Bitcoin is rising

You’ll learn how to keep your crypto activities private and the advantages that privacy-focused blockchains can bring to the broader crypto ecosystem in today’s article.

The following are the most important takeaways.

Even though blockchains have made the financial system more open, they are rarely effective at protecting user privacy.
Monero, Zcash, and Secret Network are all geared toward protecting user privacy.
Bitcoin and Ethereum services can also be used to obfuscate transaction records.

Although a censorship-proof method of transferring wealth, blockchains were never meant to protect personal information. However, other blockchains, such as Monero, Zcash, and Secret Network, have developed infrastructure for private blockchain transactions in the years since Bitcoin’s birth. It is possible to separate one’s crypto assets from one’s real identity using coin mixing protocols like CoinJoin and Tornado Cash.

Is it Possible to Stay Private in Crypto Today?

On-Chain Confidentiality

The cryptocurrency movement provides a more open and transparent alternative to traditional finance. Transparency and financial inclusion are two advantages that blockchains like Bitcoin and Ethereum provide, but privacy is not one of them. Several blockchain-based solutions have been developed to assist users in maintaining their privacy.

Monero

As far as privacy-focused blockchains go, Monero is arguably the most successful and is still being used to this day. Despite its best-in-class anonymity and a variety of privacy-preserving features, as well as a large developer community, it was initially referred to as BitMonero and deployed in 2014. Monero transactions are anonymous for both senders and receivers because the addresses of participants are disguised. Additional security measures, such as zero-knowledge proofs and stealth addresses, are employed by the network.

Updates to Monero’s privacy and security features have been implemented numerous times since its inception in 2009. CryptoNight Proof-of-Work mining on ASIC machines will be discontinued in December 2019 due to technical limitations. Making it more difficult for 51 percent of attacks to occur has improved network security. ZK-SNARKs will be included in Monero’s privacy technology by May 2020. Using this method resulted in better transactions because it was faster and less time-consuming.

Additionally, the fungibility of Monero’s coins ensures its users’ privacy. When compared to Bitcoin, the MXR coins of Monero are completely untraceable, making them ideal for anonymous transactions. In contrast, cybercriminals are increasingly using Monero as their preferred blockchain due to its reputation for crypto privacy and anonymity. Ransomware groups, including those in North Korea, have used Monero to extort darknet marketplace users. Because of this, the Internal Revenue Service has offered up to $625,000 to contractors for the development of Monero tracking systems. No bounty claims have been made due to the privacy technology of Monero.

Zcash

Monero isn’t the only privacy-preserving blockchain out there. Zcash, for example, is also popular with privacy advocates. There is no need to reveal the identity of the sender or receiver of a transaction when using Zcash’s zero-knowledge proof.

It is possible to verify a transaction’s details without revealing any of the transaction’s details using advanced cryptography. To generate these proofs, ZK-proofs make use of a special set of verification keys that are shared by all network participants. Cryptographically confirming Zcash ledger changes without disclosing which addresses were involved or how much money was transferred is possible for Zcash participants to use these keys for verification. When comparing Monero to Zcash, there’s a big difference. While Zcash’s privacy features are optional, all transactions in Monero are required to use the system’s privacy features. However, this system has unintentionally compromised the privacy of those who are trying to hide their transactions from public view.

Fewer than 20% of transactions currently use Zcash’s privacy-preserving features. It is easier for attackers to isolate a few users who shield their transactions, which weakens the privacy of those transactions, than for all users to shield their transactions. Monero uses a strict privacy system that ensures that no transaction stands out from the rest and that the maximum level of privacy is maintained for all users.

But the technology that powers Zcash is just as secure, if not more so, than that of Monero. In theory, Zcash transactions cannot be because of the network creation event keys. Leaving these keys in place could allow anyone to create an infinite supply of new coins or to falsify transactions on the network if they were not destroyed. Vitalik Buterin, the co-founder of Zcash, has praised the cryptocurrency’s zero-knowledge cryptography, noting that Zcash is engaged in “cutting-edge research on hidden information” and is a member of the Electric Coin Company’s advisory board, which developed Zcash.

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