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What is private cryptocurrency?

By August 2, 2022August 5th, 20224 minute read

The popularity of cryptocurrencies has grown due to several factors, including privacy and anonymity. Some of them assist users in concealing their identification and transactional information. However, users are looking for alternative solutions as apprehensions about the anonymity of early cryptocurrencies, like Bitcoin, grow. 

Privacy being the basis of Defi, all cryptocurrencies are private in the conventional sense.  No central body controls cryptocurrencies; hence, the ownership remains private.  However, in the context of cryptocurrencies, “private” and “public” relates to the degree of secrecy that a given coin offers.

What is a private cryptocurrency? 

A class of cryptocurrencies offering anonymous blockchain transactions is a private cryptocurrency or privacy coin. Some strategies used in trading bitcoin assets include disguising a user’s actual wallet balance and address and combining numerous transactions to avoid chain analysis to hide the source and destination of cryptocurrency transactions.

On the other hand, by enabling anybody to conduct chain analyses and observe public addresses and transactions in their network, non-private blockchains like Bitcoin and others offer transparency. This makes monitoring a person’s bitcoin and other publicly traded cryptocurrencies deposits and withdrawals feasible.

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Private cryptocurrencies, however, provide untraceability and anonymity. While untraceability renders it practically impossible for other parties to retrace the trail of transactions using services like blockchain analysis, obscurity obscures the identity behind a transaction.

5 Private Cryptocurrencies List You Should Know About

  1. Monero (XMR)

Monero provides a high level of transaction and user privacy. While Monero and Bitcoin are both decentralized peer-to-peer cryptocurrencies, Monero is distinguished as being more anonymous or privacy-oriented than Bitcoin. The anonymization attribute of Monero has contributed significantly to its growing popularity in the cryptocurrency community. Every bitcoin user receives a public address, also known as a key, that is specific to them.

Even though the sender is aware of the recipient’s public address, using Monero does not grant access to a window view of the recipient’s holdings. Transactions made with Monero cannot be linked to or tracked. Coins sent to a recipient are redirected through a unique address created at random for the transaction. Check the prices of Monero in the USDT market here. 

  1. Zcash (ZEC)

Zcash is another private crypto available in India. When a group of researchers decided they wanted to develop a cryptocurrency comparable to Bitcoin, but with some extra features, ZCash was born in 2016. They created a Bitcoin blockchain split that has improved user security and anonymity. Zerocash, which the scientists initially created as Zerocoin, was introduced not long after. The cryptocurrency was eventually called ZCash.

ZCash does not remove information about transactions. Instead, it encrypts it to prevent tracking. The security protocol zk-SNARK increases user security and anonymity while keeping the ZCash blockchain encrypted.

  1. Dash (DASH)

Dash, introduced in 2014, was formerly known as Xcoin. It was initially built with the intention of protecting user anonymity and privacy. The company has now recast its goals, albeit it still includes robust encryption capabilities. With the ability to be used as cash, a credit card, or through PayPal, Dash now wants to be a tool for everyday transactions. An open-source project called Dash has a decentralized payment network built-in.

“Masternodes,” a subset of Dash’s users, is in charge of running the network. The validation and verification of transactions are made more accessible by master nodes. Each master node has a beginning stake in their respective systems equal to 1,000 DASH. Additionally, it addresses the issue of transactions’ scalability. This is because the quantity of nodes needed to authorize a transaction is decreased to a tolerable level. Masternodes are in charge of authorizing transactions from the miner network and providing the Dash network services like payment and privacy. You can look into the prices of Dash here.

  1. Verge (XVG)

The open-source, decentralized cryptocurrency Verge (XVG) boasts that it offers anonymous transactions by masking the participants’ IP addresses and locations. Verge trades under the XVG ticker

By masking users’ IP addresses, Verge strongly emphasizes anonymity. An IP address is a numeric identifier connected to a particular computer or computer network. Obfuscating IP addresses renders transactions entirely untraceable; using an IP address, it is possible to track the user and the online activities they carried out on the connected device.

The entire anonymity of participants is difficult to protect with several well-known cryptocurrencies. As a result, private ledgers that provide distinctive ways to conceal users’ identities are becoming increasingly popular due to cryptocurrencies like Verge.

  1. Beam (BEAM)

Beam is a privacy coin that seeks to explore confidential DeFi. It uses the Mimblewimble protocol, which hides transaction values and metadata while thinning out the blockchain and enhancing scalability. LelantusMW’s most recent development seeks to deliver privacy and anonymity on all fronts. The goal of Beam is to give people total control over their finances. The team is creating a new blockchain to offer a secure, decentralized, and practical means of value storage and exchange and a robust self-governing community to foster its growth and support. To purchase beam and go through the prices, click here.

