8 Best Privacy Coins for a Secure & Confidential Investment

For many cryptocurrency enthusiasts, the biggest benefit of crypto is its ability to offer privacy. Unlike traditional currency, you can use cryptos without necessarily being tracked by banking systems and other financial institutions. However, not all cryptos offer the same level of privacy and decentralization. If confidentiality is your priority, it might be worthwhile to look into privacy coins. Explore this guide to find the best privacy coins for stealth transactions and secure investments.

Key Takeaways:

• Privacy coins are cryptocurrencies with extra features that enhance anonymity and confidentiality.
• Some of the best privacy coins include Verge (XVG), Monero (XMR), Dash (DASH) and Oasis Network (ROSE).
• Looking to trade privacy coins? Bybit offers some of the best privacy coins as Spot trading pairs and USDT Perpetual Contracts for trading.

What Are Privacy Coins?

To qualify as a privacy coin, a crypto must be both anonymous and untraceable. Many cryptocurrencies are only partially anonymous. They don't link your coins to your real-world name, but cryptos like Bitcoin have a public ledger in which users can link addresses to Bitcoin transactions. Meanwhile, real privacy coins are entirely confidential. People can’t look at a list of transactions and see that the same user address keeps receiving specific amounts of money. They also can’t look up any token to see which user owns it, or to trace its user history.

How Do Privacy Coins Work?

The typical privacy coin has to use a lot of underlying technology to maintain user privacy. It can be somewhat tricky to properly verify private financial transactions without revealing anything about the people performing them. Different privacy coins use different mechanics to achieve this goal.

Some coins use a mathematical concept called zero-knowledge proofs to protect users' identities. These protocols independently verify details off-chain, and then send a message to the network that something is true without providing evidence for why it’s true. This keeps details such as transaction amounts from being published on the network. 

Other privacy coins generate single-use stealth addresses for every transaction. Users' publicly-listed addresses change with every transaction, so no one can track financial activity. Still, other privacy cryptos even use features such as ring signatures that mix decoy addresses in with real addresses to further obscure data.

Pros and Cons of Privacy Coins

There are many advantages to working with privacy coins. The anonymity can be helpful if you want to avoid scrutiny, or if you simply prefer that no one knows how you’re handling your finances. Confidentiality can be especially useful if you’re investing a lot. When no one knows your private transactions, it's harder for people to predict what you’ll do next. You can keep your competitors guessing, and avoid catching the interest of hackers who are looking for wealthy crypto owners. 

Because privacy coins are highly fungible, individual coins cannot be tainted by past use. For example, there's no risk of accepting a Bitcoin previously used in an illegal transaction and suddenly being scrutinized by law enforcement. Ultimately, privacy coins provide peace of mind, financial security and ease of use.

However, privacy coins aren't perfect. To compensate a company for all of the extra features that protect users' identities, you usually have to pay higher-than-average transaction fees. In addition, since privacy coins are sometimes used for illegal activities, using them can make your behavior look more suspicious to law enforcement. 

Due to their controversy, there’s always the chance that privacy coins could be banned. Investors may risk sudden legal changes that might impact the value of their crypto coins. Finally, if something does go wrong with a transaction, privacy features make it harder to recover stolen or lost cryptocurrency.

Privacy Coins vs. Regular Coins

When it comes to day-to-day use, privacy coins function similarly to regular coins. Both of them use the same basic methods for buying, selling, storing and exchanging coins. The other main similarity is that both of these types of coins are cryptocurrency: digital assets that exist on a blockchain network and have a value assigned to them based on user demand.

The main difference between private cryptocurrencies and regular coins is in their transparency. Most regular blockchains have public ledgers, so that you can look at transaction data and see how coins are being spent. Privacy coins obscure this transaction data. Not only can average users not see the data, but it's also obscured from law enforcement, network developers and others. Due to these features, privacy coins aren't always sold on crypto exchanges like regular coins, and their transaction fees can be higher.

Best Privacy Coins

There are a lot of fantastic privacy coins to choose from. However, the following coins stand out from the rest due to their ability to provide confidential transactions and helpful user features.

Verge (XVG)

Verge is a somewhat unique private cryptocurrency because it offers different levels of privacy. Users have options, such as hiding IP addresses through Tor and using Wraith Protocol to hide transaction amounts. However, despite being fast and user-friendly, Verge’s security isn't the best. In 2018, hackers were able to take advantage of exploits and steal quite a bit of money.

Verge crypto is currently sitting at $0.0043 (as of Aug 10, 2023). Its price has been consistently low since early 2022. However, there was a spike in price at the end of June 2023 that brought Verge’s price from $0.0016 to a peak of $0.0096. There could be renewed interest in this crypto, so you might want to consider investing in it. 

You can trade XVGUSDT Perpetual Contracts on Bybit. 

Monero (XMR)

Monero is probably the most popular private crypto right now. It uses stealth addresses and ring confidential transactions to protect users' identities. Furthermore, it's easy to mine and has no block limitations. Despite these perks, of course, Monero isn't perfect. Its fees are high and it's not highly decentralized.

If you're looking for privacy coins to invest in, Monero's popularity makes it a smart choice. Its current price is $155.65 (as of Aug 10, 2023), and it has an impressive market cap of $2.8 billion. Though its price is down from an all-time high of $542.33, Monero still performs very well.

