What are privacy coins? all you need to know
By Nerly Shammah Jul 30, 2022
To some people, privacy is a vital piece of their everyday lives, and so these individuals seek a confidential means of transacting daily. In the realm of finance, Fiat is the most popularly used method to avoid privacy bridges.
It's not in practice totally private, but the difficulty in tracing physical cash that interacts less with financial institutions like banks makes it a fallback for private life. That said, being a government-issued currency, fiat remains controllable as the government can bend the rules at any time to suit their intents.
What Are Privacy Coins?
As the name implies, privacy coins are by design meant to keep your transactions confidential. Privacy coins are cryptocurrencies and so, they share similarities with other cryptocurrencies as it operates on a distributed ledger technology, the blockchain.
But unlike other cryptocurrencies, privacy coins use advanced technologies to keep their transactions on-chain private.
How Do Privacy Coins Work?
Privacy coins are known to be a bit complex compared to other cryptocurrencies, take away the idea of anonymity and it's all back down to a regular crypto asset.
The inner workings of its technology are dynamic, privacy coins assume transaction confidentiality through the usage of stealth addresses, Zk-SNARKs, and ring signatures.
In more detail, a stealth address is a powerful weapon that populates a transaction history with newly formed addresses. The idea is to hide the initial transacting address by creating a new one.
Zak-SNARKs stands for zero-knowledge transactions succinct non-interactive argument of knowledge, a widely Zcash used application that makes it possible for validators/miners to come to a consensus on if a transaction is valid without knowing the underlying details.
Ring signature, enhanced by its RingCT technology, one adopted by Monero to keep transaction amounts private.
With all of the underlying technologies that make up the structural layer of privacy coins, it's furthermore, a claim that these cryptocurrencies attain privacy across their various networks.
How Many Privacy Coins Are There?
There are numerous privacy coins, but it's important to note that not all do the job they claim to do effectively. For informational purposes, these are privacy coins currently in existence:
-Rose - Oasis Network
-Dusk Network (DUSK)
-Phala Network (PHA)
How To Get Privacy Coins?
Privacy coins like Monero and Zcash use a proof-of-work(PoW) algorithm to attain a consensus. Thus, these coins can be mined through the use of various software.
However, considering the aforementioned are not very cost-efficient, neither are there guaranteed outputs, the easiest way to get privacy coins is to purchase them through the fastest means, which in this case includes centralized exchanges like Binance, OKex, or Kucoin.
Are Privacy Coin Transactions Really Untraceable?
As aforementioned, not all privacy coins do the job they claim to do, all things boil down to the structural design, and only a couple of privacy coins attain a great level of privacy when it comes to the intractability of transactions.
Are privacy coins a good investment?
We believe that every investment choice should be individually concluded. As all products in the markets attain value through their utility, so then, the question of whether or not privacy coins are a good investment boils down to how useful they are to us individually.