Even though Bitcoin was initially thought of as a highly anonymous method of payment, the truth is that the privacy options offered via Bitcoin’s blockchain even when coin mixing processes, such as CoinJoin, are used are far from being perfect. Later on, many cryptocurrencies were created to solve Bitcoin’s anonymity flaws in an attempt to create a perfectly anonymous blockchain based cryptocurrency.
Throughout this article, we will take a look at the cryptocurrencies available today that provide a maximum level of anonymity to their users.
Throughout the past year or so, Monero has been increasingly appreciated as a cryptocurrency with high levels of anonymity that offers untraceable transactions. Monero XMR is one of the cryptocurrencies relying on the CryptoNote protocol, which bears basic algorithmic differences from Bitcoin, with the goal of augmentation of blockchain obfuscation. Even though CryptoNote’s cryptocurrency blockchains utilize public ledgers that track all transactions and unspent balances, transactions are innately untraceable so neither the sender nor the receiver of the coins can be revealed. The exact amount of a transaction of a cryptocurrency based on the CryptoNote protocol is not publically visible; only the approximate amount of executed transactions is recorded onto the public ledger.
Monero’s anonymity is pillared onto three main strategies:
- Ring signatures:
Cryptographically, a ring signature is a form of a digital signature that is created using the private key of one of the members of a given group of users. As such, it is almost impossible to determine the member whose private keys were used to produce the signature. Ring signatures enable the spender of Monero XMR coins to hide among other coin senders or transaction outputs.
- Stealth addresses:
Stealth addresses are one-time payment addresses that are randomly generated by the spender of the coins, on behalf of their recipient, for every Monero XMR transaction. Each Monero user has only one publicly published address, that he/she can use to receive payments, but each of his/her ongoing transactions will be recorded on the public ledger as being received by unique addresses that cannot be traced back to the published address of the recipient.
RingCT stands for Ring Confidential Transactions and represents an improvement of the architecture of ring signatures used with Monero XMR to conceal the number of transactions across Monero’s blockchain. RingCT was deployed across Monero’s network in January 2017 and became fully functional for all Monero transactions in September 2017.
You can try using Monero XMR via mining some with your PC using the user-friendly Minergate software.
Zcash is a new cryptocurrency that was launched in October 2016 on the basis of the Zerocoin project that was built to improve the anonymity of Bitcoin users. Zcash ZEC transactions are broadcast on a public ledger, yet the sender of coins can choose to conceal the payer, the payee and the payment amount.
Zcash’s protocol harnesses one of the best anonymity options that can be offered via cryptocurrency today. The protocol breaks any link that can exist between Zcash’s addresses. The currency provides a zero-knowledge proof that is very small in size and is easy to verify in term of computational resources.
If you want to try using Zcash (ZEC), try downloading the suitable miner for your GPU from Minergate and mine some Zcash to start testing its anonymity features. It’s also available in user-friendly Minergate GUI miner.
Bytecoin is the first ever cryptocurrency to be created on the basis of the CryptoNote protocol and it was launched in July 2012. Since its launch, Bytecoin BCN has been marketed as a cryptocurrency that promotes privacy via impassive transactions that feature high levels of anonymity.
As it is based on the CryptoNote protocol, most of Bytecoin’s anonymity features are provided by the protocol’s ring signatures which passively mix all transacted coins on Bytecoin’s network, offering all users obfuscation and plausible deniability whenever someone attempts to deanonymize them.
You can turn your PC into a miner for Bytecoin (BCN) via Minergate.
DeepOnion is a relatively new cryptocurrency that has been launched in July 2017. DeepOnion ONION is a fully anonymous cryptocurrency that utilizes the TOR network to provide its users with maximum levels of anonymity. ONION coins are sent and received over the Tor network, so it represents a cryptocurrency that provides users with bulletproof privacy options. The coin also was freely distributed, so there was no crowdfunding or ICOs and the developers of the coin offered 40 rounds of free coin distribution or “airdrops”.
DASH is a relatively old cryptocurrency that is known for offering reasonable levels of anonymity for its users. Via its “PrivateSend” feature, coins are mixed using an advanced version of “CoinJoin”, which is one of the most widely used Bitcoin mixing concepts. Dash’s protocol implements additional chaining feature to maximize the anonymity of users, in addition to passive ahead-of-time coins mixing options.
VERGE is one of the cryptocurrencies that have been launched in 2017. It is a decentralized, secure and anonymous cryptocurrency that is based on the proof-of-work algorithm. Even though VERGE XVG has a public ledger that enables anyone to view transactions details, it conceals the IP addresses of users via integration of both the I2P and Tor networks. As such, the anonymity level of VERGE XVG is superior to that of DeepOnion because it utilizes an additional layer of security via I2P’s tunneling and encryption.
So, these were the most anonymous cryptocurrencies available today. Please, note that selecting the most anonymous coins is somehow subjective, so another list might be available reflecting other considerable technical opinions, so always be open to other points of view and do your research quite well, if you are trying to find the most rewarding anonymous cryptocurrencies to invest in.