The need for privacy in the crypto world has drastically increased over the last few years. Just buying bitcoin is today a process which requires providing intrusive information such as ID or other such documentation. And in fact, leaked Snowden documents suggest that the NSA has been targeting ordinary Bitcoin users around the world from at least 2013.
So which coins are the best for privacy? We must remember Bitcoin “mixers” are now quite useless due to specialist software such as ChainAnalysis which can link wallet addresses and transactions automatically.
Top Privacy Coins
1. Monero (XMR)
- The privacy coin with the highest market cap and it has been around since 2014
- A well-established team of developers including Riccardo “fluffypony” Spagni
- Uses ring signature technology to ensure that all Monero transactions are completely anonymous, even to governments
- PoW (Proof-of-Work protocol)
- 20 min for a transaction to be fully confirmed
Unlike many other altcoins, Monero account balances cannot be viewed on the blockchain; this combined with a Payment ID feature and dynamic block sizes for scalability ensure Monero’s $4 billion market cap is well deserved. Users can also pay a higher fee for a higher “mixin,” which greatly increases the anonymity of a transaction. Monero is possibly the most private altcoin of all.
However, Monero is hard to use due to its technical nature, and newer cryptocurrency users may have trouble navigating the GUI software. It also has no hardware wallet due to privacy concerns, although Ledger is planning to release one in the near future.
2. Zcash (ZEC)
- Released in 2016
- First currency to employ zk-snarks which allows transactions to be private
- A well-known team; Roger Ver was one of the first investors in the Zcash company
- PoW and a maximum of 27 transactions per second
This coin also has a lot of features planned for 2018 Q2 and Q3. The “Sapling” network upgrade is expected to greatly increase transaction speeds, and the upcoming “Powers of Tau” project is expected to greatly increase privacy.
On the other hand, 10% of all coins mined are given to the developers as a tax. While this does allow funding of projects, it means less decentralization; something important for privacy coins. In addition, Zcash requires a “trusted setup” (unlike Dash, Monero etc). This means if it was not set up honestly, unlimited amounts of ZEC could be created.
Also, privacy is optional, depending on whether stealth addresses are used.
3. Dash (DASH)
- An open-source PoW project founded by Evan Duffield in 2014
- Uses its PrivateSend feature to anonymize transactions
- On average, a transaction takes 2.5 minutes
- Users can vote on proposals to help decide the direction of Dash
Dash is different to many privacy coins, in that it is incredibly easy to use, even for a new cryptocurrency user. The InstantSend feature even allows 1-second transactions for a small fee, something incredibly unique. The alpha version of the latest “Evolution” release is also expected to be distributed by the end of Q2 2018.
On the other hand, its privacy is weaker than Monero’s ring CT and Zcash’ zk-snarks. For one, account balances of Dash users are public information on the blockchain. Dash also relies upon masternodes to ensure anonymous transactions, which means someone with several masternodes could in theory attempt to deanonymize Dash PrivateSend payments. In addition, there was a controversial instamine of Dash close to launch (Evan does say this was accidental) of about 1.5 million DASH ($750 million in today’s prices) which might scare off potential investors and detract heavily from Dash’s decentralization. PIVX, (a fork without the instamine), should also be considered, but the relative lack of interest (less than 10% of Dash’s market cap) suggests PIVX is quite unnecessary.
Promising Privacy Coins in 2018
1. Enigma (ENG)
- A relatively new project (2017) with a lot of potential
- Strictly not a privacy coin, however it employs a new protocol knows as “secret contracts”
- An incredibly experienced team
- Low-risk investment (~$200 million market cap)
The idea of the off-chain Enigma is to supplement other blockchain networks such as Ethereum. Secret contracts allow project/personal data to be known only to the contract itself; on platforms like Ethereum anyone would be able to look up sensitive data on the blockchain.
Catalyst, (the first platform to be built on Enigma), allows users to trade cryptocurrency armed with incredibly large amounts of data as well as machine-learning algorithms. Support for DEXs (Decentralised Exchanges) is also expected to appear soon.
Nevertheless, the main criticism is that this coin has a very large number of competitors. There seem to be an endless amount of platforms such as Ethereum, NEO, NEM, Lisk etc that are already well established. Compared to them, Enigma is still in its infancy. Only the market can decide whether Enigma’s features are enough to set it apart from the others.
- A fork-merge of the Bitcoin and Zcash blockchains
- Employs Zcash’s privacy features (zk-snarks + shielded transactions)
- Faster transactions through the use of a larger block size (2MB)
- High-risk investment (explained below)
One of the big appeals of BTCP is that it does not have a founder’s tax on mined blocks like Zcash does. Its speed, as well as privacy, also make it quite a popular project, with a $1 billion market cap and an active community. BTCP is also planning to address code concerns through a “rebase,” integrating the last 3 years of Bitcoin updates with Zcash code in order to build a solid coding foundation.
And unlike many Bitcoin forks which have little direction or purpose, BTCP is also offering grants of up to $150,000 for research on cryptography with the aim of trying to improve privacy for users, something that shows the scale of investments and community donations behind BTCP.
However, there are problems. Coindesk argues that Zcash is still very similar to BTCP, and that this fork may simply be a cash grab by the founders. Bitcoin forks are also notoriously volatile, as shown by the graph of Bitcoin Cash below.
- A CryptoNote coin with the same ring signature technology as Monero
- Recently had a revival and is due to be added to Kucoin exchange
- Alias technology
- Blockchain pruning
- High-risk investment
This coin has been around since 2014, but recently private investors have meant this project has seen rapid changes, including a brand new website and a roadmap for 2018, including a redesigned wallet GUI and remote nodes. This combined with the large advertising campaign being prepared could result in a very large increase in price. Boolberry also has some very unique features; its alias technology also means you can replace your wallet address with a name such as @paul. Another interesting thing is its blockchain pruning, which results in a much smaller blockchain size and much faster transactions.
However, remember this is a risky investment! If it goes well, there is likely to be a large surge in price. However, like many projects, there are bound to be delays in implementation. While the Boolberry team is well-respected in the community, they remain anonymous, which could be a worry for some investors. And since Boolberry also has quite a low market cap and fewer users than the other coins here, it remains to be seen just how many people it can attract.
We hope this has given you a good overview of the most promising privacy coins to watch out for and invest in for 2018.
It must be remembered that these coins will not alone make your private. They only play a small part in ensuring it; external software such as VPNs need to be combined for complete privacy.
But for now, expect big developments in 2018!