What are the best anonymous cryptocurrencies?
An important difference between a cryptocurrency and, for example, the euro, is that a cryptocurrency transaction is more anonymous. When you pay with Bitcoins, for example, your name is not linked to the transaction. The recipient of the Bitcoin cannot see where you live, how old you are, and so on.
However, this does not mean that a cryptocurrency transaction is completely anonymous. In this article, we discuss which cryptocurrencies allow you to execute transactions completely anonymously. Cryptocurrencies that provide anonymity are commonly referred to as “privacy coins.”
Are all cryptocurrencies anonymous?
Most people think that a cryptocurrency transaction, such as a Bitcoin transaction, is completely anonymous. This is partially true. A cryptocurrency transaction is partially anonymous, but not completely. It is true that a Bitcoin or other cryptocurrency is not linked to an identity. If you pay with Bitcoins, the recipient of your coins cannot see that you are behind the transaction.
However, Bitcoin is not completely anonymous. It is possible to view all transactions in the blockchain explorer. This means that you can see where amounts come from and where they are sent.
If you transfer a certain amount of Bitcoins to someone, you can see how many Bitcoins that person has in their wallet. You can also see how many Bitcoins that person has spent. If an entity (such as the government or a cryptocurrency exchange) knows that a certain wallet belongs to you, they can see exactly which payments you have made.
What are the best anonymous cryptocurrencies?
As you can see, Bitcoin is not completely anonymous. This is also true for other well-known cryptocurrencies. Fortunately, there are some coins that are completely anonymous, specifically designed for people who want to remain anonymous in their transactions.
The best anonymous cryptocurrencies are described briefly below.
Dash is currently the most popular anonymous cryptocurrency. You can anonymously send your crypto with a special setting called PrivateSend. However, you do pay extra transaction fees for this. Privacy is not the main feature of this cryptocurrency, but rather an additional function.
Monero, also known as XMR or MNR, is a cryptocurrency that is more anonymous than Bitcoin. They use various cryptographic techniques such as ring signatures, ringCT, and Kovri to protect their users’ data.
However, it should be noted that your IP address will be displayed when you make a transaction with Monero. So the coin is not one hundred percent anonymous but comes close.
You can of course mask your IP when you execute a transaction. This way, your identity is still hidden.
Verge, also known as XVG, allows for completely anonymous transactions, even on mobile devices. Unlike Monero, this coin is one hundred percent anonymous. When you make a transaction with this cryptocurrency, even your IP address remains secret. Verge is completely encrypted.
Verge uses the Tor protocol and I2p network. This allows users to view the status of their transactions without being identified by other users. This is possible thanks to the TOR system (no additional cryptography is required here).
Private Instant Verified Transaction (PIVX)
The Private Instant Verified Transaction, also known as PIVX, is more anonymous than Bitcoin, but unfortunately not one hundred percent anonymous. If you make a mobile transaction with this coin, you are not completely anonymous. Good to know: your IP address remains hidden when you make a transaction with PIVX.
The privacy options within the cryptocurrency are called shield. Transactions are executed directly thanks to the use of Proof of Stake, unlike Monero where a transaction can take a long time.
Komodo is a fork of Zcash, but with a better consensus algorithm. This makes the system more secure, allowing users to use Komodo completely anonymously.
The developers also offer a decentralized exchange and focus on atomic swaps for executing transactions between different blockchains.
This cryptocurrency uses zk-SNARK, which stands for zero-knowledge proof protocol. The information transmitted is accurate without revealing the actual information. This is because the nodes on the system verify transactions without revealing privacy-sensitive information.
The information about the sender and recipient of the transaction is also hidden. However, there is an option to make this information visible for compliance, making the crypto not 100% anonymous.
Horizon, formerly known as ZenCash, is a fork of Zcash. Horizon also uses the zk-SNARK protocol but emphasizes user-friendliness. The system consists of several wallets that work with secure nodes. These secure nodes increase the privacy of its users.
NavCoin operates as a fully autonomous decentralized organization. Each user who stakes the cryptocurrency can vote on proposals within the community.
