There are two main problems in public blockchain (e.g. Bitcoin and Ethereum) that are noticed by privacy coins. Firstly the former provides pseudonymity rather than anonymity. With public/private key cryptography, each user’s public key behaves as pseudonym. The pseudonym issue is that as soon as you are linked to the fake name, the pseudonym becomes useless. Secondly the transparency provided by the former threatens the fungibility. Fungibility means that all cryptocurrencies have the same value, regardless of who owns them or what their history is. A fully-private coin can solve these problems.
No 1: Monero (XMR)
Monero is a coin that officially launched in 2014 as a fork from Bytecoin's code. It is the first coin to use CryptoNote open-source technology. Monero uses a proof-of-work (POW) algorithm called CryptoNight. CryptoNight was created by the CryptoNote project, which utilizes ring signatures and stealth addresses. The unique obfuscation technologies included in Monero are as follows: 1) Ring Signatures for sender; 2) Stealth address for receiver; 3) Ring CT (Confidential transaction) for transaction.
Ring signature is a form of digital signature that can be performed by any member of a group of users that each have keys. A ring signature contains the actual signer who is then combined with non-signers to build a ring in order to hide the origin of the transaction.
“burn-after-reading” Stealth address is a technology used for protecting the privacy of the receivers of cryptocurrencies. It requires the sender to create a random one-time-use address for the given transaction so that different payments made to the same receiver are unlinkable.
Ring Confidential Transaction (CT) improves transaction privacy by obscuring the transaction amount. This was critical technical success for Monero compared with CrytpoNote.
In Monero, privacy is not optional (Private on default). Monero is fungible as no coin can be traced back to its origin. Monero block time is 2 minutes on average. Since Monero is extremely private and secure, there is less wallet support for it than other cryptocurrencies. You can prove a transaction occurred on the Monero network by the help of a view key, which can be built for both a single transaction and an address. At the time, Monero does not have any sort of built-in IP obfuscation, although they are working on a technology called Kovri to hide user’s IP addresses. Monero recently implemented “Bulletproofs” upgrade (to rectify loopholes in RingCT protocol) which not only reduced the transaction fees by over 95%, but also reduced the transaction time and increased ASIC resistance.
No 2: Zcash (ZEC)
Zcash Launched in October 2016. It uses the proof-of-work (POW) consensus mechanism.
Payments made by Zcash are placed on a public blockchain, but the sender, recipient, and amount of a transaction remain private. Zcash uses a zero-knowledge proof system called ZK-SNARK (Zero-Knowledge Succinct Non-interactive Argument of Knowledge). ZK-SNARK is a mathematical proof proving that the transactional information you send is correct without having to divulge what that information is. It assures that all the transactional data is completely encrypted. Zcash block time is 150 seconds on average.
Zcash users can choose between sending shielded (private) or unshielded (public) transactions (optional privacy). The “z” transactions are private, and the “t” transactions are public. Unfortunately most exchanges only use the latter type. Accordingly, Zcash is not primarily focused on privacy. It only leaves it as an option for users. A main technical difference between ZEC and XMR is that the former wants to eliminate traces of transaction data, while Transaction data of coins for the latter is “mixed” with others.
Since Zcash utilizes a set of proving and verifying keys for checking and creating proofs, this requires a trusted setup where the keys are generated publicly and shared with all network participants. The trusted setup requires that participants generate a public/private key pair simultaneously and afterwards destroy the private key. The public key is the public parameter key that miners employ to verify shielded transactions and users utilize to build shielded transactions. The problem of the trusted setup is that if an attacker employed the private key, then the spiteful entity could construct fake Zcash that would look valid to the network.
Another large issue is that the any user who wants to have total privacy will need to have at-least 4GB of RAM. At the moment, Zcash is focusing extremely on improving the ZK-SNARK protocol.
