Direct from the desk of Dane Williams.
Kicking things off, the simple advantage privacy coins like ZCash (ZEC) or Monero (XMR) offer, lies in providing you with greater flexibility and control over who can see your financial dealings.
Privacy coins are designed to enhance your anonymity and confidentiality by obfuscating transaction details.
Making it extremely difficult for external observers to link transactions to specific individuals or addresses.
However, different privacy coins employ different approaches to achieve this goal.
With this mind and as I go further down the privacy coin rabbit hole, I keep questioning the advantages of optional privacy in ZCash, over mandatory privacy in Monero.
If any at all.
So in today’s blog post, I explore the advantages of optional vs mandatory privacy and provide some real world examples where one may be more appropriate than the other.
In ZCash, privacy is optional.
This means you can choose whether to make your transactions fully private (shielded transactions) or transparent.
When you opt for transparent transactions, the details of the transaction are visible on the public blockchain, similar to how cryptocurrencies like Bitcoin or our very own HIVE operate.
The key advantage of optional privacy is that it provides a level of flexibility and transparency.
Those of us who have no specific privacy concerns or may need to comply with jurisdictional regulatory/legal requirements, can use transparent transactions.
At the same time, you have the option to switch to fully private transactions when a certain level of anonymity is desired.
For example, let’s say you want to make a donation to a charitable organisation transparently for transparency and the ability to prove a tax deductible donation come tax time.
It would obviously be a no-brainer to use the transparent transaction option for this purpose.
However, when you’re making personal purchases or transferring larger amounts for let’s just say investment purposes, you might choose to enable privacy and protect your financial privacy.
Monero, on the other hand, is designed to provide mandatory privacy for all transactions.
This means that by default, all transactions on the Monero blockchain are private and untraceable.
The main advantage of mandatory privacy like this is that it ensures a high level of anonymity and fungibility for all of us.
Since all transactions are obscured, it becomes challenging for anyone to trace or link transactions to specific individuals or entities.
This inherent privacy-by-default ensures that every Monero user enjoys the same level of confidentiality.
As an example, let’s say you’re concerned about financial privacy when it comes to your specific political affiliate and want all your associated transactions to be private.
You’d obviously value the fungibility and anonymity that Monero provides as a default feature, removing all risk associated with a boss or potentially rival government organisation finding out.
You might not want anyone to be able to scrutinise your transaction history or track your spending habits, so you’d be smarter choosing to use Monero for all of your transactions.
In terms of risk mitigation, mandatory privacy is a no brainer.
Ultimately, the choice between optional and mandatory privacy in privacy coins, depends on your specific needs and preferences.
You may prefer the flexibility of optional privacy, allowing you to have a mix of transparent and private transactions.
While the risks associated with getting found out, may see you opt for mandatory privacy, valuing the strong and consistent anonymity that comes with having all transactions on the blockchain hidden by default.
My final verdict is that while I’m of the opinion that privacy is a key missing ingredient to mass adoption of cryptocurrencies, having choice is never a bad thing.
Long live ZCash AND Monero!
Best of probabilities to you.
