Privacy is important to everyone and there are many things that we choose to keep private or that we choose to only share with those close to us. However, whether it’s about personal finances, our health condition, family, or relationship matters, the truth is that nowadays, we end up sharing way too much personal and “private” information on the internet.
That can sometimes have far-reaching consequences. We have a recent example of this in the case of Cambridge Analytica.
But many entities also use our data in an attempt to sell us products and services or steer our decisions based on our selection on race or health status. Also, when you trade cryptocurrencies, your identity, wealth, and freedom may also be in danger.
But cryptocurrencies like Bitcoin are private and anonymous, right?
Not at all. Did you know that Bitcoin is traceable?
However, there are alternatives to give users the power to carry out operations in a truly secure, private, and anonymous way: privacy coins. Today, let’s talk about Monero ZCash and Dash. The 3 Best Privacy Altcoins.
The importance of privacy to protect your personal identity, transactions, sovereignty, and personal wealth
All our digital activities leave their mark, whether when making calls, surfing the web or when making payments with our credit cards. The worst part is that the companies that provide these services store this information and use it in many ways without our prior consent.
Privacy is the power we have to decide who knows what we do in our daily lives, and who does not. Having privacy protects our finances, our health and our peace of mind in ways you may not have imagined:
1.- Personal identity
Privacy is respect for individuality and the freedom to be ourselves, make our own decisions – and have them respected – and be responsible for our actions. The problem is that many times, others may not see our privacy as important when it somehow interferes with other “more relevant” matters. It’s in those moments when different organizations will put aside our privacy say:
“It is for the common good.”
Or:
“It is for our nation.”
Another important aspect of privacy for individual identity is the right to change. As humans, we can make mistakes. After all, Allah says we are from Bani Adam, and Bani Adam (human beings) makes mistakes, so no one is born with a manual tucked under their arm called, “How to be perfect.”
But you have the right to put the past behind you, learn from your mistakes, and give your life a new start, a new direction, all in the interest of maturity and personal growth. Having the means to control your own privacy online can most certainly help you with this.
2.- Transactions
Many times, people will see many of our actions as if they were something strange, simply due to a lack of context and understanding about our motivations.
Nobody wants to explain each act – often insignificant – that they perform day by day, hour by hour, and minute by minute, so privacy allows us to perform many of our daily activities in peace.
On the other hand, many types of relationships are based on privacy or confidentiality, which in turn is backed by trust. In many professional, business, or government relationships, when confidentiality is broken, trust is broken and the relationship is damaged.
Unfortunately, many organizations do not respect this factor and end up abusing the trust you give them, spying on your transactions, and using this information for their own benefit.
3.- Sovereignty
Privacy helps you limit the power that others might have over you, including large companies and governments. The manipulation that many organizations perform on your personal data for different purposes can influence a good part of the decisions you make – when making a purchase, for example.
You also have the right to meet privately with people who share interests and opinions similar to yours, whether in business, politics, or religion. This is very important as many times, third parties who may not share such ideas may also try to interfere to change those points of view. This is a threat to your freedom and sovereignty.
4.- Personal wealth
The vast amount of data that companies generate and store nowadays is used to gain greater control over processes and to create analytics-based predictive models to aid in decision-making.
All this data must be collected with the guarantee that no access has been violated or that there has been no manipulation that can influence the results of the data which can lead to negative economic outcomes for the organization.
Cybersecurity is in charge of taking care of the storage and privacy of this data to prevent that nothing and nobody can alter it or consult it without permission. Of course, when it comes to personal finances, the protection and privacy of your passwords, as well as the use of your money, is vital to preventing malicious agents from trying to scam you and steal your hard-earned money.
How privacy altcoins are taking lead when it comes to protecting user privacy
Cryptocurrencies have several features that make them ideal to be used as money on the internet. Security and privacy are two of these characteristics, but the reality is that the technology behind some cryptocurrencies, like Bitcoin (BTC), only protects users up to a point.
During the early years of Bitcoin, people believed that transactions were totally private and anonymous but in reality, it’s possible to trace all of Bitcoin’s transactions in its public ledger known as blockchain.
Realizing this, some groups of developers decided to create alternative cryptocurrencies to BTC that focused on protecting these aspects when carrying out operations on the blockchain; these are the so-called “privacy coins.”
The developers of these altcoins have tried to equip them with new advanced cryptography methods to maximize their ability to guarantee anonymity, to the point where some are still truly untraceable.
Although today, the number of privacy coins has increased significantly, the following three remain the most popular and important in the crypto ecosystem.
1.- Monero
Monero is currently positioned as the most notable private cryptocurrency in the ecosystem – it’s the one with the most market capitalization, according to CoinMarketCap.
Monero (XMR) was launched in 2014 as one of the first altcoins not based on the Bitcoin code, as it’s actually based on the CryptoNote protocol.
The Monero protocol uses confidential transactions and ring signatures to demonstrate ownership of unified cryptocurrencies in a group of transactions, without revealing which of these transactions was cryptographically signed.
