Privacy Coins: What Are They?

RapidVPN/ June 2, 2018/ Blog/

Privacy coins are currencies that implement full functionality to hide the identity of the people making transactions. Privacy coins are renowned for their full privacy feature. While Bitcoin encrypted the wallet Id, the amount of Bitcoin being transacted and balance are laid bare before all eyes. As a result, privacy coins are designed to protect legitimate users who do not want their financial details to be made public.

Privacy coins are a fulfilment of the purposes of the ideology behind Bitcoin and other cryptocurrencies-the need for the decentralization of the traditional monetary system and transfer of power and control from the banking industry to the people.

Privacy coins are characterized by enhanced privacy and anonymity, and they assessed using three metrics.

  1. Privacy

The number of coins owned, received, and sent are not observable, traceable or linkable by any means on the Blockchain.

  1. Fungibility

Each coin is worth the same value and is mutually interchangeable. There is no debasement or blacklisting of any coin due to depreciating transaction history.

  1. Decentralization

All nodes have the same power and control. No nodes have more influence, significance, or worth than others. No company is responsible for the creation, maintenance, and representation of the coin. Conversely, there is no central authority.


Privacy Coins and Features

  1. Monero

This privacy coin is entirely private by default with many privacy features such as stealth addresses and ring confidential transactions. (RingCT).

The stealth address allows a recipient to receive several payments using a single address without leaving any trace or link on the Blockchain between their address and someone else’s. The RingCT ensures that the outputs are masked and prevents traceability. The RingCT is a cryptographic tool that hides the amount being transacted, yet allows the network to verify the amount without making any disclosure.

Monero is not at risk of being blacklisted or debased because all coins have the same value and can be exchanged mutually without any segregation or hassles.


  1. Zcash

Zcash is a privacy coin forked from Bitcoin. It has several privacy features. The primary privacy features the zero-knowledge Succinct Non-Interactive Argument of Knowledge proofs (zk-SNARKs), which encrypts every transaction detail on its network and verifies the accuracy of the data being exchanged without revealing any transaction details. It is, however, noteworthy to state that the privacy features are optional because users could choose either the transparent (public) or private addresses.


  1. Dash

Dash was founded after the 2014 Bitcoin fork. It features an open-source peer-to-peer modus operandi with most features exactly like the Bitcoin’s. However, building further on the Bitcoin’s features, Dash offers an option to choose an instant and private transactions. Besides, Dash has a Proof-of-State protocol as additional support to miners that verify their transactions via the first tier of the service.

Dash also introduces the use of master nodes to validate transactions via the second tier of their service and is available for users with minimum wallet balance of 1,000 tokens. The master nodes ensure private and instant transactions.

Dash enables private transactions via the CoinJoin method, which involves transactions packing as “joint payments” but the details of the transactions are undiscoverable by third parties.



  1. Steven White (2018, April 16) Top 8 Privacy Coins

  1. Aziz, Founder of Master the Crypto Guide on Privacy Coins: Comparison of Anonymous Cryptocurrencies