Regular readers probably understand that Bitcoin isn’t an anonymous cryptocurrency u2014 rather, it’s a pseudonymous cryptocurrency. Because Bitcoin uses a public key to secure transactions, it is perceived as private because the key isn’t linked to any identifiable information. But theoretically, information about a person using bitcoins can be gleaned over an extended period of time. Fortunately, for those who want a truly anonymous cryptocurrency, there is a wealth of options out there and some of them are already household names. These include Dash , Monero and many others.
With over 50 u2018privacy coinsu2019 to choose from, it may seem difficult to determine which ones to go with, how they work and why one should consider investing in them.
Today, I’ll lay out everything you need to know about anonymous cryptocurrencies including what they are, where to trade them and why they’re worth adding to your portfolio.
Why is interest in anonymous cryptocurrencies beginning to skyrocket? For many the answer is taxes.
In the U.S.
for example, the GOP have made it known that they intend to impose taxes on Bitcoin-to-Ether trading, and similar moves are being mooted in a number of other jurisdictions. With other regulations on cryptocurrencies in the works , both in the U.S. and offshore, coins that offer genuine privacy and anonymity will likely continue to grow in popularity. Are privacy coins legal? The short answer is, yes. The United States Senate deemed virtual currency a legal means of exchange in 2013.
In North America, decentralized payment systems are considered a legitimate financial service.
Some countries, such as Canada, have ruled that virtual currencies are subject to anti-money laundering laws while the European Union have yet to issue an official decision regarding the use of cryptocurrency and it has fallen to individual countries within the EU to regulate virtual currencies. For instance, the United Kingdom permits the use of virtual currencies but they are subject to value-added tax (VAT) due to the fluctuating value of digital assets. The 5 best privacy coins and where to get them As mentioned, there are many privacy coins (and many more being created each month), but overall I consider these to be the best for private trading.
Dash (DASH) n Monero (XMR) n Zcash & Zclassic (ZEC and ZLC) n PIVX (PIVX) n Spectrecoin (XSPEC) n DASH Dash’s PrivateSend feature provides users with financial privacy by obscuring the origins of all funds. The Dash in your digital wallet consists of disparate u201cinputsu201d that serve as separate, discreet coins. It breaks these transaction inputs down into standard denominations and mixes them with the inputs of two other people without your coins ever leaving your wallet.
Dash utilizes decentralization and a chaining approach and uses a protocol which allows currency to remain fungible. This is an area where Bitcoin and other pseudonymous currencies are sorely lacking.
Dash’s network offers instantly confirmed, double-send proof, optionally anonymous transactions and an autonomous self-funding model via incentivized full nodes.
You can buy DASH from CEX with a credit card or via bank transfer. Kraken is another popular exchange with one of the highest trading volumes in EUR.
It allows the buying and selling of DASH in DASH/USD, DASH/EUR and/or DASH/XBT pairs. MONERO
Confidential transactions were added to Monero in January 2017 and this cryptocurrency has been blowing up ever since. By bundling the sending and receiving of public keys, Monero creates a u201cmixeru201d that conceals addresses and renders blockchain analysis all but impossible.
A number of awesome features are associated with Monero, not least of which is its high level of security and untraceability.
The XMR network functions on decentralized distributed consensus technology, offering no centralized place of attack in the event of a breach. Unlike other popular cryptocurrencies, your Monero funds are not associated with your public address. So, if you share your public address with someone, they will not know how much money you have. Monero can be purchased on Binance.
ZCASH & ZCLASSIC Like Bitcoin, there is a finite supply of Zcash coins, but distribution of the coins occurs at a much slower rate which results in artificial scarcity. Utilizing zk-SNARKS to protect the amount and recipient of transactions, Zcash is a transparent currency with a strong future in the space. This variant of a zero-knowledge proof of knowledge enables traders to reveal the number of coins they have to another individual without fear of any additional information being leaked to that person or persons.
Zcash’s whitepaper gives prospective investors detailed information about the technical side of things, explaining that transactions are less than 1kB and take less than 6ms to verify.u00a0Zclassic is a fork of Zcash which effectively removes the 20% fee associated with traditional Zcash tech. Zclassic is beneficial to miners because they receive a full block reward for their mining efforts.
You can pick up these privacy coins at Coinbase . Those looking to convert bitcoins into Zcash can use Binance for quick conversion. PIVX PIVX provides completed fungibility and anonymity. Using a zerocoin protocol, PIVX protects the integrity of your funds and removes you from the u201crich list,u201d thereby safeguarding you against malicious attacks. We’ve all heard about those AML/CMC compliance firms that track transaction history and blacklist coins. PIVX users are impervious to this kind of scrutiny thanks to their capacity for minting zPIV.