You can trade XMRUSDT Perpetual Contracts on Bybit.

Dash (DASH)

When you use Dash, you can choose a normal transaction or pick the CoinJoin option to opt in to their privacy features. In exchange for a higher fee, Dash will use a mixing protocol to obscure where your funds came from. This can be helpful, but some beginners may find Dash tricky to work with.

Dash is currently selling for $32.57 (as of Aug 10, 2023). It has a market cap of $371 million and a 24-hour trading volume of around $32 million. Currently, Dash has been trending downward. However, it's a fairly consistent crypto, so it still might be useful to investors.

You can trade DASHUSDT Perpetual Contracts on Bybit.

Zcash (ZEC)

Zcash markets its service as being a more secure version of Bitcoin transactions. This cryptocurrency focuses on simplicity, convenience and security, using zero-knowledge proofs for enhanced privacy. However, the crypto is mostly designed for Linux users and CPU miners, so it won't work for everyone.

Trading at $29.44 per token (as of Aug 10, 2023) and with a market cap of $243 million, Zcash is fairly popular with investors. Unlike many other privacy coins, its price has held mostly stable instead of zigzagging around drastically.

You can trade ZECUSDT Perpetual Contracts on Bybit.

Grin (GRIN)

Grin is an innovative, community-driven privacy coin that uses the Mimblewimble protocol to algorithmically conceal user addresses and coin balances. It can process private transactions without even using wallet transactions. Keep in mind, however, that Grin is still fairly untested, and its community-led development can be slow.

Grin currently costs $0.032 per token (as of Aug 10, 2023). With a market cap of just $4.7 million, it isn't a very well-known privacy coin. Grin is still an intriguing investment, though, because of numerous small price jumps and dips that can lead to valuable trading opportunities.

Horizen (ZEN)

Horizen is another multi-level privacy coin. Users can choose between an anonymous Z-address or a public T-address to get exactly the level of privacy they need. This blockchain features a huge node network that increases security and decentralization. However, users need to know that sending from a Z-address to a T-address will show the public how much money is being sent.

Though it's currently priced at $8.66 (as of Aug 10, 2023), Horizen’s price has gone through a lot of change lately. In the past month alone, its price has almost doubled. This coin's rapid movements make it a favorite with short-term investors.

You can trade the ZEN/USDT Spot trading pair and ZENUSDT Perpetual Contracts on Bybit.

Oasis Network (ROSE)

Oasis Network’s privacy-first design uses two separate blockchain layers to keep user data confidential. Other useful features include staking, low fees and scalability. However, users need to be aware that Oasis Network is relatively new, and hasn't yet been able to fully develop all of its planned features.

Oasis Network's token, ROSE, has a current price of $0.046 (as of Aug 10, 2023). This is low as compared to its all-time high of $0.59 in early 2022, so investors may want to be cautious. Though it doesn't seem likely ROSE’s price will recover anytime soon, new launches from Oasis Network could cause unexpected price increases.

You can trade the ROSE/USDT Spot trading pair and ROSEUSDT Perpetual Contracts on Bybit.

Decred (DCR)

This popular crypto's been around for a while, and a few years ago, Decred began to offer users the option of enabling privacy. Their simple solution consists of jumbling up transaction data so no one can see which user is associated with which transaction. Decred is fast, affordable and effective, but its method for confidential transactions might not offer quite as much security as other privacy coin platforms.

Currently selling for $14.38 (as of Aug 10, 2023), DCR has been steadily declining in value for over a year, so it might not be the best investment right now. However, this crypto has been around long enough that most watchers believe its price will recover. In fact, there was a rise in price from mid-June to early July, from $12.40 to $19.06.

You can trade the DCR/USDT Spot trading pair on Bybit.

Are Privacy Coins Legal?

Privacy coins are somewhat controversial. Not only can they be used for illegal activities, but their systems also make it much harder for financial regulators to monitor the crypto company. Privacy coins are currently legal in the United States, but some countries, like Japan, ban people from using them. Other countries, like Australia and South Korea, try to offer a compromise by removing privacy coins from crypto exchanges but allowing private citizens to use them.

Are Privacy Coins a Good Investment?

Privacy coins are in high demand, so they can be quite valuable. Especially in times of financial uncertainty when a lot of users are looking for secure ways to handle finances, privacy coin values can spike. Even if you have no need for private cryptocurrencies, purchasing some of these coins can still provide big returns. For example, over the course of a few months in 2021, Monero more than doubled in price.

However, keep in mind that their controversy makes them a little risky. In some countries, you can’t purchase privacy coins through crypto exchanges, so it's hard to use them for short-term investing. Every new announcement of a ban causes a drop in prices, so unexpected regulation may affect your portfolio. Privacy coins are harder to regulate, and some networks have crashed due to poor management or illegal behavior.

The Bottom Line

Privacy coins are a great way for people to protect their financial data, and they can also be great for savvy investors. Security features, such as zero-knowledge proofs and ring signatures, keep others from being able to see how much crypto you have or how you spend it. As long as you take the time to research coins and pick the right option, privacy coins can be useful. If you’re looking to trade privacy coins, you can sign up for a Bybit account today and get started!

#Bybit #TheCryptoArk