Bitcoin transactions are often considered to be private. But, this is far from the truth. In reality, every transaction is registered within the ledger. This means that if you wanted to discover someone's wallet address, then you can track their transactions as breadcrumbs. It is simple to obtain, as you must provide it to the individual who is to be able to receive any payments.
Because of the growing concerns of crypto-related advocates regarding privacy, certain crypto currencies were created to tackle these issues. These currencies are known as privacy coins, and they come with a variety of features that allow them to hide, cover, or even erase transactions.
Even if you have no intention of using these coins to purchase goods, as an investor it is an excellent idea to include some in your portfolio to help diversify your portfolio. So, in this article we'll talk about private currency and a bit about how they function.
What exactly is privacy coin?
In the past prior to having access to the currencies that would protect your transaction data it was commonplace to use mixers. It's basically software that bounces bitcoin between multiple wallets to confuse those who want to track your activities. Although this worked well, it meant that you had to trust someone outside with your money in order to ensure it wasn't stolen.
To that end, privacy-focused currencies were created to essentially do the same thing, but without the necessity of a third-party and at a greater scale. How they accomplish it varies among currencies however, here are the most important characteristics that privacy coins are able to incorporate.
Signatures for rings
This is how the privacy-oriented cryptocurrency attempt to deceive anyone who may be monitoring it. This makes all transactions that are made on the blockchain appear to be exchanged with one another.
This makes it difficult to determine the source of a transaction from, effectively securing everyone, as none of them can be identified. Although it's theoretically not totally foolproof, this is currently one of the most effective methods of hiding transaction data and protecting participants.
zk-SNARK
The privacy protocol is currently in development, and isn't yet widely utilized. It's still an element of the zero-knowledge verification system. It is possible for a system not to disclose information about you without knowing it.
Blockchains can validate data without divulging it. Instead, they ask a series questions until there's a consensus. However, there is concern that the responses could be forged and zk-SNARK isn't as well-known as ring signatures.
Stealth addresses
If you share your Bitcoin address, it is possible to have them view the total balance in your wallet. This is obviously unfavorable for many reasons, and most people do not wish to reveal how much money they have.
This puts you in a position to be a prime target for social engineering and fraud. A large number of best privacy coins utilize stealth addresses. These addresses won't reveal your balance on your account and allow you to make a request for money in a safe manner without divulging the exact location of your wallet.
Why should I consider investing privately in coins?
Some people believe that these coins are just intended for criminals. However, it's not the case. They are available to anyone who doesn't like the way that governments and other organizations handle their personal information. You can protect yourself by using a secure currency that hides your wallet information from anyone who might try to compromise the security of your wallet. This is often the best way to protect assets from fraud and theft.
Although many still believe that all cryptos are more or less anonymous, those attitudes could change in the near future. When this information becomes accessible to the general population, it's likely that more cryptocurrency will be able to adopt techniques to conceal themselves, while those that are already in use such as Monero or ZCash will begin to get more usage. They'll be more sought-after among vendors.
Stealth coins can be used to diversify your portfolio. It's a fantastic way of preserving your portfolio and making plans for the future by putting the majority of your earnings into Monero which is a market-cap stealth cryptocurrency. It is also possible to invest in a variety of coins that you believe might be worth it.
Conclusion
There are many different currencies to think about as well, so you must take a moment to get familiar with all the choices available prior to making a decision. While a high market cap currency will protect your investment, there are smaller cap coins that can net you some very nice yields. Everyday new technologies are introduced in the crypto-verse. It's worth your time to keep up-to-date with them.
Before investing into any currency, you must of course fully study the goals of the project, team and their roadmap. Consider what benefits this currency has to offer. Does it have something unique that is better than the current options already available?
Monero is a well-known privacy cryptocurrency. A new privacy coin needs to be able to compete with it. Something that's just another clone but adds no real functionality will not cut it for your portfolio.
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