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A compact guide on privacy coins for beginners

Blockchain technology is one of the most innovative inventions of this century. If you are familiar with how it works, you probably already know that using cryptocurrency such as Bitcoin will require your transactions to be broadcasted within the whole network. For most people, this is not the data they want to be made public. 

The good news is that there is a way to keep your identity and transaction details safer when you use crypto and that is through privacy coins. Read on to learn what privacy coins are and check out the best ones you can use in the market.

What are privacy coins?

Privacy coins are a kind of cryptocurrency that obscure transaction details using various privacy features, allowing the user to get total anonymity and identity protection when using a crypto network. It functions the same as regular cryptos, except that privacy coins offer more security to both the sender and receiver by hiding their transaction details.

How do privacy coins differ from regular cryptocurrencies?  

Though their functions are the same, regular cryptos such as Bitcoin are different from privacy coins since their users can be identified by their public addresses. So, once a person knows your public address, they can see all your transactions and track your transaction history.

Privacy coins, on the other hand, obscure your address and protect your identity which will make it hard for someone to track your deposits and withdrawals by using various strategies which you will know as you read on. 

How do privacy coins work?

To further understand how privacy coins work, you need to know what kind of privacy features they implement to make sure your transactions are anonymous and untraceable. 

Here are some popular strategies that privacy coins use:

Stealth addresses

Stealth addresses simply generate a new address every time you receive crypto so no one can associate you with a specific address, thus protecting your identity and your transaction details.


CoinJoin works by combining multiple transactions into one before disbursing the appropriate amount to each recipient.


Zero-Knowledge Succinct Non-Interactive Argument of Knowledge (Zk-SNARKs) lets you prove that a transaction is valid without sharing vital details such as the sender, receiver and amount of the transaction.


MimbleWimble is one of the newest techs used by some privacy coins such as Beam and Monero where transaction histories amounts and addresses are hidden. For the transaction to become valid, the sender must choose a random value known as the ‘blinding factor’. On the other end, the receiver must choose the same value the sender had chosen. 

Ring signatures

While a stealth address hides the destination of the crypto you send, a ring signature hides its origin by mixing the sender’s address with other addresses from other wallets when sending crypto. Also, only the sender and the receiver can view the details of the transaction. 

Are privacy coins legal?

The legality of privacy coins depends on your location’s jurisdiction. For instance, Dash, Monero and Zcash have been banned in South Korea and Japan to prevent cases of money laundering. The United States, on the other hand, hasn’t banned private coins but instead seeks tools to reveal the hidden data on the transactions.

Just like regular cryptocurrencies, privacy coins can be used for any transaction with the added advantage of letting its users take control of what data they choose to share. 

Why are privacy coins delisted on some trading platforms?

Member countries and observers of the Financial Action Task Force (FATF) acts as a watchdog for any possible global money laundering and terrorist financing cases. One of the ways they do to regulate Anti Money Laundering (AML) and Combating the Financing of Terrorism (CFT) is to implement FATF Standards’ Recommendation 16 Travel Rule which requires countries to collect identifying information from any domestic and cross-border wire transfers.

FATF forces virtual asset service providers to comply with the Recommendation 16 Travel Rule and ensures that every crypto trading platform has met this obligation before approving their operating license or registration.

With this in mind, privacy coins face scrutiny from various regulators due to their untraceable and obscured data transactions. As a result, some exchanges have decided to delist a few of them to avoid regulatory complications. For example, Dash, Monero and Zcash have been delisted by major exchanges such as Bittrex, Coinbase and Gemini. 

Additionally, another reason why exchanges delist privacy coins is they have become a popular method of payment for various criminal transactions, especially on the dark web. 

The best privacy altcoins in the market

Take a look at some of the most popular private coins as well as what anonymity and security features they use below:


Dash is a Bitcoin fork that uses CoinJoin to obscure transaction details by combining multiple transactions into one. Since Dash only uses this privacy feature, details such as your wallet balance and address are still available on the blockchain, but no one aside from you will know which one is yours.


Launched in 2016, Protected Instant Verified Transactions (PIVX) implements the zk-SNARKs sapling protocol. Here, transaction amounts and addresses are kept anonymous. Just like Zcash, PIVX is developed by the Electric Coin Company.


Monero was a fork from Bytecoin back in 2014. Now, it is the most popular privacy coin with a large market capitalization worth US$5.1 billion. It uses ring signatures and stealth addresses to provide anonymity. 

Due to its popularity, the United States Internal Revenue Service (IRS) has placed a bounty worth US$625,000 for those who can decipher the hidden details in Monero’s network since it believes that some taxpayers are not correctly reporting their crypto transactions.

Learn more about crypto at Casino Days

Despite the scrutiny, it is worth noting that privacy coins are still an integral part of the crypto economy since they provide anonymity and financial freedom, which are some of the primary goals cryptocurrencies are built for. Learn more about the crypto industry not just in India but in the world by reading more articles in Casino Days’ blog section.

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