In the cryptocurrency world, there is no value more sacrosanct than the privacy of the user. One of the things many people love about cryptocurrency is the ability to send money to anyone in the world without having to have their name attached to the transaction.
Companies can learn so many personal things about us by analyzing our spending habits when we are using traditional spending methods, such as credit cards with our names on them. Shopping preferences are tracked to bombard us with targeted ads, and others use identity data to build out profiles that can too easily be used for nefarious purposes.
With crypto, however, things change a little bit. You don’t have to tie your name or identity to any transactions you make. You can generate new wallets after every single transaction if you feel so compelled.
Privacy is one of the many reasons that people have begun to embrace cryptocurrencies, but some of the biggest coins aren’t that well known for being inherently private.
You see, while coins such as Bitcoin are not necessarily tied to your name or identity, the blockchain is still completely transparent and immutable. This means anyone in the world, from governments to your next-door neighbor, can look at the blockchain, plug in any wallet address, and see every transaction that the wallet has ever engaged in.
If someone is able to figure out your wallet address, they can then tie transactions to you as far back as the day that the wallet in question was generated.
With privacy coins such as Monero and Zcash, however, this is a lot more difficult, if not impossible. That’s because these coins and blockchains were built from the ground up with privacy in mind first and everything else second.
Zcash and Monero: How Do They Protect Privacy?
Zcash and Monero are two of the biggest names in the crypto world when it comes to privacy coins. Their goal is the exact same in that they want to help you maintain your privacy while spending your coins, but the way they achieve this goal is very different.
Zcash (known by its ticker symbol, ZEC) is a fork of the Bitcoin protocol. It keeps your transaction data private through the use of something called “zk-SNARKS,” which is a zero-knowledge protocol that keeps your transaction data private.
Monero (known by its ticker symbol, XMR) uses a different protocol known as “CryptoNote.” Monero keeps its transactions, senders, and receivers private through the use of ring signatures, stealth addresses, and ring confidential transactions.
Let’s take a look at each coin and learn more about it. Through learning about each, we can achieve a better understanding of how they protect our privacy.
Zcash is similar to Bitcoin in many ways. It uses the same sort of protocols but also provides some bonus privacy protections for its users, whereas Bitcoin does not. Just like Bitcoin, Zcash’s total supply is capped, and it has a total fixed supply of 21 million coins. Once that number is reached, no more Zcash will be mined.
Transactions with Zcash can be transparent, like Bitcoin transactions, when they are controlled by what is known as a “t-add.” Transactions with Zcash can also be shielded when controlled by a “z-add.” This is achieved through the zero-knowledge protocol, zk-SNARKS.
All Zcash coins are either in “transparent pools” or “shielded pools.” Since December of 2017, only about four percent of the total Zcash coins have been in shielded pools. At that time, most of the available wallet software did not support z-address, and there wasn’t a single web-based wallet that could support them, either.
Zcash allows people performing transactions on the blockchain the option for selective disclosure, where someone would be able to prove payments for audit reasons, like taxes. This would also give someone the choice to comply with anti-money laundering laws and regulations on tax.
The developers behind Zcash have held meetings with law enforcement agencies to explain how it works and have also stated that they did not “develop the currency to facilitate illegal activity.”
Many people dislike privacy coins because they fear that people will be using them for illegal activities, such as purchasing drugs, money laundering, or facilitating other crimes. It is important to remember, however, that this is a huge possibility with any currency, and no currency has facilitated more crime than cold, hard cash.
For people interested in mining Zcash, they will be pleased to know that it is one of the friendliest coins around for mining. Zcash uses the Equihash mining algorithm, and the developers of the coin have gone out of their way to make sure that it is ASIC-resistant.
When a coin is ASIC resistant, it means that the developers are doing everything they can to prevent the coin from being mined by expensive Application Specific Integrated Circuit (ASIC) machines, which can cost thousands of dollars apiece. When a coin can only be mined by these expensive machines, fewer people will be able to mine that coin profitably.
With Zcash, almost anyone in the world who has a desktop computer and an internet connection can begin mining. This is because Zcash is friendly to CPU and GPU miners, meaning all you need to do to get started mining Zcash is to download some mining software for your computer that works with its operating system.
Mining software for Zcash is available for all of the major desktop operating systems (Windows, Mac OS, and Linux), and there are also plenty of wallets available for all of the major desktop operating systems, as well as for mobile operating systems. That means you can access your Zcash coins on your smartphone just by visiting the Google Play Store (for Android users) or the Apple App Store (for iPhone and iPad users).
Once you have your computer set up for mining, just set up your wallet to receive payouts from your mining efforts, and you will be good to go.
Like every other major cryptocurrency out there, Zcash can be bought, sold, and traded on all the big cryptocurrency exchanges. You can find Zcash on exchanges such as Binance, Poloniex, ShapeShift, KuCoin, and so many more.
When you are ready to grab some Zcash on your favorite exchange, simply go to the website of the exchange, sign up for an account, and send some coins (usually Bitcoin) from your personal wallet to your exchange wallet. You will then be able to begin buying, selling, and trading Zcash right from your computer or smartphone. When you’re ready to hang onto it for safekeeping, you can withdraw it from your exchange wallet to a personal Zcash wallet that is completely under your control.
