With the rise of privacy-centered cryptocurrencies such as Bitcoin, the likes of Monero and Zcash have significantly contributed to maintaining anonymity in a distributed ledger economy. Contrary to Bitcoin’s traceability and visibility, some other cryptocurrencies strive to ensure privacy by hiding the transaction information including the transaction amount.
Monero, for instance, uses ring signatures and stealth addresses for the purpose of sender and recipient names as well as the amount sent. In addition to this, it is one of the most secure and untraceable cryptocurrencies with strong features for securing privacy which is embraced by users who believe in their identity. In contrast, Zcash offers privacy only when it is needed as all normal transactions are public - these are called “shielded transactions.” These shielded transactions do not reveal any transaction details using technological advancements such as zero-proof knowledge (zk-SNARKs). This kind of dual functionality allows users to execute private and transparent transactions making it easier to meet the regulations and still maintain privacy.
On the downside, the privacy facilities have caused a lot of issues among the participants as the local and international regulators and governmental entities suspect money laundering, tax evasion, and other illegal activities. For instance, some exchanges have to delist privacy coins, to help the exchanges to be in compliance with the regulations. In addition, some countries have issued a blanket ban on the use of any privacy coin.
On the other hand, privacy coins can be expected to persevere into the future, given that developers are looking for ways of conducting selective transparency enhancement while upholding user anonymity. These types of cryptocurrency help create a foundation for online privacy in today’s world of finance which is riddled with such high levels of surveillance. However, the continuation or extinction of these virtual coins will also majorly depend on the extent of conflict or compatibility between new ideas and law.
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~ Nesaty