One of the main advantages of digital currencies is anonymity, that is, the ability to hide your personal data from third parties. The ability to make anonymous payments without providing documents has made cryptocurrencies a popular means of payment. Still, it quickly became clear that anonymous cryptocurrencies are rather mere wishful thinking.
Over time, the term ‘pseudo-anonymity’ has become increasingly used concerning some coins. This was especially evident when trying to pay with cryptocurrencies offline — when buying goods in a store, you had to show your passport. However, the challenge was accepted, and the crypto community developed real anonymous cryptocurrencies. Today, we decided to list the most anonymous coins. Let’s get started!
Most Anonymous Cryptocurrencies to Know
Before listing the most anonymous cryptocurrencies, let’s look at the advantages and disadvantages of private tokens. Among the advantages, it’s worth noting that anonymous cryptocurrencies guarantee privacy, security of personal data, and minimization of the risk of losing funds.
The disadvantages are an increase in transaction time, increased fees, as well as the use of anonymous money on the darknet, which leads to sanctions from regulators. Now it’s time to consider specific coins!
At the top of the list is Monero, which uses the CryptoNote encryption engine. According to many crypto experts, it is the most secure cryptocurrency in the world. It was released in 2012 by the anonymous development team Nicolas van Saberhagen.
This token hides everything you need: from the sender’s identity to the transaction amount. This approach guarantees the complete anonymity of information for third parties. Information, in turn, is seen by a sender and a recipient. Moreover, the system creates unique user addresses for each transaction. What is inside the Monero system, and why do experts say that it is the most secure cryptocurrency in the world? Well, it is a rather complex combination of special cryptography and special protocols in combination with ring signatures.
Due to its security, Monero has become a hit on the darknet, and all sorts of Internet scammers like to pay with this token in dubious transactions and mine it. Hence the increased attention of law enforcement agencies and regulators, as well as attempts to find out beneficiaries of transactions.
Another drawback of Monero is the volume of a DAG file, which is more than several dozen times larger than that of bitcoin due to the cryptographic body kit.
It’s a fork of the famous Zcoin token. A smart anti-hacker protocol is implemented inside the system, each circuit of which has a built-in mechanism for generating random data. The know-how of this cryptocurrency is smart privacy. Activating this function leads to the complete disappearance of all funds on a client account along with transaction history. Still, after a couple of minutes, the accumulated amount is returned in new coins but cleared of transaction traces.
Tracking financial transactions is unrealistic, as well as understanding who was the sender and recipient of funds. Experts have calculated that the use of smart privacy costs 2% of the amount destroyed by the cryptocurrency. This is an incredible level of privacy, thanks to which the coin is among the most anonymous cryptocurrencies.
It’s one of the main competitors of Monero, which uses a Zerocash encryption protocol during transactions. The launch of the anonymous token was released in 2016. The token was created according to patterns of bitcoin, but unlike the main cryptocurrency of the world, it guarantees complete security of transactions according to the creators. An outside observer sees that a transaction is being made, but all the transaction details are hidden: where the money was withdrawn from, where it was credited, and what amount was transferred between wallets.
Zcash innovation is as follows: the transaction participants can both open their data and completely hide them at their discretion. A zero-knowledge proof protocol is launched to support the entire transaction chain. The property of this protocol is confirmation of the transaction volume without transferring information about operation participants. Protocol information is reflected in a special design — zk-SNARK.
To complete a transaction, its participants need to generate an address. If they do not need anonymity, they can create an address with the letter T (these are open and transparent addresses). Still, if a transaction is confidential, you need to create a Z address.
Komodo was invented and launched in 2016 by an anonymous crypto enthusiast named jl777. The coin encryption protocol is Delayed Proof of Work (dPoW).
One of the most secure cryptocurrencies, Komodo, is actually another fork of Zcash. The main advantages of the coin are zero proof and a fairly recent Delayed Proof of Work (dPoW) protocol.
Zero proof ensures that all transactions, sender/recipient identification, and amount on the Komodo platform are not visible to an outside observer.
How is this effect achieved? Komodo additionally signs its blocks on the bitcoin blockchain, making third-party hacking nearly impossible.
Moreover, coin owners have a choice between public and anonymous transactions. In the first case, transaction traces can be found in the blockchain; in the second case, only the transaction itself is recorded.
The creator of Dash, Evan Duffield, was sure that the first cryptocurrency lacked anonymity and more than once proposed changing the Bitcoin blockchain. Faced with resistance from BTC creators, Duffield developed the XCoin concept in 2013. After two rebrandings, the coin was named Dash. Dash is usually called the most secure cryptocurrency, but practice shows that this is not entirely true.
The anonymity of Dash is ensured by the usual mixing of cryptocurrencies, which is performed by main nodes (PrivateSend). This feature hides the origin of funds and other data but is not a default option. Its activation entails a commission increase.
Founder: Rob Viglione. Encryption Protocol: Zero-Knowledge Proofs. In 2018, the project changed its name to Horizen. However, a ticker of the traded cryptocurrency has been kept as ZEN. Thus, it’s a hard fork from Zclassic, emphasizing increased anonymity of transactions.
Zencash implements Transport Layer Security (TLS), which protects a protocol and data packets sent between client-server apps.
Verge is an anonymous cryptocurrency that focuses on privacy and is able to keep all transactions private, anonymous, and completely untraceable. It uses Tor and 12P to ensure the complete anonymity of its users and their funds.
Experts say that the Tor proxy system drives traffic through many computers, thereby encrypting it. An add-on from the private I2P network is used to increase user privacy and complicate the process of user identification.
This anonymous cryptocurrency successfully combines a high degree of privacy and a high transaction confirmation speed.
Navcoin is a cryptocurrency created back in 2014 on a special Bitcoin Core code. While not as popular as its competitors like Monero and Zcash, it has stood the test of time.
The Navcoin code is written on the original bitcoin code with key changes that allow the introduction of several unique features. For example, a new NavTec blockchain, created in parallel to the main blockchain, is used for privacy. Compared to bitcoin, Navcoin’s transaction speed is much faster.
In 2015, a small group of Dash developers came up with the Darknet coin and later renamed it PIVX.
The coin is positioned as a reliable modern-day token. It is built on the architectural Dash masternode platform, where the Zerocoin protocol is responsible for privacy. Among the advantages are fast transactions and improved anonymity of all transactions within the platform.
In essence, PIVX is a self-funded and community-driven DAO platform. POS (Proof-of-Stake) is implemented here — an algorithm that functions at the expense of masternodes and validators. Masternodes propose projects for the platform development for voting and verify transactions using a special mechanism. Validators are responsible for mining, creating blocks, and receiving rewards for their creation. Part of the reward goes to the platform fund and is directed to its development.
PORAMIN Inc. is a creator of the project, which started in 2016. Firo is based on the Zerocoin protocol created by Matthew Green, a professor at Johns Hopkins University.
It’s another cryptocurrency based on the zero-knowledge protocol. The unique system allows anyone to mint coins in a public ledger into private coins.
The MTP (Merkle Tree Proof) implementation algorithm solves the security centralization problem that bitcoin suffers from. This algorithm prevents any mining enterprise from gaining a competitive advantage over the rest of the community.
What other anonymous cryptocurrencies do you know? What are your favorite ones? Feel free to share your thoughts in the comments below!