Bitcoin's founder is Satoshi Nakamoto. The identity of Satoshi Nakamoto is private. Nobody knows who Satoshi Nakamoto is. He or she is a self-sovereign individual.
It is a well-known fact that Bitcoin transactions are anonymous but not private. Everybody can see the Bitcoin transactions, i.e., how much Bitcoin is transacted and the sender and the receiver addresses.
Although the Bitcoin addresses are anonymous, i.e., one can't directly see the real names of the individuals associated with a Bitcoin address, it is not always impossible to identify the person associated with a Bitcoin address.
If you have shared your Bitcoin address with someone, they know to whom a particular Bitcoin address belongs. They can also see the transactions on the address and its balance.
This is where the problem lies with Bitcoin.
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What would happen if people knew your Bitcoin address?
If your Bitcoin address becomes public to some people with whom you shared your address, there could be many problems.
- You could become a target to the evil people in the crypto community.
- The evil people can threaten and blackmail you irrespective of you have millions of dollars worth of Bitcoins or not.
This is a tricky situation for the owners of Bitcoin and other traditional cryptocurrencies.
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This is where privacy comes into the scene of money
In fact, the concept of private money is not new in the domain of fiat currencies.
Private money is nothing but cash.
Once we withdraw cash in an ATM or from the bank teller, there is no record of what we do with the cash.
We withdraw cash with our account numbers and names, but after we get the withdrawn cash in hand, all transactions can remain fully anonymous and private. We can buy anything by cash transactions without any need to link it to our digital identity.
If we get paid in cash for any services we provide to someone or a group, only we know how much cash we hold.
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Privacy coins are digital versions of the privacy feature of cash
There are several privacy coins in the crypto sphere, such as Monero, Zcash, Dash, Zcoin are popular privacy crypto coins in the crypto market.
All the privacy coins don't work on the same computational principle.
The main purpose of privacy crypto coins is to keep the crypto address private or hidden.
Monero creates many footprints so that the initial transaction footprints are impossible to be distinguished from the crowd of footprints. Monero calls these footprints "Decoy Outputs." Monero also hides the sender and receiver addresses and calls them "Stealth Addresses."
Zcoin does it differently. Zcoin washes away the footprints so that the initial transactions remain invisible.
Unlike Monero, privacy isn't a default feature in Zcash and Dash. Users can choose both transparent and private transactions at their will.
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What are your opinions about the privacy coins?
The self-sovereign identity requires the element of anonymity and privacy to be present in financial transactions.
Privacy coins provide an enhanced level of privacy in the crypto transactions.
The digital identity community will definitely welcome privacy coins.
The anonymity of cryptocurrencies is already under the radar of the global financial regulatory boards. The privacy features of the privacy coins may raise more questions to the government regulatory boards.
What are your opinions about the privacy coins?
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Thumbnail Photo by Executium on Unsplash
#cryptocurrency #blockchain #bitcoin #privacycoins #technology
Cheers! Debesh Choudhury
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