Privacy is something everyone is talking about in crypto space. Being decentralised in nature privacy is one of the necessary feature in cryptocurrency inorder to secure our crypto assets from outsiders.one main thing that differenciates privacy coin from other regular cryptocurrency is the consensus mechanism that used inorder to validates the transactions.
What is a privacy coin
A privacy coin is a type of cryptocurrency that conceal the transaction details of the public wallet address used by any parties during the transaction process.
Most of the cryptocurrency exchange requires an identification process through a verified id. And when users buy/sell coins from such exchange their id is recorded on the data. But if the coin is made privacy the transaction record will be made private and untraceable by the time of exchanging it to other crypto asset
Why privacy coin is necessary
In a nutshell privacy coin is all about making all the trasaction details and public address untraceable and secret. It is designed to benefit those legitimate users who do not want their financial details made in public. As public wallet are transparent and anyone can see the balance aswell as trasaction detail about buying and receiving.
Such type of cryptocurrency is mainly useful on those platform where many third parties are involves in trasaction process.
What is Monero(XMR)
Monero(Money) is a peer to peer cryptocurrency build under the POW alogorithm in order to achieve distribution consensus. It was launched in april 18, 2014 as a fork of Bytecoin. This project mainly focus on privacy and does not endorse any particular pool, software or any hardware and has no ICO nor premining nor any initial announcement. Transaction on Monero cannot be linked to a particualar users or real world. It is completely fungible.
The main feature of Monero project inculdes
- Untraceable transaction history
- Blockchain analyst resistance
- Centralised adaptive parameter
- Unlinkable transactiom between public wallet address and transaction
Why Monero is the best privacy coin
There are many popular privacy coin such as zcash, Beam, particl, Dash, komodo etc . But what makes Monero more pupular than all of this privacy coin? The key reason behind its popularity lies on this three factors.
- Ring signature
- Stealth address
- RandomX algorithm
In traditinal cryptocurrencies it uses and unchange signatures inorder to validate the transaction on blockchain. While Monero uses a ring signature technique in place of it.
Ring signature is a concept used in cryptography which can be sign by any member of those group who have the privacy key. In this technique it is quite impossible to identify the key used to sign .Simillarly in Monero Ring signature hides the sender by employing a ring of signers who all come together to sign a transaction making it impossible to identified the senders.
This means that users can freely share Monero public address with anyone, receive payment at the same address number of times. But no one can see the transaction details at all. Hence it is not an opp-in feature.
Stealth address allows to use a one-time public key address in single transaction. This method provides three feature a private view key, private spend key and public address. Private view keys is used for notifying any incoming transaction, spend key as name suggest is used for making a payment and public key is for receiving any transaction.
As i have mention above the census mechanism used in the privacy coin is what makes this coin different from regular cryptocurrency. So there is no doubt that Monero works under POW consensus but its hasting algorithm was upgraded from cryptonight algorithm to RandomX algorithm back on November 30, 2019 with the coming of Monero 0.15.
Since ASIC protocol used in POW consensus could lead to centralisation which is considered to be a big threat to any privacy coin. RandomX prevent this from centralisation by introducing RandomX execution code.
Monero being one of the best privacy coin in crypro space still it is a big risk for all the exchange platform. Due to its untraceable and privacy feature no one can know what the exchange is being used for. Either for money laundering or to any illegal trading platform.