What are privacy coins and why do they matter?
Privacy coins are unique cryptocurrencies that allow the user to gain total anonymity when making transactions on their blockchain. To achieve this, they use various methods to hide transaction data and even offer different levels of anonymity at which they can function.
That being said, privacy coins have always been a controversial topic. Law enforcement agencies and regulators often see them as a facilitator for cybercrime, dark-web purchases, and money laundering.
And while this may partially be the case, privacy in the crypto industry is needed because:
Wallet balances are publicly visible and hackers can easily trace them back to their owner, raising safety concerns for individuals.
Businesses using cryptocurrency transactions may have corporate secret transactions that they need to hide from the public or the competition.
Addresses can be blacklisted, decreasing the fungibility of cryptocurrencies.
While being a niche market, privacy coins have their fair share of supporters. Their combined market cap is nearing $10 billion, making them an essential factor in the crypto market. So which are the best privacy cryptocurrencies for 2021? Let’s find out.
Best privacy coins for 2021
As we briefly mentioned, most privacy coins use different algorithms to hide user data. In the list below, we go over their main privacy functions, as well as the particularities of their respective blockchains.
Created in 2014, Monero is arguably the most popular private cryptocurrency, constantly hovering in the top 15 coins by market capitalization. It was originally based on the CryptoNight algorithm, which links it to one of the earliest private cryptocurrencies ever created - Bytecoin.
On the Monero blockchain, all of the details around the transaction - sender, recipient, and amount, are concealed by default.
The network achieves this through the use of different concepts such as:
Ring signatures - which mix up the sender and recipient signatures with past transactions, making it impossible to discern who signed the transfer of XMR tokens. This concept was upgraded even further with the implementation of RingCTs in 2017.
Stealth addresses - which are single-use addresses, prevening transactions to be linked to previously-used addresses
Three wallet keys (instead of 2)
private spend key, used to send payments.
private view key, used to display transactions for the account.
public address, used to receive payments.
Finally, Monero’s network is programmed to receive periodic updates, which has led to the addition of a wide array of features, without any community controversy.
Monero price predictionfor 2021
Let’s have a look at a quick technical analysis and why we think Monero might deserve the title of best privacy coin.
Combining XMR’s 350% growth during the last 2 years with the current bull run, a conservative prediction could place XMR’s price reaching $500 by the end of 2021.
Zcash is Monero’s biggest rival and is often labeled as the most private cryptocurrency on the market. Initially introduced as a Bitcoin fork in 2016, the cryptocurrency added a privacy layer to its protocol through a concept known as ZK-Snarks.
ZK-Snarks is a type of cryptography that uses zero-knowledge-proof (ZKP). The concept relies on fact that you can prove the knowledge of information, without ever divulging said information. For this to take place, a secret key is generated before the transaction.
Furthermore, users can opt-in to use the privacy functions on the ZEC blockchain by either using transparent (t) or shielded (z) addresses. While transactions can be sent between these two types of addresses, only z-to-z transactions remain fully private.
Finally, ZEC transactions have an optional memo field, which can be used by corporations to make identifiable transactions, if required by law.
Zcash price prediction for 2021
Below is a short term price prediction for ZEC, showing why it’s among our list of top privacy coins.
While its growth was slower than some other coins on the market (“only” 50% in 2 years), the bearish pattern was broken. Considering the current bull run, the price should double by the end of 2021, reaching $150 per ZEC.
Dash was created in 2014 as a result of a Bitcoin fork and was one of the first cryptocurrencies to introduce the masternode concept to the ecosystem. Its goal was to become a faster and more private version of Bitcoin, offering near-instant transactions and increased scalability.
Since its darknet debuts as Xcoin and DarkCoin, Dash was successfully rebranded to a cryptocurrency that is globally used for daily transactions. For example, it became one of the most widely accepted coins by Venezuelan merchants shortly after the economical crisis peaked.
The privacy layer is an opt-in feature and uses a transaction mixer to hide sensitive data of the transaction. Check out the video below to see how this works in detail.
Dash price prediction for 2021
To justify its presence in our privacy coin list, we made a short analysis of the DASH coin for 2021.
Similar to ZEC, DASH followed a bearish trend until recently, bottoming out during the March 2020 coronavirus market crash. The trend was reversed into bullish and the imminent bull market could push the price towards the $250 mark before January 2022.
