A privacy coin is defined as a cryptocurrency that allows private transactions hiding data about its users . Such data are the amount of cryptocurrency traded and held in wallets.
Which cryptocurrencies offer privacy?
Bitcoin and many popular cryptocurrencies are not true privacy coins. Bitcoin users are identified by their public address. There are computer programs which can, in time, even link those addresses to actual identities. All bitcoin transactions and wallets are also publicly visible data.
However there are some cryptocurrencies that offer privacy, with ZCash, Monero and Dash being among the first and most popular.
Does BitcoinZ offer private transactions?
BitcoinZ is a digital coin that offers optional privacy by utilizing Zk-SNARKS which is ZCash’s cryptographic technology. In fact this is why obviously the coin was named Bitcoin with the “Z” added in its name. The user can choose the type of address, with T (transparent) or Z (ZK-snarks cryptographed private) addresses.
What ZK-SNARKS cryptography does?
The acronym zk-SNARK stands for “Zero-Knowledge Succinct Non-Interactive Argument of Knowledge,”. It refers to a complex proof mechanism where one can prove possession of certain information, for example a secret key, without requiring to reveal that information, and without any interaction between the prover and verifier.
“Zero-knowledge” proofs allow one party (the prover) to prove to another (the verifier) that a statement is true, without revealing any information beyond the validity of the statement itself. For example, given the hash of a random number, the prover could convince the verifier that there indeed exists a number with this hash value, without revealing what it is.
In a zero-knowledge “Proof of Knowledge” the prover can convince the verifier not only that the number exists, but that they in fact know such a number – again, without revealing any information about the number.
The fact that the BitcoinZ currency is combining the fundamental characteristics of the original bitcoin (Community character with no third party controlling it, No premine, No ICO sales, No DEV taxes) and adds the privacy option (and many other characteristics like faster tx speed with reduced block time), is making it really unique.