Monero is one of the most popular solutions on the crypto market for privacy. Privacy has always been at the forefront of the Monero project and was the main reason that the coin was ever created in the first place. Monero also has a bit of an interesting story behind it.
In July 2012, the first-ever implementation of the CryptoNote algorithm was launched. This project was referred to as Bytecoin, and it had quite a bit of promise. Unfortunately, some things were going on behind the scenes that didn’t quite add up, such as how 80% of bitcoins had already been created.
In light of some of these startling revelations, the Bitcoin blockchain was forked, and the new chain was called Bitmonero. The name was changed shortly after that to simply Monero, which means simply “coin” in the Esperanto language.
Unlike most other cryptocurrencies in existence, Monero has two public keys and two private keys for its wallets.
The Types of Keys in Monero
There are two types of keys in any cryptocurrency, and this is true with Monero as well. When your wallet is generated, you will see your “public key” and your “private key,” and you will need to store them both somewhere safe, where only you can access them.
For those who may not know the difference between these types of keys and what exactly they do, let’s dive in a little further to learn more.
Public Key. The public key is used to generate your one-time “stealth public address,” where funds can be sent to the receiver. The public key also helps the sender participate in ring transactions and can also verify the signature of the key image.
Private Key. The private key is used by the receiver to scan the entire Monero blockchain to find coins sent to them.
The private key also helps in creating the key’s image that enables the verification and sending of transactions.
Your Monero address is created in two parts. The public key makes up the first half of your Monero address, while the private key makes up the second half. All Monero addresses are 95-character strings.
Every single transaction on the Monero blockchain is private by default, which is the primary reason why people love Monero and continue to support the project.
Monero uses the CryptoNote protocol for mining. The CryptoNote protocol powers many popular coins, all of which are able to be mined on a regular desktop computer, as long as it has the required software packages and a connection to the internet.
Monero, much like Zcash, is created to be ASIC-resistant. This means that if an ASIC machine that is able to mine the currency comes out, the developers will create a patch that will render such machines unusable for mining Monero. This is because Monero is meant to be accessible to anyone and everyone who wishes to mine it and use it.
All you need to do to begin mining Monero is download the right software for mining, depending on your operating system. Monero mining software can be found for all of the major desktop operating systems (Windows, Mac OS, and Linux).
You’ll want to make sure you have a Monero wallet on your desktop or your smartphone (Monero wallets can also be found on Google’s Play Store for Android devices and Apple’s App Store for iPhones and iPads).
Once you have set up your mining software and created your Monero wallet, simply point your mining software to a Monero mining pool, input your wallet address to receive your payouts, and then begin mining. You can up your hash rate by adding some more machines or even some GPUs into the mix. A higher hash rate can help net you a higher payout.
Much like Zcash and all the other major coins, if you are interested in obtaining Monero but might not want to go through everything it takes to mine it, you can obtain it through trading.
Simply find an exchange you’d like to use (such as Binance, ShapeShift, KuCoin, or many others) and sign up for an account. You’ll then be able to send some coins over to your exchange wallet and use those coins to trade for Monero.
After you’ve obtained some Monero on your favorite exchange, you will be free to withdraw the Monero to your personal Monero wallet under your control. You can then spend it or hold it, watching the value increase until you are ready to sell it.
How Monero Protects Your Privacy
Monero uses three different forms of cryptography to protect the anonymity and privacy of everyone who participates in the Monero blockchain. Ring signatures, stealth addresses, and ring confidential transactions are all implemented into the Monero network to protect the privacy of everyone who uses it. Let’s explore some of these a little bit more in-depth:
Ring signatures. Ring signatures help to maintain the privacy of the sender of Monero coins. Ring signatures use decoys so that any third party who may be snooping on transactions won’t be able to identify the original sender of the Monero coins.
Stealth addresses. Stealth addresses help to protect the privacy of the recipient of Monero coins. A one-time address will be generated for the recipient of the coins so that someone snooping on transactions won’t be able to see a full history of transactions for a single wallet.
Ring CT. Ring Confidential Transactions, or Ring CT, protect the privacy of the entire transaction, including the sender and the recipient of Monero coins. Ring CT can shield the value of the transaction, so people viewing the blockchain won’t be able to know exactly how much Monero Bob may have sent to Jill, for example.
Wrapping it Up
As you can see, there are all sorts of reasons why people would choose to use Zcash and Monero to protect their privacy.
In a world where companies and governments are already after our data, it is nice to know that there are ways to send and receive money without our names and identities being tied to every single transaction. This protects us from targeted ads from companies that are checking out our shopping habits or from more nefarious folks who seek to use our data to build a profile on us.
With privacy coins such as Monero and Zcash, we can take back some semblance of privacy and security. We can spend these coins knowing that others won’t be able to snoop on our transactions and identify a single person involved in the transaction. This is a huge breath of fresh air for privacy enthusiasts who love these coins for that exact reason.
In a world where privacy is slowly fading away, it is nice to know that options still exist to help us maintain our privacy and anonymity when spending our hard-earned money. For people who are into crypto and who value their privacy, there may be no better coins for them to be interested in than Zcash and Monero.