In the early days of Bitcoin, it was perceived as a privacy-enabling currency due to the fact that Bitcoin does not require or display any personally identifiable information of its users. The fully transparent nature of the Bitcoin blockchain, however, means that the history of any person’s Bitcoin activity can be easily traced if a real-world identity is somehow connected to a Bitcoin address.

While there exist services that can, to a certain extent, obfuscate someone’s activity on the Bitcoin network, it has become apparent that Bitcoin is not very suitable for users who highly value privacy and anonymity. For this reason, several privacy-focused cryptocurrencies have emerged over the years, leveraging innovative technologies.

We’ll be taking a look at five different “privacy coins”, which were included in the list thanks to different attributes such as popularity, market cap, technology and uniqueness.

Monero (XMR)

At the moment, Monero is the undisputed king of privacy coins, and has the largest market capitalization ($733 million) by a significant margin.

Monero uses a proof-of-work consensus algorithm and employs technologies such as ring signatures and ring confidential transactions (RingCT) to obfuscate all the details relating to transactions. When someone spends XMR, no outside entity can see how much XMR was spent and who was the transaction’s receiver.

When coins are spent, the transaction is signed and time-stamped with a ring signature, this signature is verified against a group of public keys without revealing the actual private key used. The default obfuscation of all the transaction details means transactions on the Monero blockchain cannot be linked to a particular user or real-world identity.

With Monero, privacy is not optional – users cannot choose to send a public transaction. This is not the case, however, for the next privacy coin on our list.

Zcash (ZEC)

Launched in 2016 by the Zcash Company, Zcash is a cryptocurrency that offers privacy and selective transparency of transactions. Payments made with Zcash are published on a public blockchain, but the sender, recipient, and amount of a transaction remain private. Zcash uses advanced cryptographic techniques called zero-knowledge proofs, to guarantee the validity of transactions without revealing key information about them.

Zcash uses a zero-knowledge proof construction called a zk-SNARK (Zero-Knowledge Succinct Non-interactive Argument of Knowledge). These constructions allow the network to maintain a secure ledger without revealing the parties or amounts involved. The process involves encrypting the transaction metadata and zk-SNARKs are used to prove the validity of all transactions.

Zcash users can choose between sending shielded (private) or unshielded (public) transactions.

The Zcash project has received some criticism for the way they chose to fund the development of Zcash. This is facilitated through a “founder’s reward”, where the founders of Zcash receive 20% of all the block rewards that are granted to Zcash miners. The founder’s reward is active for the first 4 years of Zcash’s existence.

Dash (DASH)

While best known for being a cryptocurrency geared for everyday use, Dash can also be a viable option for those interested in private transactions. In addition to providing transparent payment options, Dash allows anonymity with its PrivateSend feature that utilizes the concept of CoinJoin.

Dash offers a decentralized mixing service within its platform called PrivateSend that allows transactions to be formed by multiple parties and paid out to multiple parties and the merging of funds together means that they cannot be uncoupled afterwards. Here, funds are mixed together and outsiders cannot be sure of the sender, amount, or destination. Successfully mixing payments using the PrivateSend feature requires at least three participants.

PIVX (PIVX)

Launched as a fork of Dash, PIVX is the acronym for Private Instant Verifiable Transaction. Unlike most other popular privacy coins, PIVX employs a proof-of-stake consensus algorithm. PIVX also uses a custom version of the Zerocoin protocol.

The coin also owes some of its popularity to the fact that it features a masternode system. Masternode owners can vote on how the development budget will be used and submit developmental proposals of their own.

Horizen (ZEN)

Horizen was launched in 2017 under the ZenCash name, but rebranded in 2018. Horizen is a fork of ZClassic, which is itself a fork of the previously discussed Zcash. Horizen aims to be a user-friendly coin and also enables use-cases beyond currency. Its platform enables private chatting among users and the team has a long-term goal of making the Horizen platform suitable for the deployment of applications.

While Horizen uses a proof-of-work consensus mechanism, newly minted ZEN coins are not distributed only to miners. 70% of the ZEN is distributed to miners, while DAOs (decentralized autonomous organizations), secure node operators and super node operators receive 10% each.