#CryptoEssentials: What are Privacy coins and do you need them?
To help get you started on your crypto journey, we’ve developed the #CryptoEssentials. A series of articles designed to give you all the information you need to start trading cryptocurrency. If you have any questions about the #CryptoEssentials, the Coinage Exchange or anything else Crypto related, feel free to get in touch with us.
Although most crypto transactions offer a degree of anonymity, in that the users identity is unknown, a record of each transaction is always added to a transparent public ledger. This allows the potential for someone to track every transaction to and from a specific wallet. If the identity of the wallet owner is linked to the wallet address, their anonymity could be compromised.
Enter Privacy coins.
There are around 30 privacy coins available and different coins protect transaction data in different ways. Monero for example is a currency that is designed to be untraceable and keeps both the sender’s and the receiver’s addresses private, as well as the transaction amounts. By default, this makes the balance of your wallet private too.
Dash on the other hand offers a ‘Private send’ capability via CoinJoin. CoinJoin groups a number of transactions together to create a joint payment. This makes it impossible for anyone to see exactly what amount went where and therefore masks the specific transaction to/from your wallet.
That’s all good and well but it’s only criminals moving their money that will use these privacy coins, right? Wrong. Some users probably won’t need to use privacy coins but simply prefer to.
The transparency that the public ledger provides might be fine for the occasional trader or even a public body where transparency is paramount. However, knowing that someone could see your whole transaction history makes some users a little uneasy. This is likely to be amplified if a user has a particularly large balance in their wallet or is a business trader carrying out commercially sensitive transactions. For those users, privacy coins are their friends.
That said, it is important to acknowledge that for some time there has been a stigma attached to cryptocurrencies that they are mainly used by the criminal underworld to move their ill-gotten gains around undetected. As a result, it is often implied that additional anonymity equates to increased illegality.
However, think about what it would be like if someone were able to search for your name online, find your bank statements and see every transaction you’ve ever made. That would be undesirable for many users to say the least.
It’s also worth remembering that this is at a time where cryptocurrencies are being adopted at a greater rate than ever before. It’s not too difficult see a time where more and more personal data is linked to wallet addresses and the need for greater privacy will further increase.
It is clear is that privacy coins are actually a very important stepping stone in bringing cryptocurrencies to mainstream markets. Whether you want to start using them at this point in your crypto journey is your decision. Either way, if you have any questions about privacy coins or anything else crypto related, feel free to send us a message via the social channels below.
If you found this article useful why not take a look at the other articles in our #CryptoEssentials series below. If you have any questions about anything crypto related, drop us a message via our social channels.
Coinage is here to make cryptocurrency investing easier, safer, stable and more transparent for seasoned traders and newcomers alike.
For more information about Coinage or the Coinage Exchange go to GetCoinage.com
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In this edition of the #CryptoEssentials, we take a look at what are Privacy coins and do you need them? … Read More