Bottom Line

In the virtual world, anonymity is highly desired, but it also carries the risk of consequential criminal activity. Operators of cryptocurrencies like exchanges need to devise a system to prevent frequent efforts at hacking by malicious parties and mandate KYC to ensure smooth law enforcement if required. The regulators have voiced serious concerns over Privacy Coins. Infrastructure is needed in the industry to confirm the legitimate owner of cryptographic assets.

Frequently Asked Questions

Is Ethereum Safe To Invest?

The Bitcoin market is unquestionably more volatile than the stock market. This may not be the market for you if you are incredibly risk-averse. Ethereum, on the other hand, may be a terrific investment for you if you're a diamond-handed investor who won't lose sight of short-term losses. Ethereum is a relatively safe investment as it is also based on blockchain.

Who Invented Cryptocurrency?

Satoshi Nakamoto invented cryptocurrencies and the technology that makes them function in 2009. The presumed pseudonymous individual or persons who invented Bitcoin used this identity. In addition, Nakamoto created the first blockchain database. Even though many people have claimed to be Satoshi Nakamoto, the person's identity remains unknown.

Is Cryptocurrency Safe To Invest In?

Cryptocurrency investments are subject to market risks, but if sufficient security measures are not taken, trading accounts can be maliciously accessed. Investments come with risks and uncertainties, and we cannot claim that any digital currency investment is risk-free. Buying and selling cryptocurrencies can be risky even if the trader is knowledgeable about the market and treats their coins carefully.

How Cryptocurrency Works?

Cryptocurrencies use cryptography technology to keep transactions and their units (tokens) secure. Cryptocurrency works via a technology called the blockchain. A blockchain is a decentralized technology that handles and records transactions across numerous computers. The security of this technology is part of its value.

Is Cryptocurrency Banned In India?

No, cryptocurrency is not banned in India. India has seen its ups and downs in the crypto sector concerning its legal status. The Reserve Bank of India (RBI) issued a circular in April 2018 advising all organizations under its jurisdiction not to trade in virtual currencies or provide services to assist anyone in dealing with or settling them. A government committee proposed outlawing all private cryptocurrencies in mid-2019, with up to ten years in prison and severe penalties for anyone dealing in digital currency. The Supreme Court overruled the RBI's circular in March 2020, allowing banks to undertake cryptocurrency transactions from dealers and exchanges.

How To Invest In Cryptocurrency Stocks?

Cryptocurrency can be purchased in two ways: through mining or exchanges. The process of confirming and adding transactions to the blockchain public ledger is known as cryptocurrency mining. Cryptocurrency exchanges are another option. Exchanges make money by charging transaction fees, but there are alternative platforms where you may communicate directly with other cryptocurrency traders.

Which Cryptocurrency Is Best To Invest In 2021?

Many altcoins are flourishing to invest in. Some cryptocurrencies with great potential are Ether, Ripple, Tron, and more. Investors are trying to diversify their portfolios and are flocking to the leading cryptocurrencies. Many growing businesses are already accepting cryptocurrency as acceptable payment methods.

What Is Cryptocurrency?

A cryptocurrency is a digital currency secured by encryption, due to which chances of activities such as counterfeiting and double-spending taking place get close to impossible. Cryptocurrencies get created on blockchain technology ( a distributed ledger enforced by a distributed network of computers). Cryptocurrencies are unique in that they do not get issued by any central authority. The term "cryptocurrency" comes from the encryption techniques used to keep digital currencies and the network safe.

Is Cryptocurrency Legal In India?

In India, cryptocurrencies are legal; anyone can purchase, sell, and trade cryptocurrencies. They are currently unregulated; India does not have a regulatory framework in place to regulate its functioning. According to the Ministry of Corporate Affairs (MCA), companies must now declare their crypto trading/investments during the financial year, according to the Ministry of Corporate Affairs (MCA). Cryptocurrency transactions have been taxable in India when people receiving such gains are Indian tax residents or where the crypto is considered to be domiciled in India

Are Cryptocurrencies A Good Investment?

Cryptocurrency has the potential to make you extremely wealthy, and the potential to cause you to lose your money. Crypto assets, like any other investment, come with many risks and potential rewards. Fundamentally, cryptocurrency is an excellent investment, particularly if you want to gain direct exposure to the demand for digital currency.

Disclaimer: Cryptocurrency is not a legal tender and is currently unregulated. Kindly ensure that you undertake sufficient risk assessment when trading cryptocurrencies as they are often subject to high price volatility. The information provided in this section doesn't represent any investment advice or WazirX's official position. WazirX reserves the right in its sole discretion to amend or change this blog post at any time and for any reasons without prior notice.
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