In this way, it mixes the signed transaction with other operations, so it isn’t possible to know which transaction belongs to which person. It’s also noteworthy that in Monero, all transactions are private and anonymous by default.
Monero makes it possible to shield transactions against spies – such as analytics companies – but users can also use blockchain explorers to obtain information about the transactions.
Although the use of Monero has usually been linked mainly to black markets and unauthorized web mining, some web portals have implemented Monero mining as an alternative to generating income without resorting to invasive advertising.
You can learn more about Monero in this article, Why Monero is Better Than Bitcoin at Privacy.
2.- DASH
Dash or Digital Cash is a cryptocurrency launched in 2015 developed from the Litecoin code, and it’s an altcoin that has gained wide acceptance in several Latin American countries.
Unlike what happens with Monero, in the Dash protocol, private transactions – known as PrivateSend – are optional. These transactions are carried out between three users who wish to use this service, generating new addresses belonging such users. These transactions are mixed between the participants to erase the trace they leave on the network, something that can be repeated up to eight times automatically.
This task is carried out by the master node system of the Dash network, which mixes the transactions that have requested the PrivateSend service.
Masternodes are the governing figures of the Decentralized Autonomous Organization (DAO) that runs the Dash network and a masternode is a network member that proves to have at least 1,000 DASH.
Dash is a fairly complete ecosystem that offers its users tools to make private transactions, as well as a desktop wallet, a lightweight desktop wallet, an app and even a paper wallet. Dash is positioned as the second privacy coin in the ecosystem by market capitalization. You can get more information here, Dash Crypto: A Privacy Coin with a Promising Future.
3.- ZCash
Based on the principle of Zero-knowledge Proof, ZCash is a privacy-focused cryptocurrency launched in 2016. The ZCash protocol uses parameters called, zk-SNARKs (Zero-Knowledge Succinct Non-Interactive Argument of Knowledge), which allow users to prove the possession and validity of certain information without the need to reveal identity or interact with other users.
As with DASH, ZCash supports two types of transactions, shielded (with z addresses) or transparent (with t addresses), and users can choose the type of transaction they want at any time.
It’s odd, but it seems that nowadays t-addresses are more used, which means that most ZCash users ignore the possibilities of anonymous transactions.
Even so, the developers of ZCash are constantly implementing improvements to the network and currently, the cryptocurrency is positioned the 57th most popular cryptocurrency by way of market capitalization compared to all other cryptocurrencies in the market in general. It is also the the third favorite altcoin of users focused on privacy. Learn more here, What are the Benefits of ZCash?
Some reasons to underline the importance of privacy while transacting with cryptocurrencies
At first, these cryptocurrencies went unnoticed by a good portion of cryptocurrency users and investors. This was due in many cases to the bad reputation that has been created around them by calling them “criminal coins” – as some of their features are suitable for illegal activities.
However, in recent months, their popularity has been growing gradually, as more and more investors are interested in speculating with them. Even so, the main intention is still to take advantage of the anonymity and privacy they provide online because it turns out that more and more users are interested in hiding their payment history and keeping their transactions untraceable.
Another important reason is tax evasion by investors; as government authorities in different countries seek to tax the use of cryptocurrencies as investment assets, investors migrate to privacy coins that allow them to hide their operations and profits.
Fungibility goes hand in hand with privacy
Today, there are a large number of cryptocurrency exchanges available on the web. This, on the one hand, expands the number of options available to all types of users.
On the other hand, a large number of cryptocurrencies move in many exchanges whose previous use is unknown most of the time by users.
These traceable cryptocurrencies could have been used in illegal activities and be part of a judicial investigation that could end up causing problems for the final holder of such coins.
With a privacy coin this doesn’t happen because its activity cannot be traced, so the cryptocurrency is visible to everyone, totally free of any guilt; it’s equal to all other currencies. This is called fungibility.
Avoid surveillance by powerful organizations
Large companies and financial organizations keep a record of your activities on their networks. This allows them to have the power to block your operations if for some reason they consider that there is something suspicious about them, even if there is nothing strange – how many complaints are there out on the web about PayPal regarding this matter?
Performing financial operations in privacy coin networks, allows users to enjoy great freedom without fear of being blocked or ending up with their accounts banned for unfair reasons.
Protect you from data loss
Every month we see in the news, how large companies report data breaches that result in the theft of valuable information from millions of users, such as passwords, social security numbers and credit cards. This happens because cyber criminals are able to keep track of information in traditional centralized computer systems.
In modern decentralized systems based on blockchain – including those of privacy coins – it’s much more difficult for this to happen, since privacy and anonymity protect user information.
Conclusion
Privacy coins represent a natural evolution of first-generation cryptocurrencies; altcoins that solve the privacy problems of users and that offer a new range of possibilities thanks to this. Developers know this and for that reason, they are implementing privacy and anonymity features in the new generations of cryptocurrencies.
It’s very likely that in the future, as the adoption of blockchain increases and with it also restrictions, taxes and threats to security and privacy, more and more people will see privacy coins as the best alternative to have privacy and freedom when operating in the crypto world.