What are Privacy Tokens?

Did you know that all your online activities are traceable on the internet?

Privacy has become so transparent that there is hardly anything "private" online anymore. The way you spend online can indicate medical conditions, personal wealth, sexual preferences, and other intimate data.

Whether you are buying or subscribing online, your personal information is not fully protected while you make payments. So an alternate transfer mode called privacy tokens was developed to prevent personal information leakage through online payments.

In short, privacy tokens are digital currencies used in the cyber world for anonymous monetary transactions without leaving virtual traces.

Why use Privacy Coins?

In recent times, private coins gained popularity as they offer 100% privacy that cryptocurrencies couldn't.

Privacy coins encrypt transactions without the need for verification. The sender and receiver's balance remain hidden so users can maintain a private balance in their account. It hides the users' address and transferred amount whenever there is a transaction.

How do privacy coins work?

Currently, there are hundreds of privacy coins in the market that users can choose. All of them use different tactics or a combination of strategies to maintain transaction privacy. Let's examine the most popular ones.

Stealth Address

Privacy coins use stealth addresses to protect your identity by creating a new address for each transaction. This prevents any other parties from linking your address to any past or future payments.

Monero is an example of Privacy Coins that takes this tactic a notch higher. It provides private view key, spends key, and recipient address to all wallet owners. So when if users make a public transaction, the funds go to a unique and separate blockchain address that only the sender and receiver can view. Learn more here : https://www.getmonero.org/

Helix Token

This is another big privacy token that I am particularly fond of and believe it has a lot of merit. Helix is getting ready to roll out new features to make privacy on the web and private transactions easy. Learn about them here : https://helix-crypto.com/

Ring Signature

Another tactic used in privacy coins is the ring signature, where the wallet owner signs privately. Only the sender knows this signature. To protect the sender's privacy, it hides the signature among other senders' signatures. When there is a transaction, it gets harder to connect to the right sender, making it almost untraceable.

In addition to hiding the sender's identity, this feature also encrypts the transaction output and conceals the amount.

CoinJoin

When a sender makes a transaction through CoinJoin, the amount combines with other senders. The combined amount of all senders goes to a third party that distributes the amount to the receivers. Each receiver gets the amount in a new and untraceable address for every payment, ensuring both users' total privacy. Learn more here : https://en.bitcoin.it/wiki/CoinJoin

Zk-SNARKs (“Zero-Knowledge Succinct Non-Interactive Argument of Knowledge,” )

Another tool used in privacy coins is cryptography that allows users to hold information without revealing the content. It enables users to prove that the transaction is valid without sharing the amount, sender, or receiver. This feature allows total privacy and helps in scaling the blockchains. Learn more here : https://z.cash/technology/zksnarks/

Tor

Since IP addresses can give away locations during transactions, privacy coins like Monero and Verge use Tor to hide the IP address.

Tor uses layers and layers of encryption to hide user IP address so that there is no re-routing to the user. It is compatible with all blockchains and is often available by default in most privacy coins. Learn more here : https://www.torproject.org/

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With all these features, privacy coins allow you to control your data and protect your reputation. It liberates you from financial scrutiny and enables users to spend any amount however they choose!