Bitcoin is an excellent step toward the future of currency, but there are some privacy concerns. There is a lack of anonymity with Bitcoin, which many people do not appreciate. Because of this, multiple developers have worked to create their own anonymous cryptocurrencies. The methods of delivering anonymity vary, as do the degree of anonymity provided. Explore some of the top anonymous cryptocurrencies.
Monero is one of the clear leaders in terms of anonymity for cryptocurrencies. The default setup of Monero delivers privacy. Instead of just anonymizing the identities of users, Monero also hides the quantities in transactions. Monero’s privacy is possible thanks to stealth addresses, Kovri, the ring confidential transaction, and ring signatures. In addition to hiding information regarding quantities and identities, Monero will generate new address combinations for every transaction. The downside of high privacy is that transactions are complex, making them larger. This, in turn, increases the amount of time it takes for each transaction.
Komodo is a Zcash fork that uses the Delayed Proof of Work protocol and zero-knowledge proof. This results in an additional layer of security and full anonymity. Thanks to the zero-knowledge proof ensures that the amounts, identity of senders and receivers, and transactions are private, with no one able to view or trace them. From there, Delayed Proof of Work adds more security since it can recycle Bitcoin hash rates so that they are unchangeable.
PIVX adopted the Zerocoin protocol which uses zero-knowledge proofs to hide connections between two parties in a transaction. This allows for full privacy. PIVX started using the protocol in October 2017, at which point it was the first Proof of Stake crypto that fully implemented Zerocoin protocol practices. The Zerocoin protocol hides your coin balance to reduce the attraction to thieves. It also hides the addresses of the source and receiver for privacy. zPIV transaction is incredibly quick compared to others and the transaction history gets concealed.
Verge is a relatively new crypto compared to many of the others, but it has a strong focus on privacy. It can keep all transactions untraceable, anonymous, and private. Verge relies on 12P and Tor to ensure that anonymity and privacy. The use of Tor allows for encryption by changing IP address while I2P ensures that the response and message do not get sent via the same path.
Zcash uses the zero-knowledge Succinct Non-Interactive Argument of Knowledge or zk-SNARK protocol. This protocol lets you prove the veracity of information without having to actually show that information. One downside of Zcash is that it is not private as a default. That is due to the simple fact that the zk-SNARK protocol is inefficient, demanding as much as 4GB of RAM until the transaction gets sent. Even then, the sender must run a full node. This gives Zcash a significant barrier to adoption.
Other anonymous cryptocurrencies you should be aware of include Deeponion, Navcoin, Spectrecoin, Zcoin, and Zencash.