Anonymity and security in the cryptocurrency world is one of the most important aspects. Over time, it has become clear that the anonymity promised by Bitcoin does not quite match reality. That is why the demand for anonymous cryptocurrencies appeared.
The main reason for this demand is the much higher level of privacy in any commercial transactions with them. In other words, it is almost impossible to trace the purchase, sale and exchange of coins, and the algorithms for adding new entries to the blockchain will not be open to everyone.
But how do you figure out anonymous cryptocurrencies on your own so that you don’t fall for scammers? Alex here! In this article, we’ll talk about the 6 most promising anonymous cryptocurrencies in 2021.
Komodo
Komodo was created as a result of the SuperNET forum on the digital currency Zcash. In this case, confidentiality is guaranteed by Zero-Knowledge Proofs. This technology makes trade transactions completely anonymous. Data about the sender, the recipient, and the number of coins are hidden.
Security is also affected by the Delayed Proof-of-Work protocol used. This option block attempts to attack the funds. To manipulate Komodo, an attacker would have to transform the BTC blockchain.
Monero
XMR is by far the most popular anonymous cryptocurrency. The technology behind this digital currency is known as the CryptoNight Proof-of-Work protocol.
Monero uses a system of enforced privacy. This makes it impossible to identify any user. A third party is not sure what address the transaction was sent to. This is possible because of signatures that blend the sender’s input with other information of this type. The XMR protocol implements RingCT, which hides the amounts of funds being transferred.
Monero’s emphasis on anonymity and security gives users the ability to use it for all types of online activity. For this reason, XMR is often used in darknet environments. It is one of the payment methods for hackers. Even though Monero is used for criminal activity, it is still one of the most anonymous cryptocurrencies you can use.
NavCoin
The anonymity algorithms used by the creators are not based on cryptographic methods or the use of peer-to-peer networks but simple trace entanglement. When a transaction is made, the buyer does not receive the tokens immediately.
Instead, they are sent to NavTech’s internal network, then encrypted and put into a pool based on multiple servers. As a result, tracing the transaction becomes virtually impossible, though theoretically permissible. A coin can be an attractive investment, but only if you are willing to take some risk.
Dash
In 2014, Dash was launched as Xcoin. The anonymity aspect that DASH offers its customers is based on mixing all transactions, making it difficult to track payments. We call this the PrivateSend option. This is an optional feature that must be activated in advance.
Dash has become a popular way of doing business in Venezuela. This cryptocurrency is the epitome of CoinJoin. However, the most important features of Dash are instant transactions, globality, and ease of use. It is on these three features that the creators create the image of CoinJoin.
Zcash
Zcash was created in 2016 and is a descendant of Zerocoin. Zcash uses the Zerocoin protocol and zero-knowledge to ensure transaction anonymity. In the Bitcoin network, transactions are transparent, while ZEC provides the ability to generate a public and a private address.
As for how they work, the public discourse has the same function as a BTC address. The personal address is used to conceal the sender, recipient, and transaction amount.
Commercial transactions are confirmed by a method called zk-SNARK. The transactions themselves are available on the public network. Information about the parties and the amount of the transaction is encrypted. ZCash allows for transparent transactions. You can send such a ZEC transaction to wallets or exchanges that do not support the ZCash privacy feature while remaining anonymous.
Verge
XVG is a cryptocurrency based on blockchain technology that offers the execution of anonymous transactions. It uses the Tor network solution or I2P. The main motive behind creating the project was to develop a digital currency that is ready to be used in everyday payments while preserving user data privacy.
Although the Verge network contains information about all transactions, the addresses of the users of this cryptocurrency network who make transactions are anonymous. This is why XVG is part of a group of individuals.
Anonymous Cryptocurrencies Problems
The evolving world of cryptocurrency provides its users with many solutions for hiding transactions and increasing privacy. The creators understand that maintaining anonymity for commercial transactions is very important to users. However, such functionality is also one of the biggest challenges.
In 2017, a survey was conducted on Monero. Tests showed that it was possible to link a transaction over a long ring signature. The developers of the project started working on a solution to this problem quite quickly.
So the developers implemented the RingCT protocol and implemented a minimum signature size. Another disadvantage is that determining the correct signature size may be easier than expected.
In turn, the centralization of masters in the Dash network allows masters with access to private transactions to influence the privacy of this cryptocurrency. Also, it is unknown whether the new Zcash protocol will prove to be a flawless and bug-free system. Zk-SNAR is a relatively new cryptocurrency methodology.
Anonymous Cryptocurrencies Future
The future of anonymous coins seems promising. They provide a solution to the problem of transaction privacy. If users can make decisions, such projects could be developed. However, governments in different countries may see a threat in anonymous coins, which could affect the ability to use them.
Linking business transactions to Bitcoin network users is not a problem. Encrypted transactions prevent this process. Monero is currently associated with crime, but as you might guess, the share of cash in this type of activity is even greater. This is the main argument used against anonymous digital assets. Therefore, investors deciding on such a purchase should consider all these aspects.
Final Notes
We have described the largest anonymous cryptocurrencies, but there are many more smaller projects aimed at preserving privacy and protecting personal data. Good examples are Hush, Sumokoin (a subsidiary of Monero) and Aeon (another subsidiary of Monero).
In addition, some projects are taking privacy to the platform level. For example, Wanchain is developing smart contracts that are compatible with various blockchains, and Enigma allows the creation of anonymous decentralized applications.
As privacy encroachments grow, the list of anonymous cryptocurrencies will only grow, it is inevitable. Every year, new cryptocurrencies appear in the world, some on the contrary, disappear. It’s a living world that is interesting to watch. and Artex Global can help you with that: if you missed our recent articles, like the one about cryptocurrency exchanges in the UK, we advise you to read it.
I have been studying cryptocurrency for over 5 years. I have accounts in every exchange and I test everything on myself.
I want this market to be more understandable for everyone.