Bitcoin is not nearly as private as many think. But there are a ton of other cryptocurrencies that have their main focus on privacy. Today we take a look at the five most promising privacy coins.
Cryptocurrencies are usually pseudonymous, but not private
For example, cryptocurrencies such as Bitcoin (BTC) and Ethereum run on blockchains, where every transaction can be viewed publicly online. Every transaction between two or more parties can thus be traced. In addition, each crypto wallet has a unique address that can be viewed publicly.
You don’t always know who exactly is behind such wallet addresses, but there is still a certain degree of traceability. Especially when a wallet is transferring funds to a crypto exchange.
Privacy coins, on the other hand, try to hide information about transactions in order to give users more financial privacy.
Verge combines two different functions to obfuscate transactions. The Privacy Coin uses the Tor network so that the IP addresses of users are hidden by default. In addition, so-called stealth addresses are used to disguise transactions even better. Stealth addresses are based on the same principles as hierarchical deterministic wallets.
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In simple terms, this means that an unlimited number of unique addresses are generated for which there is only one password. This makes it very difficult to assign which transaction is related to which wallet.
However, if you send XVG to two different addresses, it is still possible to tell where the transaction came from . Verge has also had data leaks in the past and the crypto project was the victim of a 51 percent attack just a few days ago .