Additionally, The Zcash project uses a criticized founder’s reward related to fund the Zcash development. The founders of Zcash currently receive 20% of all the block rewards given to Zcash miners.
Zcash does not currently have any sort of built-in IP obfuscation, although they are working on a technology called Dandelion to hide user’s IP addresses.
No 3: Dash (DASH)
Dash is a fork of Bitcoin and is equipped with a variety of Bitcoin features. It is not overly focused on privacy. Dash utilizes both conventional proof-of-work mining and a collateralized MN (Masternode) network.
There is one very important reason to include Dash among the rest of privacy coins: PrivateSend. PrivateSend utilizes the concept of CoinJoin. In this process, the Dash Masternodes combine your coins multiple times with other coins which are being sent on the network. This process makes your coins effectively indistinguishable from other coins simultaneously sent (sender, amount, or destination). This feature requires three participants at the minimum. The issue of this type of privacy is that if enough time is spent analyzing the transaction, the attacker can determine receiver and sender through metadata information. Just like Zcash, Dash only enables private transactions upon request. Dash block time is 150 seconds on average.
No 4: PIVX (PIVX)
This coin Launched as a fork of Dash. Unlike most other popular privacy-focused cryptocurrencies, PIVX uses the proof-of-stake v3 (PoSv3) consensus algorithm. PIVX also employs a custom version of the Zerocoin protocol. PIVX block time is 1 minute on average. Two of its important features are as follows:
SwiftTX: Transaction time is instant (within seconds) using “SwiftTX”. Transaction confirmation is done by the Masternodes (no need for the network's approval).
See-saw algorithm: PIVX has developed See-saw reward balance system. On the one hand, when the Masternode count increases, the Masternode reward decreases and staker node reward increases. On the other hand, when the Masternode count decreases, the Masternode reward increases and staker node reward decreases.
PIVX has unlimited coin supply and doesn’t hide transaction amount.
No 5: Verge (XVG)
Verge launched in 2014. This cryptocurrency employs the I2P and Tor networks to achieve the complete security and shield against web tracking and cookies. Therefore, it is difficult to link transactions with users. In January 2018, Verge was equipped with its first blockchain-level privacy protocol called Wraith. This is a unique protocol that gives you a choice to send your transactions through either Public Blockchain or Private Blockchain. The transactions you send through the private blockchain use stealth addresses (similar to that of Monero) in combination with the Tor strategy. Verge block time is 150 seconds on average.
No 6: DAPS
The concept for DAPS (Decentralized Anonymous Payment System) was born in early 2018. We have carefully selected certain tested protocols from projects like PIVX and Monero and are incorporating our own custom solution to offer a truly-private cryptocurrency. Utilizing these features together will enable a fully private blockchain network. We plan to offer the most complete anonymity package in any protocol to date, with an on-chain solution to the "Trust Problem" that prevents such a fully-private network from being created. Our unique solution to the "Trust Problem" is called Proof-of-Audit (also known as the Harpocrates Protocol). DAPS currently has 3rd party certification of the DAPS development in full time production incorporating features such as PoSv3, Multi-Masternodes, See-Saw block reward, Proof-of-Audit, RingCT, mandatory TOR/OBFS4 relays and mandatory stealth addresses. DAPS block time will be 1 minute. The private testnet will be released in 1st half of 2019 and the release of DAPS mainnet in 2nd half of 2019 (after being reviewed by a reputable third-party code auditing firm).
Our TG : https://t.me/dapscoin
Discord: https://discord.gg/w898czA
Website: https://www.dapscoin.com
Whitepaper: https://www.dapscoin.com/whitepaper.pdf
Conclusion
To me, Monero is currently the king of privacy coins and only private-on-default coin among the above-mentioned first 5 coins. Nevertheless, the issue of Monero is that its information was for a time not fully obscured. This means that analytics still can be used to some degree with high accuracy on Monero today. DAPS, from the onset will be a fully private and trustless blockchain with privacy on default.
