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The 5 most private cryptocurrencies
What are privacy cryptocurrencies?
Privacy-oriented cryptocurrencies are digital currencies with features that enhance privacy and anonymity. Many people are concerned about how governments and companies use their personal information and data, so they naturally want less scrutiny of their private lives.
However, many privacy-oriented tokens have been removed from popular exchanges due to government and law enforcement concerns in many jurisdictions. Unregulated decentralized exchanges (DEX) and self-hosted wallets are slowly becoming the only means of acquiring or using privacy cryptocurrencies.
Here’s a rundown of the five most popular privacy-focused apps cryptocurrencies, which have several built-in privacy features. These projects claim to offer enhanced security features or options that help keep users’ identities and activities hidden.
Regulators in many jurisdictions have warned about privacy tokens and privacy-enhancing techniques because they are often used for illegal activities. In the US, cryptocurrency mixing service providers have been arrested and their services shut down. The European Parliament finalized a regulation in April 2024, setting the stage for a ban on privacy-oriented tokens and hosted techniques and stricter regulations for crypto service providers. In most cases, users are still allowed to self-custody these assets and use them in peer-to-peer transactions.
Key Takeaways
- Several projects have emerged that employ certain techniques designed to protect user anonymity.
- Many use mixing techniques like CoinJoin, encrypted addresses, random transactions, or others to disguise transactions.
- Many privacy tokens are designed to address people’s concerns about their private information and data.
- Unfortunately, there are always bad actors ruining something good for everyone else. Most of these tokens have been used in illicit transactions, so authorities and regulators are targeting developers and vendors.
1. Monero (XMR)
Monero (XMR) is a cryptocurrency designed primarily to help anonymize users. Monero transactions are much more difficult to track because they use ring signatures and stealth addresses. These methods help to hide the identities of the sender and recipient. Additionally, Ring Confidential Transactions, or RingCT, helps hide the transaction amount, providing more privacy.
Trading at $129.23 on May 5, 2024, Monero ranked 48th in overall market value, standing at around $2.4 billion.
2. Zcash (ZEC)
Zcash (ZEC) defines itself as “If Bitcoin is like http for money, Zcash is https”, underlining its enhanced security and privacy features. Zcash has implemented a cryptographic tool called zero-knowledge proof and offers participants an option to secure transactions. It allows participants to transact without any of them revealing their addresses to others. Zero-Knowledge proofs also hide transaction values.
Zcash ranked 171st on the list of cryptocurrencies with a market cap of $378 million and traded at $23.19 on May 5, 2024.
3. DASH (DASH)
Created in 2014, FEATURE is a cryptocurrency that allows users to choose whether or not their transactions are anonymous and private using a protocol known as CoinJoin. The feature works by hiding the origin of your funds. Choosing to use the feature will slightly increase the transaction fee.
DASH achieves this through a mixing protocol that utilizes an innovative decentralized network of servers called we masters. Another feature that DASH offers is Instant Send, which can process transactions as fast as a credit card.
As of May 5, 2024, Dash ranked 186th in market value with a total value of $347 million. At the time of writing, it is trading at around $29.47.
Cryptocurrency tumblers and mixers are increasingly used for money laundering and other illicit activities. Law enforcement authorities and regulators in many jurisdictions target these service providers as facilitators, so it is best to be careful and learn your country’s rules when considering a cryptocurrency or service that uses mixing techniques.
4.0×0.ai (0x0)
A controversial cryptocurrency exchange, 0x0.ai is a cryptocurrency and digital asset platform that allows users to anonymize their transactions and identities by grouping transactions. These transactions are then mixed and the cryptocurrency is distributed to other users.
On May 5, 2024, 0x0 traded at $0.36 and ranked 231st by market cap, with a total value of $313 million.
5. MimbleWimble (MWC)
MimbleWimble is a privacy-focused token with core features that allow you full control over your privacy. All transaction amounts are encrypted by default and no addresses or other private information are stored on the blockchain. On the MimbleWimble blockchain, transactions appear as random inputs and outputs. Between the encryption, the lack of addresses, and the built-in randomness, there is no way to track users.
As of May 5, 2024, MWC is ranked 305th in market cap at $182.5 million, and tokens are trading at $16.66.
What is the best privacy cryptocurrency?
Monero is the most popular privacy cryptocurrency, followed by ZCash and Dash. Each attracts different users.
What is a privacy cryptocurrency?
A privacy cryptocurrency uses techniques to provide users with more anonymity and privacy.
Do privacy coins have a future?
Privacy coins are being targeted by many jurisdictions because they can be used for nefarious purposes. Exchanges that rely on regulatory compliance are starting to remove them, but decentralized exchanges that don’t fall under any jurisdiction still list them. Privacy coins probably aren’t going anywhere as people who want them will find ways to use them.
The end result
Privacy tokens have a place in the world as privacy is something that many people want. These cryptocurrencies promise a life away from the government and corporate espionage that many people desire.
However, privacy for ordinary law-abiding citizens means more privacy for criminals, so it is difficult to say whether privacy cryptocurrencies will be available in the future.
Comments, opinions and analyzes expressed on Investopedia are for informational purposes only. Read our warranty and disclaimer for more information. As of the date this article was written, the author did not own any privacy cryptocurrencies.