Private Coin Watch

The Secret World of Cryptocurrency: How Privacy Coins Keep Your Transactions Hidden

Privacy coins are a type of cryptocurrency that aim to provide increased anonymity and privacy for users. There are several techniques that privacy coins use to achieve this goal, including ring signatures, zKsnarks, and stealth addresses.

Ring Signatures

Ring signatures are a cryptographic technique used by privacy coins like Monero and Sumokoin. A ring signature allows a group of users to sign a message, without revealing which user actually signed it. In a typical digital signature, a user signs a message using their private key, and the signature can be verified using the user’s public key. However, with a ring signature, a group of users each provide their own public keys, and one of them signs the message using a combination of all of the public keys. This makes it impossible to determine which user actually signed the message, providing a high degree of anonymity.


Another technique used by privacy coins is zKsnarks (Zero-Knowledge Succinct Non-Interactive Argument of Knowledge). This is a type of zero-knowledge proof, which allows a user to prove that they know something (such as a secret key), without revealing what that thing is. In the context of privacy coins, zKsnarks are used to prove that a transaction is valid, without revealing any of the transaction details (such as the sender, recipient, or amount). This provides a high degree of anonymity for users, as it makes it impossible to link transactions to specific individuals.

Stealth Addresses

Finally, privacy coins like Zcash and PIVX use stealth addresses to provide additional privacy for users. A stealth address is a temporary, one-time-use address that is generated for each transaction. When a user wants to receive a payment, they provide the sender with a stealth address, rather than their permanent public address. This makes it difficult for anyone to link the payment to the recipient, as the stealth address is not associated with the recipient’s public address. Additionally, stealth addresses can be generated for specific transactions, further increasing the level of privacy.

In summary, privacy coins use a variety of techniques to provide increased anonymity and privacy for users. Ring signatures allow groups of users to sign messages without revealing who actually signed them, zKsnarks enable users to prove the validity of a transaction without revealing any details, and stealth addresses provide temporary, one-time-use addresses to recipients. Together, these techniques make privacy coins an attractive option for users who value their privacy and anonymity.