While the Japanese regulator’s hostility towards privacy cryptos is not surprising, this crackdown might set a precedent for other regulators around the globe in their approach towards crypto regulation. Given the growing focus on the importance of privacy and the role privacy plays in the mainstream adoption of cryptocurrencies, we provide a short summary of the top privacy coins and the major differences between them.
Firstly, the need for privacy coins emerged because, contrary to the popular belief, BTC transactions are not anonymous, they are just pseudonymous.
What this essentially means is that all transactions for a given wallet can be seen and audited. Therefore, if a person’s real-world identity is linked to a Bitcoin wallet address then anonymity is compromised. Privacy coins address this shortcoming by obfuscating key transaction details such as sender and recipient addresses, transaction value, etc. Zcash and Dash provide opt-in anonymity
wherein the user reserves the right to whether or not to conceal the transaction details. On the other hand, Monero offers full anonymity and every transaction is completely anonymous by default.
Does this mean there is no way anyone apart from the owner of the private keys can view the transactions?
Absolutely not. Monero and Zcash provide a key called “View Key” that can be shared by the owner with anyone who wants to have access to the transaction details. In this way, regulators can still view the transactional ledger by requesting the “View Key” from the user.
What is/are the potential use case(s) for privacy coins?