News
The 5 most private cryptocurrencies
What are cryptocurrencies for privacy?
Privacy-oriented cryptocurrencies are digital currencies with features that enhance privacy and anonymity. Many people are concerned about how governments and businesses use their personal information and data, so they naturally want fewer controls over their private lives.
However, many privacy-oriented tokens have been removed from popular exchanges due to government and law enforcement concerns in many jurisdictions. Decentralized exchanges (DEX) and unregulated and self-hosted wallets are therefore slowly becoming the only means to acquire or use cryptocurrencies for privacy.
Here’s a roundup of the top five most popular privacy-oriented ones cryptocurrencies, which have several built-in privacy features. These projects claim to offer advanced security features or options that help keep users’ identities and activities hidden.
Regulators in many jurisdictions have warned about privacy tokens and privacy-enhancing techniques because they are too often used for illegal activities. In the United States, cryptocurrency mixing service providers have been arrested and their services shut down. The European Parliament finalized a regulation in April 2024, setting the stage for banning privacy-oriented hosted tokens and techniques and tightening regulations for crypto service providers. In most cases, users can still store these assets themselves and use them in peer-to-peer transactions.
Key points
- Several projects have emerged that use certain techniques designed to protect user anonymity.
- Many use mixing techniques such as CoinJoin, encrypted addresses, random transactions, or others to mask transactions.
- Many privacy tokens are designed to address people’s concerns about their private information and data.
- Unfortunately, there are always bad actors who ruin something good for everyone else. Most of these tokens have been used in illicit transactions, so law enforcement and regulators are targeting developers and vendors.
1. Monero (XMR)
Monero (XMR) is a cryptocurrency designed primarily for the ability to help anonymize users. Monero transactions are much harder to trace because they use ring signatures and invisible addresses. These methods help hide the identities of the sender and recipient. Additionally, Ring Confidential Transactions, or RingCT, helps hide the transaction amount, providing more privacy.
Trading at $129.23 as of May 5, 2024, Monero was in 48th place by overall market value, standing at approximately $2.4 billion.
2. Zcash (ZEC)
Zcash (ZEC) defines itself as “If Bitcoin is like http for money, Zcash is https”, emphasizing its advanced security and privacy features. Zcash has implemented a cryptographic tool called Proof Zero-Knowledge and offers participants the ability to secure transactions. It allows participants to make transactions without any of them revealing their address to others. Zero-knowledge proofs also hide transaction amounts.
Zcash ranked 171st on the list of cryptocurrencies with a market capitalization of $378 million and traded at $23.19 on May 5, 2024.
3. TREATMENT (DASH)
Created in 2014, HYPHEN is a cryptocurrency that allows users to choose whether their transactions are anonymous and private or not using a protocol known as CoinJoin. The feature works by obscuring the origins of your funds. Choosing to use the feature will increase your transaction fee slightly.
DASH achieves this through a mixing protocol that uses an innovative decentralized network of servers called main nodes. Another feature offered by DASH is instant sending, which can process transactions as fast as a credit card.
On May 5, 2024, Dash ranked 186th by market capitalization with a total value of $347 million. At the time of this writing, it was trading at around $29.47.
Cryptocurrency glasses and mixers are increasingly used for money laundering and other illicit activities. Law enforcement and regulatory authorities in many jurisdictions target these service providers as facilitators, so it is best to use caution and learn your country’s rules when considering a cryptocurrency or service that uses mixing techniques.
4.0×0.ai (0x0)
A controversial cryptocurrency tumbler, 0x0.ai is a cryptocurrency and digital assets platform that allows users to anonymize their transactions and identities by bundling transactions. These transactions are then mixed and the cryptocurrency is distributed to other users.
On May 5, 2024, 0x0 was trading at $0.36 and ranked 231st by market capitalization, with a total value of $313 million.
5. Mimble Wimble (MWC)
MimbleWimble is a privacy-focused token with core features that allow complete control over your privacy. All transaction amounts are encrypted by default and no addresses or other private information is stored on the blockchain. On the MimbleWimble blockchain, transactions appear as random inputs and outputs. Between encryption, lack of addresses, and built-in randomness, there is no way to track users.
On May 5, 2024, MWC was ranked 305th by market capitalization, with $182.5 million, and tokens were trading at $16.66.
What is the best cryptocurrency for privacy?
Monero is the most popular privacy cryptocurrency, followed by ZCash and Dash. Each appeals to different users.
What is a privacy cryptocurrency?
A privacy cryptocurrency uses techniques to provide users with greater anonymity and privacy.
Do privacy coins have a future?
Privacy coins are being targeted in many jurisdictions because they can be used for nefarious purposes. Exchanges that rely on regulatory compliance are starting to remove them, but decentralized exchanges that don’t fall under any jurisdiction still list them. Privacy coins probably won’t go anywhere as people who want them will find ways to use them.
The bottom line
Privacy tokens have a place in the world, as privacy is something that many people desire. These cryptocurrencies promise a life away from the government and corporate espionage that many people desire.
However, privacy for average law-abiding citizens means more privacy for criminals, so it is difficult to say whether privacy cryptocurrencies will be available in the future.
The comments, opinions and analyzes expressed on Investopedia are for informational purposes only. Read ours warranty and exclusion of liability for more information. As of the date this article was written, the author does not own any cryptocurrency for privacy.