Which crypto offers the best privacy?

Monero and ZCash are two of the best choices for privacy-focused cryptocurrencies. But these two coins are not the same, some prefer one over the other. So if you are concerned about your privacy but want to invest in crypto, should you choose Monero or ZCash? Which privacy coin is best?

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What is Monero?

Monero (XMR) was launched around the same time as other major coins, such as Ethereum, in 2014. Riccardo Spagni is the founder of Monero, although its origins can be traced back to CryptoNote, another crypto protocol that no longer exists.

Like Bitcoin (and originally Ethereum), Monero uses the proof of work mechanism, which requires the use of miners to verify transactions and keep the blockchain secure. But there are some key differences that separate typical coins like Bitcoin from privacy coins like Monero.

While cryptocurrencies offer a higher level of privacy than traditional cash, most coins are pseudonymous and not anonymous. Ethereum, Bitcoin, Dogecoin, Tether, Litecoin and many other popular cryptocurrencies fit this description.

This is because crypto blockchains often display the wallet addresses involved in a given transaction, which can theoretically be linked back to an individual.

Monero addresses this problem by using a number of useful security features, including ring signatures, RingCT, and stealth addresses. Let’s see how these work.

1. Ring signatures and RingCT

Ring signatures provide Monero users with a way to protect their identity in a transaction. A single-ring signature can be performed by any member of a single group. Each member of the group has keys and one user is required to authenticate and facilitate the transaction. External users are unaware of who in the group signed the transaction, which can obscure the identity of the real signer.

Ring signatures use something known as triangular distribution to extract a number of public keys from the blockchain. These keys are then used in a group to create the ring signature.

RingCT (Ring Confidential Transactions) is the protocol that gave way to a better version of ring transactions. RingCT was first used in a Monero block in January 2017 and eight months later this feature became mandatory with every transaction.

Basically, it is RingCT that makes it possible to hide transaction amounts in Monero transactions. Known as a “Multi-layered Linkable Spontaneous Anonymous Group signature”, this provides a more robust user privacy model by obscuring more important data.

2. Stealth Addresses

Stealth addresses are not unique to Monero. Other privacy coins, such as Verge, also use this protocol to protect users. Originally proposed in 2014 by Bitcoin developer Peter Todd, stealth addresses have proven their worth in privacy coin transactions.

You can think of stealth addresses as somewhat similar to burner phones. A stealth address is a one-time, temporary cryptocurrency address that can be attributed to the recipient of a single transaction. Once used, this address is immediately discarded so that it can never be used to track or trace a user’s activity and identity.

What is ZCash?

Zcash (ZEC) is slightly younger than Monero and was launched in October 2016. Starting as Zerocoin (a Bitcoin hard fork) in 2015 and then switching to its current name in 2016, ZCash has become one of Monero’s biggest competitors over the years .

Like Monero, Zcash uses the proof of work consensus mechanism. But Zcash uses a different mining algorithm, has a different supply limit and a different value in the market.

Zcash also has different privacy elements than Monero. Zcash is actually not private across the board. You can even change your level of anonymity when using the Zcash blockchain. This is done by selecting shielded or transparent addresses.

1. Transparent addresses

Transparent addresses are just like those used by most crypto blockchains. A transparent address is completely displayed on the blockchain, which means that every transaction you make will also display your wallet address on the blockchain.

It is worth noting that all multi-signature transactions carried out on the Zcash blockchain cannot be shielded. These types of transactions will always be transparent.

2. Protected addresses

Shielded addresses are not visible on the Zcash blockchain. You can choose to have your transactions shielded, although Zcash’s origins as a Bitcoin hard fork mean that this is completely optional.

Shielded addresses differ from stealth addresses in that the former encrypts and hides your permanent wallet address, while the latter generates a one-time random address that is fully exposed on the blockchain.

Both the sender and recipient addresses are encrypted in shielded transactions through the use of the Zk-Snark protocol. Zk-Snark is a zero-knowledge proof algorithm that stands for Zero-Knowledge Succinct Non-Interactive Argument of Knowledge.

Shielded addresses also have a memo field where the sender can provide the recipient with important information related to the transaction. This memo field is also fully encrypted, meaning only the sender and recipient can use it.

Monero vs Zcash: Which Is More Private?

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When it comes to privacy, Monero is considered the best choice simply because its privacy features are mandatory.

As discussed earlier, Monero’s ring signatures, which conceal users’ identities, are mandatory for all transactions. Zcash, on the other hand, does not use ring signatures and gives you the option to use a transparent or shielded address. This means that if you want, you can display your wallet address in full on Zcash’s public blockchain, as you would with Bitcoin, Ethereum, and other typical cryptocurrencies.

However, Monero’s stealth address feature is not mandatory. You can choose whether or not to generate a one-time address for a particular transaction, which means you can choose the less secure option if you prefer. Because of this, Monero can be considered less safe than ideal.

Some prefer Zcash simply because the transaction costs are lower. However, monero transactions are usually processed in less time. So, there’s a little back and forth here.

Zcash is a useful cryptocurrency if you only want to make certain transactions private, while Monero is the choice for those who want total anonymity.

Be careful when choosing a privacy coin

If you are looking for a trusted privacy coin, make sure you take note of the protective features on offer. It could be that one of your future choices far outweighs the others or there are other factors, such as price, that also make you think. By doing so, you can find the right privacy coin for you and make a well-researched investment.

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