Privacy Coins: The Ultimate Guide to XMR, ZEC, DASH, XVG, GRIN and More

Privacy coins are cryptocurrencies that employ advanced cryptographic mechanisms to hide transaction data from the public eye, keeping their users fully anonymous.

Privacy coins are a type of cryptocurrency that prioritize anonymity and privacy in transactions. They differ from traditional cryptocurrencies like bitcoin and Ethereum, which maintain a transparent and traceable ledger of transactions. Here's a closer look at privacy coins and their current state in the market.

Privacy coins, such as Monero (XMR), Zcash (ZEC), Dash (DASH), Horizen (ZEN), Verge (XVG), Beam (BEAM), and Grin (GRIN), employ advanced cryptographic techniques to conceal crucial transaction details from the public eye. Unlike bitcoin or Ethereum, which display the sender's and recipient's addresses, the amount transferred, and even wallet balances, privacy coins keep these aspects of the transaction private.

Privacy coins aim to provide a higher degree of financial independence and control for everyday users. Their main benefits include financial privacy, security, and resistance to censorship. For instance, investors can avoid the tracking and surveillance of their transactions, which is useful not only for criminals but also for citizens in countries with authoritarian or repressive governments. In China, for example, those who waste money on non-essentials can be penalized, and privacy coins can help make these transactions discreetly. Privacy coins can also prevent data breaches, which have become more frequent in recent years.

However, due to their potential use in illegal activities, privacy coins have come under increasing scrutiny from financial watchdogs. For example, they are completely banned in Japan, and you can't trade them on crypto exchanges in South Korea. Although privacy coins are still legal in the US and the European Union (EU), regulators are watching them very closely and may impose restrictions, citing anti-money laundering (AML) risks. In 2023, leaked documents showed that the EU planned to ban banks and crypto services that deal with privacy coins.

Some major crypto exchanges, in an effort to avoid additional scrutiny, have chosen to delist privacy coins, affecting their liquidity. For instance, Binance delisted Monero earlier in 2024.

Here are the top privacy coins by their popularity and market cap:

* Monero (XMR) is one of the oldest privacy coins and the largest by market cap, with over $3.1 billion as of mid-June 2024. It uses ring signatures and stealth addresses to hide senders and recipients. Ring signatures merge users in a “ring” to make it difficult to identify which user created a given signature. At the same time, stealth addresses allow the generation of a new address for each transaction a user receives.

* XMR has faced a challenging period in 2024 as it was delisted from Binance, and Kraken is blocking it in Ireland and Belgium. As a result, the coin's price hasn't been able to benefit from the crypto market's bull run, which, in our view, is a sign of things to come.

* The chart above shows that since 2021 Monero has largely decoupled from bitcoin. Rather than following the ups and downs of the world's largest crypto (as many coins do), Monero has been mired in a flat line – like a dying patient.

* Zcash (ZEC) was launched in 2016 by the Electronic Coin Company (ECC). It is the first project to use so-called zk-SNARK technology, which proves the validity of transactions without revealing their details.

* ZEC's price and fees have been declining during the last few years amid regulatory pressure. Token Terminal data shows that weekly fees have dropped from several thousands in 2018 to just over $200 as of today. The token price has dropped from $884 in 2018 to the current level of $20, on a market cap of $336 million.

* While Zcash hasn't died, its usage, fees and revenues are a ghost of its former self.

* Dash (DASH) is less anonymous compared to Monero or Zcash, but its PrivateSend feature mixes transactions to enhance privacy. The price of Dash fell from over $1,100 in 2018 to $23 in June 2024. Dash has lost 45% while bitcoin has surged by about 5,000% since 2017.

* Like Monero, Dash no longer follows the movements in bitcoin and has fallen to such an extent that it barely registers on the chart above.

* Verge (XVG) coin launched as DogeCoinDark in 2014 and rebranded to Verge in 2016. During the last four years, XVG has dropped by almost 90%, while bitcoin has gained over 74%. Today, VRG has a market cap of just $68 million.

* While the price of Verge is extremely depressed when compared with its glory days, the coin obviously has some followers, as evidenced