to hide a user's wallet balance and address to maintain a level of privacy. Using privacy coins cannot guarantee total privacy, and you should keep in mind any local regulations and laws when handling such assets.
Below we’ve outlined three cryptographic techniques that some privacy coins use:
Stealth addresses: Every transaction generates a new address to protect the privacy of the recipient.
Zk-SNARKs: Zk-SNARKs, an acronym for zero-knowledge succinct non-interactive argument of knowledge, allows you to prove that a transaction is valid without sharing its details (sender, receiver, amount).
Ring Signatures: When you sign a transaction with a private key, others can link your signature to your address. Ring signatures prevent that from happening.
Since there are various signatures in the same transaction, it becomes harder for others to connect your signature to your address.
Are Privacy Coins Really Untraceable?
This will depend on the design and structure of each privacy coin, as some are more traceable than others. Not all privacy coins are as private as they claim. Poorly designed protocols could contain flaws that can make their transactions traceable.
Privacy Coins on Binance
Below we’ve listed a selection of popular privacy coins:
Monero (XMR) at a price of $217.50 and at a market cap of $3,936.97M*
Zcash (ZEC) at a price of $179.20 and at a market cap of $2,521.57M*
Oasis Network (ROSE), at a price of $0.27 and at a market cap of $927.01M*
Decred (DCR), at a price of $62.50 and at a market cap of $868.52M*
Secret (SCRT), at a price of $5.37 and at a market cap of $876.89M*
Horizen (ZEN), at a price of $48.18 and at a market cap of $589.19M*
Verge (XVG), at a price of $0.013 and at a market cap of $218.47M*
Dusk Network (DUSK), at a price of $0.50 and at a market cap of $201.48M*
Phala Network (PHA), at a price of $0.29 and at a market cap of $79.20M*
BEAM (BEAM) at a price of $0.38 and at a market cap of $42.54M*
* As of April 1st, 2022.
* This list is ranked by market cap and does not constitute a recommendation or endorsement by Binance to buy or sell any currency.
Conclusion
Privacy coins are one of a number of emerging asset classes being added to the blockchain ecosystem. As with any investment or purchase, you should always DYOR (Do Your Own Research) and take into account local laws and regulations.
Ready to start your crypto adventure with Binance?
Sign up for a Binance account or download the Binance crypto trading app. Once your account is verified, you can buy cryptocurrencies on Binance using fiat in three ways: from Binance via bank transfer, card channels or e-wallets options.
Buy BUSD, BNB and cryptocurrencies with a Debit Card, Credit Card, or via Bank Transfer
Linking your debit card, credit card, or bank account (available in many regions) is one of the easiest ways to buy Bitcoin and more than 200+ cryptocurrencies.
Disclaimer: Cryptocurrency investment is subject to high market risk. Binance is not responsible for any of your trading losses. The opinions and statements made in the article should not be considered financial advice and are shown to illustrate an example, and is not intended to serve as investment advice or recommendation.
Read the following articles for more information: