Most people have heard of Bitcoin, but the truth is that there are so many more options than just this one particular coin. When it comes to the cryptocurrency world, there are quite a few options about how to invest and what to invest in. Indeed, since this area is so new, the sheer breadth of cryptos can get confusing. As such, here’s an overview of one of the more specialized forms of cryptos: Privacy coins and also how privacy coins and bitcoin differ.
What Are Privacy Coins?
According to the crypto experts at SoFi Invest, Privacy Coins are coins that are shielded from public view. This is necessary, since, “any bitcoin transaction can potentially be traced back to its source. This has led developers on a quest to create the most private cryptocurrency.” Their enhanced privacy features make privacy coins among the most secure cryptocurrency.
How Do Privacy Coins Differ from Bitcoin?
Bitcoin is a specific type of cryptocurrency – indeed, it is the very first kind of publicly available currency on the market, the most well-known, and the coin with the highest overall market capitalization. Bitcoin dwarfs all other forms of cryptos in terms of its sheer value. However, unlike any of the various types of privacy coins, Bitcoin transactions are publicly accessible. This means that anyone with knowledge about how to search the blockchain can find evidence of a Bitcoin transaction. For investors who value their privacy, that’s a major problem. That’s where privacy coins come in: In theory, these coins have technological advantages that shield their users from public security, allowing them to conduct financial transactions in anonymity and security.
Furthermore, it should be noted that Bitcoin is a type of cryptocurrency, but there is only one “Bitcoin” that can be purchased and sold on the crypto market. Privacy coins are a type of crypto and there are many different types, including Bytecoin, Monero, Zcash, and more. Any of these coins have their own value and various security benefits. As such, you can’t buy a “privacy coin” – you have to pick a type of coin to buy.
What Are Privacy Coins Used for?
As the name would imply, privacy coins are used to allow someone to engage in crypto transactions at a level that completely protects their privacy. This, in theory, means that an individual could purchase and sell privacy coins without having to worry about their identity being disclosed or anyone finding them on the internet. They should be able to also hide the balance of their wallets and ensure complete anonymity. While there are many obvious and understandable reasons that someone may want to keep their identity private, there are also more nefarious concerns: Some terrorist groups have been noted to use cryptos to make payments and move money, and it seems likely that the enhanced privacy that comes with privacy coins may be used in these efforts. Clearly, privacy coin use is legal, but this is one of the illegal uses of this crypto.
Privacy coins offer a solid alternative for people interested in doing more with cryptos but who are concerned about protecting their personal information. If this is you, you should absolutely check out what privacy coins have to offer.