Cryptocurrency was developed as a decentralized form of currency by folks who knew how to create code. Despite the decentralized nature, it’s not completely private. The blockchains that make up crypto are also constantly under scrutiny from those who truly know how to mine data, and some of those can hack transactions and determine what you buy and how much you have. Privacy coins provide a way to move money privately and can even secure your wallet.
What are privacy coins?
Privacy coins are codes that disguise the sender and the recipient. According to experts with SoFi Investing, “one of the best privacy coins for transferring funds from one wallet to another is Bytecoin (BCN).” At each transaction, Bytecoin generates a code that looks like another wallet address via ring structure. The ring structures make exchanges
- untraceable: it’s not possible to see who sent the crypto
- unlinkable: it’s not possible to see who received the coins
It simply looks like one new wallet made each transaction only one time.
What are the most popular ones?
Monero is a very popular privacy coin and is a fork of Bytecoin. Like any privacy coin, the sender’s address is a new creation and privatized by this coding. However, Monero also offers Tails OS features to clean up after the transaction.
Be aware that these privacy enhancing steps, from the new sender address to the Tails OS cleanup, can get in the way of fast transfers. Usability will suffer for extreme privacy, but if you prefer to hide your transactions, Monero is worth the extra steps.
Zcoin uses a destructive protocol to create brand new spendable coins. Instead of hiding where the crypto came from, it burns the old coins and creates new ones. The destruction rate is quite small, but if you want to transfer coins completely anonymously, you will be able to generate freshly minted coins and send them to the recipient with no traceability.
How do you buy them?
You can buy privacy coins on exchanges where you would buy crypto. For example, to buy Monero you can simply set up an account on Binance and transfer your crypto there. Be aware that Monero purchases are always completely private; while you can move crypto to other investments on Binance, once the Monero purchase is made the crypto will be untraceable, even when studying your Binance balance and transaction history.
Of course, you will be able to see your Monero coins via the search. A quick tip: Ethereum is a cheaper and faster deposit to your Binance account than Bitcoin. If you’re only using Binance to buy a few Monero, it may be easier to buy Ethereum prior to setting up your new account.
Privacy coins aren’t an absolute necessity, but being able to remain anonymous can reduce your risks over time. As Bitcoin becomes a more accessible and user-friendly method of transacting with vendors and other traders, the ability to hide your net worth may make privacy coins a good choice for you.