Privacy is playing a crucial role in the actual world of cryptocurrencies which was not very popular few years ago. Due to increasing problems with the protection of information, cryptocurrencies such as Monero and Zcash are now trending. These coins emphasis on anonymity in the transaction and the fact that the transactions taking place cannot be tracked, unlike other conventional coins such as the Bitcoins.
Monero and Zcash are relatively similar in their objectives, which is the users’ anonymity, but the extent to which they implement it is quite distinct. This article aim now at comparing the two leading privacy coins at the core and in their distinctive features.
Monero: Privacy Preserving by Default
It should be noted that Monero (XMR) is on the list of the most secure and anonymous cryptocurrencies. Unlike Bitcoin, all the transactions are transparent and easily traceable whereas Monero utilizes the most complex hashing algorithms to ensure that all transactions are fully anonymous. This privacy is the supplied default setting for every transaction which makes Monero the preferred option for users in need of an anonymous currency.
Monero uses a combination of three main privacy technologies: Ring signatures, ring confidential transactions (ringct) and stealth addresses. Similar to Stealth addresses Ring signatures conceal the sender ID and one cannot know that initiated the transaction. In the case of RingCT the amount of the transaction does not appear while stealth addresses is that the address of the recipient will not be disclosed. When the four technologies are combined together, Monero guarantees that nobody will ever be able to follow any of the particulars of a transaction.
However, Monero, which pays much attention to anonymity, is also subject to attention from the not so bright side. It has been associated with the use in the dark web for engaging in criminal activities because it allows the hidings of information relating to the transactions. Authorities and financial watchdogs hate this kind of heightened anonymity to a large extent, but Monero still enjoys backing from privacy enthusiasts who have respect for freedom around the world.
Zcash: Flexible for Selective Transparency
Zcash (ZEC) provides a more set a loose on option for the privacy benefit. It is important to point out that the Zcash transactions are not anonymous by default unlike the Monero. However, the users can opt for transparent or shielded transaction. This optional privacy feature makes Zcash capable to attract more users who might need privacy in some transaction but transparency in other.
Zcash embraces quite an innovative technology known as zk-SNARKs or Zero-Knowledge Succinct Non-Interactive Arguments of Knowledge. This cryptographic is one that enables you to prove that a certain transaction that was performed is authentic without staking any reference to that transaction, the participants or the amount of that transaction. zk-SNARKs seem to be more private than other SNARKs while at the same time being secure for use on blockchains.
Zcash’s transparent and shielded transaction features make it a very flexible formof privacy coin. One will find it appealing to those people who would wish to have their deals more private than those who are comfortable with a more direct and open agreement. Nevertheless, it has an optional private option that has been condemned since privacy should be the norm on any cryptocurrency that ‘printed’ itself as a privacy coin.
Moreover, certain sceptics note that zk-SNARKs are more resource-demanding than the private features applied by Monero and result in a higher fee and a longer time of operation. Still, Zcash is one of the most widely used privacy coins with a rather large customer base.
Privacy vs. Regulation: A Constant Struggle
This makes both Monero and Zcash to be under pressure from the regulators since they are mostly associated with the aspect of privacy. Governments are concerned that these privacy coins may be employed in illicit business that includes money laundering and tax evasion among others. Therefore, certain exchanges have removed Monero as well as Zcash so that they won’t encounter an issue with regulations later on.
Zcash, in contrast to Monero, has always provided an option to create transparent transactions, thus Monero’s privacy by default has made this cryptocurrency more appealing to regulators. However, both coins are still in the middle of controversies that relate to issues of privacy as well as regulation in the blockchain industry. Privacy coins on the other hand provide participants with financial freedom and anonymity which proves to be an issue to governments who are trying to fight AML and KYC rules.
Nonetheless, the threats from the regulators as mentioned earlier have not deterred investors from investing in the privacy coins. There are more users who are concerned with their identity disclosure and who think that privacy coins protect their financial data.
Conclusion
Monero and Zcash are two biggest examples of approaches towards privacy in the sphere of cryptocurrencies now. Another advantage that Monero has is complete anonymity by default, which will help users to use it without any criticism. That is why Zcash is more versatile and has opted-in privacy features that would make more users comfortable.
The two coins are not immune to the regulation issues but the concern that they have towards the privacy of the users makes them relevant. Because the trend towards private transactions is gradually gaining more and more popularity in the field of financial transactions, Monero and Zcash will always remain in demand in thecrypto space, providing users with options for safe and anonymous transactions.
