The main topic for today is privacy, but some people like to call it "pree-va-see".
Basically, privacy is what we all need or want, we all need our own space, respecting each other's privacy.
Financially, we need it all the time as it is the basic privacy that everybody has since you wouldn't want everybody watching your spending habits or how much money you have.
This is why banks only release your spending habits or how much cash you have to the authorities or to the person owning the bank account.
In short, they try to keep your stuff private.
You aren't doing anything wrong.. (are you? -.-)
Or anything to hide.. (do you? -_-(very suspicious))
But then again you wouldn't want to know your spending habits or your how much money you have in your bank.
With Bitcoin and other non-privacy cryptocurrencies, you are transparent.
You do in fact create a fake name or appearing as another person.
But all of your transactions are recorded on something called a blockchain, the problem is that it's permanent and available to anybody.
Basically, anybody can see you when any amount of cryptocurrency is transferred from address A to address B.
Despite being under a fake name or another person, people with some effort can track you down with other technologies or with outside information, ip addresses, or transactions from known addresses, they may find you.
(they will kill you(movie reference to TAKEN)(just kidding lol))
Even if you create many different addresses(which is what Bitcoin does), you can still be tracked via your spending patterns and the location chuckling addresses to the transaction.
This makes Bitcoin potentially less anonymous than traditional banking since everybody will now be able to see your transactions despite being decentralized.
Now, we move on to Fungibility.
When an item is replaceable by an identical item or the item itself is mutually interchangeable.
Put it this way, clients or currencies should not be distinguishable from each other.
It can't be tainted in any way, and they should just be all even.
Here's a real-life example, 90% of all US dollars are tainted with cocaine.. wait waht? (huh, even as a dog I couldn't smell it out)
This is because a lot of the money that has been involved in drug trafficking has already been mixed into the banking system or being used in multiple transactions.
Therefore the bills are no longer distinguishable from each other, but Bitcoin and other coins are able to track your previous transactions.
(V the part below will be important for ANY whales so listen up lol V)
Let's say, as an example, someone uses Bitcoin in a drug transaction, and it somehow that ends up in your hands.
If you are checked one day while still having it, tracking where it came from, linking you to a drug trade, could get you prosecuted for a crime you didn't commit, and having your coins seized due to civil forfeiture laws. (just sucks a lot. also means if you are a whale it sucks SOOOO much. yep)
This is where Zcoin comes in.
Zcoin uses the zero coin protocol allowing you to wipe off all your previous coin transaction history.
Most of the other coins may try to obfuscate transaction links by messing it up the links making it hard to track, but without destroying it making it STILL possible to be tracked.
Zcoin on the other hand COMPLETELY destroys transaction history.
You: But how does it do that?
Well it works using a system called zero-knowledge proof.
Zero-knowledge proof works with 2 steps.
1.Burn your coin(s)
2.Redeem new coin(s) with proof (contains ZERO transaction history upon redeeming your new coin)
(You will not have to point out which of the coins were burnt to redeem your new coin(s))
These two steps keep you anonymous.
Here is a real life example.
I had 10 Zcoins, so I'd like to burn 5 of my coins.
I burn 5 of my coins with proof to redeem new coins without any transaction history.
That is the zero-knowledge proof.
You: Even with all this, criminals would be using them, right?
Even with Zcoin technology, it is still very problematic, making it impossible to withdraw large amounts of money at a time from cryptocurrencies.
All exchanges are regulated by the AML and KY signals.
Exchanges that help hackers launder their money like the btc-e are being shut down
The moral of this post is that financial privacy is extremely important.
The same should extent to cryptocurrencies, which is why Zcoin is they way to go!
Why are people moving to Zcoin?
In conclusion, for Bitcoin, you could get linked to a crime you didn't commit, and all of your transactions are permenent and public.