The Horizen blockchain was launched in 2017 and is a fork from Zclassic, which is itself a fork from the Zcash network. Similar to its predecessors, ZEN uses ZK-Snarks to assure the privacy of its users.
Thanks to its sidechain solution Zendoo, Horizon offers enterprises a platform for creating private PoS blockchains that use the powerful privacy features of the main blockchain.
Finally, for increased security, the ZEN network uses end-to-end encryption between peers, similar to messaging services such as Signal or WhatsApp.
Horizen price prediction for 2021
ZEN’s price has finally broken a 2-year high and short-term prediction shows it might retrace back to $10. From there, following the market bullish movement, it’s expected to find support and reach at least $25 before the end of 2021.
A hard fork from meme-coin Doge and formerly known as DarkDoge, XVG was released in 2014 and rebranded as Verge in 2016.
Verge is a popular privacy coin that focuses on fast transactions (<5 seconds) in addition to providing its users a good level of privacy. To obfuscate users’ data, it routes the transaction information of its wallet through the Tor Anonymity Network (Tor).
Thanks to this, it can successfully hide user IPs and geolocation, while leaving other parts of its transaction data transparent.
An interesting feature of its PoW network is the multi-mining algorithm support, with no less than 5 different algorithms supported.
Verge price prediction for 2021
XVG had one of the strongest bull runs in the market post-COVID19 crash, with over 450% gains between March and September 2020. And while this trend was interrupted by the DeFi bubble, the bullish momentum has now resumed even stronger. Following this pattern, we could see XVG price reaching $0.015 by January 2022.
In February 2020, the blockchain separated from the Ethereum network, launching its own mainnet. The privacy protocols of Enigma are based on a concept called “secret contracts”.
These self-executing applications keep data private and are compatible with Ethereum smart contracts to ensure interoperability between the blockchains.
To ensure the privacy of the secret contracts, the information is computed in pieces, encrypted, and sent in parts to different validator nodes. This way, no single node has access to the full data at any time.
Enigma’s smart contract privacy features are quite unique and make it one of the best privacy cryptocurrencies because of its future-proof concept.
Enigma price prediction for 2021
ENG’s price has been following a steady bullish trend since March 2020 and has recently broken a major resistance level at $0.6. This movement allows us to predict a price of $1.4 by the end of next year.
Haven is a fork from Monero and uses the same privacy features, meaning stealth addresses, ring signatures, and ringCTs.
However, what makes it most unique in our list of best privacy cryptocurrencies is that it offers a mix of a standard market-priced cryptocurrency (XHV) and a USD-pegged asset (xUSD) on the same blockchain.
The protocol achieves this by a “mint-and-burn” process, where users can either:
burn XHV tokens to receive the USD-pegged xUSD stablecoin
burn xUSD to receive XHV
So, in addition to offering its users increased privacy, the Haven network also allows them to mitigate volatility with an on-chain stablecoin exchange.
The team plans to add additional assets and commodities to the Haven ecosystem, such as GBP, EUR, but also Gold, Silver, and Oil. this would allow the users to choose the pegging mechanism that best suits their needs.
Haven price prediction for 2021
Fairly recent on the markets, XHV is experiencing the first genuine bull run in its existence. Recently, the price broke the major $3 resistance but was severely rejected from the all-time high at $5.
Nevertheless, the candles are expected to find support at the $3 level and continue the parabolic trend towards $40, increasing by more than 1000% by January 2022.
Firo, formerly known as Zcoin, this entry on our list of best privacy cryptocurrencies was launched in 2016.
It popularized the ZeroCoin protocol where every coin on the blockchain undergoes a process of burning and minting. This cycle was deemed necessary to erase previous transaction history and eliminate the chance of identifying where the coin comes from.
So, in order to render their transaction anonymous, users burn XCZ coins to receive a new batch of another currency called Zerocoins. The Zerocoins can later be redeemed for XCZ at the time of spending.
While it was adopted by many other private cryptocurrencies, this protocol was considered flawed. For this reason, the network transitioned to the Sigma protocol in July 2019.
And finally, the latest upcoming update to the Firo network, called Lelantus, is right around the corner. In this process, coins are burned in an anonymity pool and then redeemed by the receiver.