ADVFN Logo ADVFN

We could not find any results for:
Make sure your spelling is correct or try broadening your search.

Trending Now

Toplists

It looks like you aren't logged in.
Click the button below to log in and view your recent history.

Hot Features

Registration Strip Icon for default Register for Free to get streaming real-time quotes, interactive charts, live options flow, and more.

A Comprehensive Guide to Privacy Coins: Is It Worth Your Investment?

Share On Facebook
share on Linkedin
Print

Privacy coins represent a unique class of cryptocurrencies designed to ensure complete anonymity by using sophisticated cryptographic methods to obscure transaction details from the public. Unlike Bitcoin, Ethereum, and other digital currencies, privacy coins do not disclose the sender’s and recipient’s addresses, transaction amounts, or wallet balances.

© trustetc.com

Prominent privacy coins include Monero (XMR), Zcash (ZEC), Dash (DASH), Horizen (ZEN), Verge (XVG), Beam (BEAM), and Grin (GRIN).

The Pros and Cons of Privacy Coins

Bitcoin initially promised anonymity and privacy, but its transactions have become increasingly traceable through blockchain analysis tools, especially after regulatory authorities mandated KYC (Know Your Customer) compliance for cryptocurrency exchanges. Katie Haun, a former prosecutor now a crypto venture capitalist, noted, “Without the technology underlying bitcoin, we never would have been able to catch those people,” highlighting how blockchain can aid in tracing criminal activities.
Despite potential misuse, privacy coins strive to provide greater financial autonomy and privacy for everyday users.

Facebook rubbing out erasing privacy pencil

Privacy coins offer significant benefits, including enhanced financial privacy, robust security, and resistance to censorship. These features allow investors to evade transaction tracking and surveillance. While this can be exploited by criminals, it also serves citizens in authoritarian or repressive regimes. For instance, in China, where spending on non-essentials can lead to penalties, privacy coins enable discreet transactions. Additionally, privacy coins help protect against data breaches, which have surged in recent years.

The Risks Associated with Privacy Coins

Despite their advantages, privacy coins face scrutiny from financial regulators due to their potential misuse for illegal activities. They are outright banned in Japan and cannot be traded on crypto exchanges in South Korea. Although still legal in the United States and the European Union (EU), these coins are under close watch, with potential restrictions looming due to anti-money laundering (AML) concerns. In 2023, leaked documents revealed that the EU was considering banning banks and crypto services from dealing with privacy coins.

To avoid regulatory complications, some major cryptocurrency exchanges have delisted privacy coins, impacting their liquidity. For instance, Binance removed Monero from its platform earlier in 2024.
Consequentially, this makes investing in privacy coins a risky endeavor.

Leading Privacy Coins

Here are some of the top privacy coins based on popularity and market capitalization:

monero-150x150

Monero (XMR)

Monero is one of the pioneering privacy coins and boasts the largest market cap, exceeding $3.1 billion as of mid-June 2024. It employs ring signatures and stealth addresses to obscure the identities of senders and recipients. Ring signatures blend users into a “ring,” making it difficult to discern who signed a transaction. Security addresses generate a unique address for each transaction, further enhancing privacy. However, Monero faces challenges in 2024, with delistings from Binance and Kraken blocking its use in Ireland and Belgium.

zcash-logo

Zcash (ZEC)

Launched in 2016 by the Electronic Coin Company (ECC), Zcash is notable for being the first to implement zk-SNARK technology, which verifies transaction validity without revealing transaction details. Despite its innovative approach, ZEC has experienced a decline in price and fees over the past few years due to regulatory pressures. According to Token Terminal, weekly fees have plummeted from several thousand in 2018 to just over $200 today. Similarly, the token’s price has dropped from $884 in 2018 to around $20, with a market cap of $336 million.

dash-150x150

Dash (DASH)

Although Dash is less anonymous than Monero or Zcash, it enhances privacy with its PrivateSend feature, which mixes transactions. The price of Dash has plummeted from over $1,100 in 2018 to $23 in June 2024. While Bitcoin has surged by about 5,000% since 2017, Dash has dropped by 45%, losing its correlation with Bitcoin and barely registering on market charts.

Can Privacy Coins Endure?

Privacy coins face significant regulatory pressure in key jurisdictions, making them less appealing for long-term investors, despite their support for individual privacy rights.

coinsjar

Nonetheless, their robust technology ensures they will remain operational in the future. While governments cannot completely shut down privacy coins, they can restrict their liquidity sources.

Conclusion

Despite offering advantages such as financial privacy, security, and resistance to censorship, privacy coins encounter substantial regulatory hurdles that deter investors. The market for these coins is strained by delistings and legal pressures, impacting the price performance of major privacy coins. Although their use for legitimate privacy concerns is justified, the association with illicit activities and ongoing regulatory scrutiny cast doubt on their long-term viability.

Learn from market wizards: Books to take your trading to the next level

CLICK HERE TO REGISTER FOR FREE ON ADVFN, the world's leading stocks and shares information website, provides the private investor with all the latest high-tech trading tools and includes live price data streaming, stock quotes and the option to access 'Level 2' data on all of the world's key exchanges (LSE, NYSE, NASDAQ, Euronext etc).

This area of the ADVFN.com site is for independent financial commentary. These blogs are provided by independent authors via a common carrier platform and do not represent the opinions of ADVFN Plc. ADVFN Plc does not monitor, approve, endorse or exert editorial control over these articles and does not therefore accept responsibility for or make any warranties in connection with or recommend that you or any third party rely on such information. The information available at ADVFN.com is for your general information and use and is not intended to address your particular requirements. In particular, the information does not constitute any form of advice or recommendation by ADVFN.COM and is not intended to be relied upon by users in making (or refraining from making) any investment decisions. Authors may or may not have positions in stocks that they are discussing but it should be considered very likely that their opinions are aligned with their trading and that they hold positions in companies, forex, commodities and other instruments they discuss.

Leave A Reply

 
Do you want to write for our Newspaper? Get in touch: newspaper@advfn.com