The cryptocurrency uses a parallel blockchain that runs alongside the main blockchain to obscure transactions. However, the servers are owned by NavTech, so the cryptocurrency is not fully decentralized in practice.
However, the NavCoin team strengthens security by running the servers through a network of nodes. This can enhance the anonymity of NavCoin users.
revealing the real information. This is because the nodes on the system verify transactions without revealing privacy-sensitive information.
How to choose the right anonymous cryptocurrency?
It is important to ask yourself which cryptocurrency is best for you. Anonymity is important, but you also want to invest in a good, popular, and stable cryptocurrency. Therefore, it is important to ask yourself how important anonymity is to you.
If anonymity is important to you, you can invest in a fully anonymous cryptocurrency, but this currency must also be valuable. When selecting an anonymous cryptocurrency, you can also consider the following factors:
- Function: Does the cryptocurrency have a unique function?
- Security: Is the cryptocurrency difficult to hack?
- Reliability: Is the team behind the cryptocurrency reliable?
- Future vision: Is there a clear vision for the future?
How can you buy crypto anonymously?
Another problem when you want to buy and own anonymous crypto is the KYC rules of crypto exchanges. Crypto exchanges must keep records of their customers’ data to prevent money laundering, for example.
However, when you buy crypto from a comparable exchange, third parties can still see what you are investing in.
Therefore, it is important to buy crypto on a decentralized exchange. Just like crypto itself, there is no specific party that controls these exchanges. When you use a TOR network or VPN connection, it becomes very difficult for external parties to track your transactions.
In the overview below, you will find some examples of decentralized exchanges where you can buy crypto:
- PancakeSwap: Here you can trade in all BEP-20 tokens without an account. The decentralized exchange (DEX) runs on the Binance Smart Chain.
- SundaeSwap: If you want to invest anonymously in crypto on the Cardano blockchain, this exchange is the best choice.
- UniSwap: This decentralized exchange is used for trading ERC20 tokens that run on Ethereum.
You can also choose to buy and sell peer-to-peer crypto. This means you buy the crypto directly from another person. Some well-known platforms for this are Localbitcoins, Paxful, and Bisq.
The dangers of anonymity
It is important to note that anonymity also comes with its own risks. Cryptocurrencies like Monero and Verge are, for example, very attractive to criminals. These coins are often used on the dark web to trade drugs or other illegal products.
Therefore, it is important to always be vigilant when making payments with cryptocurrencies. Bitcoins and other crypto coins are also often used for scams.
What are the benefits of anonymous cryptocurrencies?
- It follows a libertarian movement where you can do whatever you want without any form of supervision.
- Your privacy is fully respected, no one knows what you are spending your money on.
What are the disadvantages of anonymous cryptocurrencies?
- The blockchain of anonymous crypto is often larger because more measures are needed to guarantee anonymity.
- This makes verifying a transaction take longer.
- It also makes it more difficult to keep track of the status of your payments.
Why would you want to use anonymous crypto?
One of the main reasons for the creation of Bitcoin was the desire to be completely free from central parties. Satoshi Nakamoto, the creator of Bitcoin, believed that banks had too much control over our transactions.
However, Bitcoin is not perfect, as many data is still published on a public ledger. If you value anonymity, it is important to research to what extent the crypto you want to use is truly anonymous.
Are anonymous cryptocurrencies legal?
In the Netherlands, anonymous cryptocurrencies are legal, but this does not mean that you can use them for illegal purposes.
Not all countries are big fans of anonymous crypto. For example, Monero and Zec are banned in the United States and Japan. In the future, more governments are likely to follow this example, as it is very difficult to track transactions with anonymous crypto.
Conclusion: How anonymous are crypto?
Most crypto is pseudonymous: you carry out transactions under an alternative name. However, when a person or entity knows which name is associated with you, they can see exactly which transactions you have carried out.
If you really want to own completely anonymous crypto, you should choose one of the privacy tokens in this article. It is important to buy the privacy token through a method that cannot be traced back to you: normal crypto exchanges are therefore not a good choice.