Their advanced cryptographic method is what distinguishes privacy coins from bitcoin and other altcoins.
Looking for complete privacy and anonymity in your crypto transactions? This is where privacy coins come in.
Regular crypto coins aren't completely private, as blockchain transactions are recorded on a public ledger and open for anyone to see. While such a system provides several advantages, it doesn't offer users full privacy and anonymity, making it easier to link an identity to someone’s address.
Privacy coins are not too different from bitcoin or other altcoins. They hide wallet addresses and obscure information that could be used to identify a wallet owner. This may be crucial if you want to keep your financial activity anonymous and private.
In this article, we will take a deep-dive into what privacy coins are, how they work, and how you can add them to your portfolio with Binance.
What Are Privacy Coins?
Privacy coins are a class of cryptocurrency built on two main principles: anonymity and untraceability.
How Do Privacy Coins Work?
Similar to other cryptocurrencies, privacy coins also use blockchain technology as a distributed ledger. While crypto transactions are usually public, privacy coins are designed in a way that makes it very difficult (or impossible) to connect transactions. You can’t determine the source or destination of funds.
What sets private coins apart from regular crypto is that they use cryptography to hide a user's wallet balance and address to maintain anonymity and untraceability.
Below we’ve outlined four cryptographic techniques that some privacy coins use to keep information private.
Stealth addresses: Every transaction generates a new address to protect the privacy of the recipient. This ensures that external parties can't link any payments to your wallet address.
CoinJoin: Works like a coin mixer that merges transactions from different individuals into a single transaction. Then a third party effectively tumbles the coins and sends them out to recipients. Each recipient receives the coins at a new address to reduce traceability.
Zk-SNARKs: Zk-SNARKs, an acronym for zero-knowledge succinct non-interactive argument of knowledge, allows you to prove that a transaction is valid without sharing its details (sender, receiver, amount).
Ring Signatures: When you sign a transaction with a private key, others can link your signature to your address. Ring signatures stop that from happening.
Since there are various signatures in the same transaction, it becomes harder for others to connect your signature to your address.
Are Privacy Coins Really Untraceable?
This will depend on the design and structure of each privacy coin, as some are more traceable than others. Not all privacy coins are as private as they claim. Poorly designed protocols could contain flaws that can make their transactions traceable. Still, considering the current cryptography and encryption methods, we can say that privacy coins are working well. However, as new analytical tools are developed, computers may one day become powerful enough to crack modern encryption methods.
Top Privacy Coins on Binance
Privacy coins are great for those seeking true financial confidentiality. Below we’ve listed the top privacy coins you can consider adding to your crypto portfolio:
Monero ( XMR) at a price of $217.50 and at a market cap of $3,936.97M*
Zcash ( ZEC) at a price of $179.20 and at a market cap of $2,521.57M*
Oasis Network ( ROSE), at a price of $0.27 and at a market cap of $927.01M*
Decred ( DCR), at a price of $62.50 and at a market cap of $868.52M*
Secret ( SCRT), at a price of $5.37 and at a market cap of $876.89M*
Horizen ( ZEN), at a price of $48.18 and at a market cap of $589.19M*
Verge ( XVG), at a price of $0.013 and at a market cap of $218.47M*
Dusk Network ( DUSK), at a price of $0.50 and at a market cap of $201.48M*
Phala Network ( PHA), at a price of $0.29 and at a market cap of $79.20M*
BEAM ( BEAM) at a price of $0.38 and at a market cap of $42.54M*
\* As of April 1st, 2022.
\* This list is ranked by market cap and does not constitute a recommendation or endorsement by Binance to buy or sell any currency.
How To Buy Privacy Coins on Binance In 2 Steps
Looking to purchase privacy coins? Get started in minutes on Binance, the largest cryptocurrency exchange by trading volume and user base. At Binance, you can buy crypto in two simple steps while enjoying low fees:
Step 1: Make a fiat deposit via an e-wallet transfer or bank transfer on Binance. Be sure to check the available fiat channels for your preferred currencies. For more information see an in-depth guide on “ How to Deposit USD via SWIFT”
Optional: Convert the fiat currencies to BUSD or USDT so that you can trade a greater variety of tokens.
Step 2: Buy the privacy coin of your choice through a user wallet purchase or directly with credit/debit card.
Conclusion
Since Bitcoin and many other cryptocurrencies run on a decentralized network, they can provide a certain degree of privacy. For instance, allowing users to create wallets without directly exposing their identities. Still, they are not fully private because transactions are recorded in a public ledger. As such, privacy coins could be an option for those looking for higher levels of anonymity and privacy.
With that being said, remember to DYOR before purchasing and committing to any privacy coins.
Ready to start your crypto adventure with Binance?
Sign up for a Binance account or download the Binance crypto trading app. Once your account is verified, you can buy cryptocurrencies on Binance using fiat in three ways: from Binance via bank transfer, card channels or e-wallets options.
Buy BUSD, BNB and cryptocurrencies with a Debit Card, Credit Card, or via Bank Transfer
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Disclaimer: Cryptocurrency investment is subject to high market risk. Binance is not responsible for any of your trading losses. The opinions and statements made in the article should not be considered financial advice and are shown to illustrate an example, and is not intended to serve as investment advice or recommendation.
Read the following articles for more information:
(Support) How to Buy Crypto with Debit/Credit Card on the Website and the App
(Academy) A Beginner's Guide to Monero (XMR)
(Academy) zk-SNARKs and zk-STARKs Explained
