Top Five Anonymous Cryptocurrencies

04.01.2021

There is probably no need to explain what cryptocurrency is. For many of us, buying bitcoin and playing on the cryptocurrency rate has become as commonplace as buying or selling currencies of other countries. One of the aspects of cryptocurrency's appeal is its anonymity. Or rather, the confidentiality of cryptocurrency transactions. After all, there were times when you could buy a dollar at a regular exchange office only by presenting an identity document. Thus, third parties became aware of your financial transactions. And buying cryptocurrency, or exchanging bitcoin for other altcoins, was initially considered a completely confidential action. So why did the question of anonymous cryptocurrencies arise? Let's figure it out and name the best of them.

How are anonymous cryptocurrencies different from Bitcoin and its closest altcoins

Bitcoin is considered the first electronic coin called a cryptocurrency. Using the blockchain systеm, the creators of BTC revolutionized the world of financial transactions. After all, it has now become possible to make transactions between two people without the participation of a third party. Neither the bank nor the state takes part in such exchanges of funds. It would seem, what else is needed? It turned out that, if desired, it is quite possible to track such transactions. And all thanks to the same blockchain systеm. It records all stages of the cryptocurrency transfer and, having spent enough time, you can find both the sender and the recipient of the crypto. You can find out the personal data of a Bitcoin network user only after he uses the email address for the second time or even when passing the verification procedure on one of the cryptocurrency exchanges. This state of affairs, of course, does not suit the participants of the transactions at all. Fortunately, there were talented programmers who were very interested in Bitcoin and the blockchain systеm. Enthusiasts appeared who were looking for an opportunity to improve the systеm, expand its functionality as much as possible and make the cryptocurrency as anonymous as possible. Among the many altcoins, you can find many "coins" whose transactions are almost impossible to track. Their source code is designed in such a way that any actions with the crypto are completely confidential. Thus, anonymous cryptocurrencies appeared, units of calculation within the network. Confidentiality of transactions is ensured by cryptographic protocols that make the process of tracking transactions in the blockchain as difficult as possible, or even completely impossible. The address of the electronic wallet of the owner of anonymous cryptocurrency is known only to him and to the persons to whom he has entrusted such information.

Anonymous cryptocurrency Monero. Created in 2014.

The data of the participants in the transaction is automatically hidden, and it is also impossible to find out the amount of the transfer. To achieve the highest level of confidentiality, an integrated approach is used. It includes:

CryptoNote, an algorithm that masks the data of the participants in the transaction and the amount of the transferred cryptocurrency in the blockchain network.
Ring signatures. The transaction is signed by several addresses at once, among which it is impossible to calculate the true address of the Monero sender.
Also, each transaction is accompanied by the creation of invisible addresses that hide the real address of the recipient.
The transfer amount is made anonymous by RingCT (Ring Confidential Transactions). In 2018, it was replaced by the Bulletproofs mechanism, which allowed to reduce both the amounts
of transactions and the size of commission fees.

The first best coin in terms of anonymity also has disadvantages:

in terms of one transaction, the Monero blockchain is five times larger than the Bitcoin blockchain;
still unresolved issues with scalability.

Obviously, a couple of disadvantages do not make Monero unattractive for participants in the cryptocurrency market, and it is not for nothing that it ranks first among anonymous cryptocurrencies.

Anonymous cryptocurrency

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