Table of contents
Start for free
The future of Zcash, Monero, and private cryptoHow can you use crypto privately? A guide to Zcash, Monero, and other privacy coins and projects.
As a result, many cryptocurrency community members have supported progress to build more privacy-respecting currencies, wherein users’ balances, interactions, and transactions are private. In this blog, we’ll explore some cryptocurrency basics, then walk through Monero and Zcash - two trending, popular, private cryptocurrencies with different protocols, ecosystems, and privacy features. Each also has their own set of crypto exchanges, regulatory concerns, and use cases.
What are privacy coins and cryptocurrencies?Cryptocurrencies are digital or virtual tokens that use cryptography to secure their transactions and to control the creation of new units. Cryptocurrencies are decentralized, meaning they are not subject to government or financial institution control. Bitcoin, the first and most well-known cryptocurrency, was created in 2009. Cryptocurrencies are often traded on decentralized exchanges and can also be used to purchase goods and services.Cryptocurrencies have become popular because they offer a degree of anonymity, are decentralized, and are often cheaper and faster to transact than traditional fiat currencies. Bitcoin, the most well-known cryptocurrency, has seen tremendous growth in popularity since its launch in 2009. Today, there are thousands of different cryptocurrencies with a combined market capitalization of over $1 trillion. Cryptocurrencies have become popular with investors, speculators, and users who value privacy and decentralization.Cryptocurrencies are often lauded for their privacy features. Transactions made using cryptocurrencies are generally pseudonymous, meaning that they are not linked to individuals' real-world identities. This can make it difficult for authorities to trace cryptocurrency transactions and to track down the individuals behind them. Additionally, many cryptocurrencies offer privacy-enhancing features such as built-in mixing services that can further obfuscate the origins of transactions.However, it is important to note that cryptocurrencies are not truly anonymous. In most cases, it is possible to trace cryptocurrency transactions back to their real-world origins. Additionally, many exchanges and service providers require users to verify their identities, meaning that users' real-world identities are often tied to their cryptocurrency activities. As such, while cryptocurrencies offer some privacy features, they are not completely private.
What are Zcash and Monero?Given the amount of information exposed by public blockchains, users, scientists, and researchers have sought ways to shield cryptocurrency owners and transactions. This field is known as “privacy tokens” or “privacy coins.”Zcash is an open-source cryptocurrency that offers privacy and selective transparency of transactions. Zcash payments are published on a public blockchain, but the sender, recipient, and transaction amount may remain private. Monero is a cryptocurrency that focuses on privacy, decentralization, and scalability. UnlikeWhile many cryptocurrencies that are derivatives of Bitcoin, Monero is based on the CryptoNote protocol and has significant algorithmic differences relating to blockchain obfuscation. In the remainder of this blog, we’ll explore how these currencies work, some regulatory concerns associated with them, and privacy work associated with other layer one blockchains.
How do Zcash and Monero work?Zcash uses a zero-knowledge proof construction called a zk-SNARK (succinct non-interactive argument of knowledge), developed by its team of experienced cryptographers. This construction allows two users to exchange information without revealing their identities. The sender can encrypt data so that it can only be decrypted by someone with a secret key, and the receiver can verify that the data was not tampered with, without learning anything about the sender or the contents of the message.Monero uses a technique called ring signatures to obfuscate the sender of a transaction. Ring signatures work by having a group of users sign each transaction, making it impossible to determine which user actually signed the transaction. This makes Monero transactions more private than Bitcoin transactions, which are only pseudonymous.In addition, Monero (XMR) uses stealth addresses to further obfuscate the recipient of a transaction. Stealth addresses are single-use public keys that are generated for each transaction. The sender generates a stealth address, which is then used to create a one-time public key. The recipient can then use their private key to decrypt the transaction, without revealing their public key or address.
What are the benefits of Zcash and Monero?The main benefit of Zcash is its privacy. Crypto transactions on the Zcash network are not publicly visible on the blockchain, and the sender, recipient, and amount of a transaction can all remain private. This makes Zcash a good choice for users who value their privacy. Monero is also a good choice for users who value privacy, as well as those who value decentralization and scalability. Monero is based on the CryptoNote protocol, which is designed to be resistant to blockchain analysis. Monero is also scalable, as it can be easily integrated into existing cryptocurrency platforms.Although large exchanges - Coinbase, Kraken, Binance, and others - allow consumers to buy and sell privacy coins, this does degrade user privacy to an extent as the set of users purchasing these coins would still be known.
