It’s likely, the most anonymous (private) cryptocurrency in the world is a coin you have never heard of, and well that should be a crime. Not for the reason that there is anything wrong with private coins.
Rather, private and secure is at the core of what makes cryptocurrency what it is. Yet, when it comes to truly private and anonymous transactions, these cryptocurrencies are often hiding in the shadows.
Do you remember when it felt illegal to hold Bitcoin?
Depending on where you live, it may still be. However, for most people in the world, cryptocurrencies have become widely accepted and their use is increasingly becoming more common.
It wasn’t that long ago Bitcoin was a bad word and associated with dark and nefarious online transactions. Many years have since passed and fortunately, these opinions have largely changed. Today cryptocurrency transactions are socially acceptable and an increasingly common part of our daily lives.
Yet, Privacy coins still retain their dark and nefarious association.
Why are private coins still looked upon with great suspicion?
To answer this question, we first need to take a closer look at the origins and beliefs around the adoption and use of encryption and privacy-enhancing technologies.
Before Bitcoin: There was the CypherPunk movement…
30 years before Satoshi Nakamoto and Bitcoin, there was the CypherPunk movement. Starting in the 1980s and during the early days of the internet, a small community of individuals came together to advocate the widespread use of strong cryptocurrency encryption and privacy-enhancing technologies for political and social change.
Yet, it wasn’t until the early 1990s that these beliefs and ideas became more formalized when a small group of individuals came together under the name cypherpunks. It’s from here was born the infamous Cypherpunk Manifesto, as written by Eric Hughes in 1993.
The basic ideas are (The Cypherpunk Eric Hughes, 1993):
“Privacy is necessary for an open society in the electronic age. … Privacy in an open society requires anonymous transaction systems. An anonymous system empowers individuals to reveal their identity when desired and only when desired. This is the essence of privacy. Privacy in an open society also requires cryptography… ”
Sadly, when Satoshi Nakamoto brought us Bitcoin twenty years later, what he gave us was a very secure, yet not entirely private cryptocurrency.
Why are all Cryptocurrencies are not “Private”?
For the simple fact, the ledger on which all transactions are posted too is public. At least that is how Mr. Nakamoto had originally architected it.
A cryptocurrency by function is secure. That is, mathematical formulations are used to verify transactions. Yet, secure doesn’t equal private and this is where many cryptocurrencies fall short.
Most cryptocurrency transactions are not considered private because details about the transaction are public, which can include the sending address, receiving address, and transaction amount.
How Private Coins Work
Private cryptocurrencies function in that they either hide or otherwise obfuscate the sending and receiving addresses and or the amount of the transaction. For example,
Monero, the most popular and widely used private and secure cryptocurrency uses a mechanism called stealth addresses to hide the sender and receiver's addresses and a feature called Ring Confidential to conceal the amount of the transaction.
Zcash uses a mechanism called Zero-Knowledge Proof which allows users to shield transactions. This allows users to transact without revealing their address as well as obfuscating the transaction amount.
Dash offers a feature called PrivateSend which functions by obscuring the origin of the funds.
These are likely the most popular and recognized private coins on the market. However, none of them claim to be the world’s most private cryptocurrency.
What is the world’s most private cryptocurrency?
According to the developers of this website, it’s Pirate Chain:
The developers who created Pirate Chain believe the best use of the protocol is a chain that requires private sends only. Delayed Proof of Work (dPoW) protects Pirate’s blockchain from damage against double spends and 51% attacks by attaching a backup of the ARRR chain to the Bitcoin Blockchain. In order to 51% attack Pirate, you would have to first 51% attack Bitcoin. This makes security against double spends and hostile takeovers nearly impossible if not impossible altogether.
Symbol:Pirate Chain (ARRR)
Would you invest in Pirate Chain?
No, unless my name is Jack Sparrow, Arrg!
Pirate Chain may very well offer the world’s most secure cryptocurrency, but unless they are looking to onboard the Pirates of the Caribbean, they should seriously reconsider their branding.
The privacy coin DarkCoin had similar branding problems until they changed their name to Dash. Lest we not forget in these early days, Dash was a pump-and-dump Xcoin fork. It was later rebranded to DarkCoin and only after, more appropriately branding to Dash — Digital Cash did it see its popularity and rise to fame.
Why look at Pirate Chain?
Not all gems are well polished. Pirate Coin is still a young project with a small team (and isn’t without flaws). They have what looks to be good technology behind what I can only say is poor branding. Unfortunately, Pirate coins…Arrg, Private coins will likely remain in the shadows until such time as they remake their image to something more generally acceptable.
For whatever reason, privacy coins seem to be a strange niche where these projects often have the technology right, but branding all wrong, IMHO.
Privacy Coins in General
Although privacy coins don’t make up a large percentage of the cryptocurrency market (only 2.16%) and it’s unlikely a privacy coin will make the top 10 cryptocurrency listing anytime soon, doesn’t mean there isn’t a lot of movement in this niche.
A Future Need for Privacy
Privacy coins will always have a place within the cryptocurrency ecosystem and a place in my portfolio. Whether for philosophical or practical purposes, privacy coins offer portfolio diversification and anonymity. As we see the need and expectation for privacy increase, so to will the use and value of these coins (as has been seen in recent years).