By minting PIV, you’ll never have to worry about merchants blacklisting your coins.
To ensure true anonymity, they have started implementing deferred broadcasting, funneling transactions through a delayed pre-broadcast phase.
Users can buy PIV from several reputable exchanges . SPECTRECOIN Spectrecoin looks set to grow big and fast in the year to come. Developed with the aim of providing privacy tools for both financial transactions and communications, Spectrecoin fully encrypts all user activities with its OBFS4 intelligible protocol. Onion addresses prevent the nodes from being referred to by their IP addresses and anyone who attempted to track a user’s web traffic would see the traffic coming from random nodes across the network. With an ambitious roadmap that places privacy above all else, it’s obvious why people are speculating that Spectrecoin will knock Onion right off the map. The Spectrecoin developers have even run a successful test to penetrate the u201cGreat Firewallu201d of China.
You can buy, sell or trade Spectrecoin at Cryptopia . Important privacy coin use cases that are entirely legal There is much concern from law enforcement and politicians that the ability to transfer money anonymously will lead users to buy and sell illegal materials. As we saw with the FBI’s crackdown on the anonymous marketplace Silk Road, Bitcoin was used to purchase illicit substances and other illegal goods, so there is some foundation to those fears. For this reason, privacy coins rightly or wrongly have been portrayed as something that only criminals and terrorists would want to use. But there are u00a0a number of reasons why average law-abiding citizens might want to use anonymous cryptocurrencies which we’ll explore below. As we’ve seen in recent years, blockchain technology has countless use cases . Privacy coins use this blockchain tech for their decentralized ledger.
Those who are leery about anonymous cryptocurrencies should consider just how many benefits they could offer individuals who want their identity to remain unknown for financial, moral or personal reasons. Here’s some examples.
1. Political contributions While there are many who are happy to wear their political and social affiliations on their sleeves, there are just as many who prefer to keep such information to themselves. For example, if someone is pro-life and works in an environment where their employers and co-workers are pro-choice, they can make political contributions with these cryptocurrencies without anyone finding out. Similarly, if you want to contribute to a gay rights organization, blockchain tech enables you to do so without others getting wise to your humanitarian efforts. In short, privacy coins enable users to put their hard-earned money behind the causes that matter the most to them u2014 without having to announce it to the world.
2. Doing business discreetly Privacy coins are the perfect solution for an entrepreneur or company that wants to send money to another company without their competitors seeing who they’re doing business with and trying to steal the contract out from under them.
If you don’t want your rivals to be able to track your sales or supply chain, anonymous cryptocurrencies can do the trick. With cryptocurrencies like Dash and Monero, you can keep your trade secrets secret and prevent the seizure of client or supplier lists. 3. Robbery prevention Muggings are a common occurrence across the globe, especially in cash poor countries like Mexico. Criminals often target tourists who they suspect of possessing a decent amount of walking around money.
Privacy coins can curb this kind of activity because no one will be able to gain access to your funds. It’s reasonable to believe that a rise in anonymous cryptocurrency popularity could dramatically reduce the incidents of kidnappings and burglaries. Granted, crypto-jacking has become another concern, but with privacy coins the likelihood of such theft occurring is slim to none. Encryption stops hackers dead in their tracks when they try to mine coin using your browser. 4. Prevention of government interference It’s not hard to imagine a world in which government organizations come after all crypto creators, forcing them to implement anti-privacy and de-anonymization features. We’ve already seen the attempts that world governments have begun to make where regulation is concerned.
That being said, if the Monero – AlphaBay situation has taught us anything it’s that anonymous cryptos can seriously stump government agencies and prevent them from invading your privacy at will u2014 shielding us from the unwanted attention of tyrants or bad actors.
5. Securing your devices with privacy coins When friends ask me for my advice about investing, I always tell them that their number one consideration should be purchasing a Virtual Private Network (VPN) with military-grade encryption. This ensures that no one can track your altcoin purchases or gain access to your wallet. The most private VPNs are logless, meaning that they do not keep logs of user activity or collect any of your personal information. Using reliable web hosting and a dedicated VPN solution can give traders that extra layer of security they need. The Seychelles-based VPN BolehVPN allow their customers to pay for VPN service with XMR (Monero).
More will likely adopt privacy coins as a means of payment in the near-future. As we can see, there is no end to the possibilities with privacy coins and with the market more robust than ever, now is the time to get in on these exciting anonymous digital assets. Nobody has to know, your secret’s safe with them.
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