What concerns exist?When it comes to digital currencies, there are a lot of regulatory concerns that come along with them. Generally, regulators take issue with Zcash and Monero’s anonymity and their ability to hide transactions. This has led to a lot of concern about money laundering, evading taxation, and other illicit activity.Broadly, completely private digital currencies can be more easily used for illegal activities. This is because it is very difficult to trace transactions that are made using these currencies. This means that people can use them to buy and sell illegal goods and services without getting caught. This is a big concern for law enforcement and regulatory agencies, who frequently try to trace transactions - including crypto ones - to establish a chain back to criminal use. This concern led to regulators sanctioning Tornado Cash, which had been used to process over $7 billion of digital currency. Other processes for anonymizing transactions include CoinJoin, a process used to obscure the participants in bitcoin transactions.These regulators remain concerned that these digital assets can be used to launder money or exchange illegal assets on the dark web. This is because it is very difficult to track where the money is going when it is being transferred using these currencies. This means that people can use these currencies to transfer money that has been obtained through illegal activities. This is a big concern for financial institutions and regulatory agencies.Overall, there are a lot of regulatory concerns that come along with the use of Zcash or Monero. These concerns need to be addressed before these digital currencies can be widely adopted.
Why are Zcash and Monero important?Privacy matters for a variety of reasons. It allows us to keep our thoughts and feelings to ourselves, and it gives us the ability to control who we share our information with. Additionally, privacy helps protect our personal information from being used against us. This is particularly true in a financial context, where financial information reveals who we transact with and what we buy, whether in USD or BTC.Zcash and Monero are important because they offer users enhanced privacy and security. Unlike Bitcoin, which is pseudonymous, Zcash and Monero are both fully anonymous. This means that users can transact without having to worry about their personal information being exposed from their crypto wallet address.In addition, both Zcash and Monero use cutting-edge cryptography to ensure that all transactions are completely secure. This makes them both much more difficult to hack than Bitcoin, which has been the victim of numerous high-profile hacks in recent years.Another reason why Zcash and Monero are important is because they are both very versatile. Zcash, for example, can be used for both public and private transactions. This makes it ideal for a wide range of different purposes. Monero, on the other hand, is specifically designed for private transactions. This makes it the perfect choice for those who value their privacy above all else.Finally, it is worth mentioning that Zcash and Monero are both very easy to use. Their user-friendly interfaces make them perfect for beginners, while their advanced features will appeal to more experienced users. With regulatory concerns solved, there are few additional complexities incurred by using a privacy-focused cryptocurrency.In conclusion, there are many reasons why Zcash and Monero are important. Their privacy-enhancing features, cutting-edge security, and versatility make them two of the most popular cryptocurrencies in existence.
Other privacy coins and practicesMany larger cryptocurrencies have also had subprojects focus on expanding user privacy, including Bitcoin and Ethereum. For example, Dash is an open-source cryptocurrency forked from Bitcoin that was intended to yield the privacy of cash. MobileCoin is another privacy-focused cryptocurrency that was integrated with the popular messaging app Signal; MobileCoin has some origins in Stellar, with the intentions to have low fees and short transaction times.Some Ethereum community members have also proposed adding zero-knowledge layer-2 solutions or rollups that add additional privacy to transactions on the Ethereum blockchain.Ultimately, crypto privacy is in quite a nascent state, and new currencies, protocols, and proposals are likely to emerge and grow significantly.
Questions and communityWe at Skiff are a privacy-first, end-to-end encrypted workspace for email, communication, collaboration, and more. our products keep your notes, files, and email private only to you - like Zcash shielded addresses or transactions on Monero. We currently accept crypto paymentsTo try out our workspace, visit the signup page - or join our Twitter, Reddit, and Discord communities.
Skiff TeamPrivacy Guide For Cryptocurrency UsersLearn about protecting your privacy in the crypto space.
Andrew MilichWhy you should use crypto wallets for your emailsHow Web3 and crypto wallets improve privacy, anonymity, identity portability, and encryption for email and communications.
Sunny LiHow does encrypted collaboration work in real-time?Collaborating in real-time requires complex algorithms. How can it be done end-to-end encrypted and completely privately?
Jason GinsbergWhat is end-to-end encryption, and is it secure?End-to-end encryption has become an absolute necessity for messaging and communication today. How does it work?
Jason GinsbergWhat's decentralized storage, and how is it part of Web3?A deep analysis of the decentralized networks IPFS, Arweave, and Storj - and how they're facilitating Web3 apps.
Skiff TeamWhy Web3 companies use Skiff Mail, Calendar, Pages, and DriveHow distributed, high-performance teams leverage Skiff's products for communicating and collaborating.
Skiff TeamWhat is the best digital or online calendar?Digital calendars are a crutch for schedule management and team collaboration. What are the best and most private calendar products?
Gilbert ZhangWhat is the best password manager?Looking for a password manager that combines robust security with ease of use? We’ll review all of the most common password managers in this blog.