Anonymous cryptocurrencies have always been attractive to investors, who put privacy and confidentiality first. Monero has long been the leader among such assets. Which cryptocurrency strives to challenge it for leadership?
Anonymous cryptocurrencies obscure payments by hiding the details of the sender and the receiver, as well as the transaction amount. Transactions are stored in a public blockchain, but one can hardly identify the parties to the transaction, even knowing their public keys (wallet addresses).
This feature distinguishes anonymous coins from other cryptocurrencies, like Bitcoin or Ether, where, with a public key, the transaction history and transactors’ addresses can be viewed through any blockchain browser. It's just like viewing a bank statement, which is stored 24/7 in the public domain and is publicly available to everyone. Of course, privacy-oriented holders of digital assets don’t take to this idea.
Hence, in 2014, the crypto market welcomed a coin that finally challenged the pseudo-anonymity of available cryptocurrencies. It placed privacy and confidentiality as the top priority. The coin was called Monero.
Monero
Ticker: XMR
Market Cap: $2,686 Bn
#CMC: 27
Exch num: ~60
Market Cap: $2,686 Bn
#CMC: 27
Exch num: ~60
Monero emerged as a fork of Bytecoin with its Proof-of-Work blockchain. The developers aimed to create an "honest" privacy coin, with no pre-mine (a hidden issue of coins for in-plant use), to avoid the mistakes of Bytecoin. Monero is based on the CryptoNote open-source protocol, which ensures an absolute level of privacy. This protocol uses the RingCT (Ring Confidential Transactions) signature technology to hide the sender's and recipient's wallet addresses, amount, and time of the transaction. The RingCT technology allows adding 10 false signatures to every transaction and mixing it with the real sender's signature. All the blocks are encrypted using various cryptographic algorithms.
In August 2022, Monero executed a hard fork to update the protocol, increasing the total number of signers in a ring signature from 11 to 16. This made tracking Monero transactions even more challenging.
If you try to enter a public key into any Monero Explorer, you will be automatically turned down in a polite, or sometimes impolite, way. The only interesting information you can get with a transaction hash/id will be the number of confirmations, block number, fee, and number of attached ring signatures (16). The Monero blockchain reveals no personal or confidential information.
Since currency pairs with XMR (nearly 60) are available on both CEXs and DEXs, and given the support of the most well-known hot and cold wallets, Monero is the most widely used anonymous cryptocurrency.
The closest competitors of Monero are Dash and Zcash, which also claim to have anonymous money transfers.
Dash
Ticker: DASH
Market Cap: $462 Mio
#CMC: 81
Exch num: 90+
Market Cap: $462 Mio
#CMC: 81
Exch num: 90+
Dash coin was introduced to the market in 2015, having changed several names and concepts. Evan Duffield, who saw bitcoin's lack of anonymity as the biggest flaw, created Xcoin, which was later rebranded to Darkcoin, and finally to Dash. The cryptocurrency uses a hybrid blockchain (Proof-of-Work and Proof-of-Stake), allowing owners of both mining equipment and masternodes (network nodes that validate transactions, provide liquidity, and maintain services that enhance transaction privacy) to earn money.
Dash anonymity is ensured by the PrivateSend technology, which acts as a crypto mixer. This function is intended to "split" the transaction into parts, which are simultaneously sent to the recipient. This method is called CoinJoin (known as coin mixing). It makes the transaction untraceable, and the amount of payment and private keys of the parties to the transaction hidden.
The PrivateSend feature is optional, meaning it does not automatically apply to all transactions, as with Monero. In addition, it is integrated only in a limited number of cold wallets, such as Dash Core.
Over the past two years, Dash representatives have begun to actively market this cryptocurrency as "a regular means of payment like Bitcoin", without focusing on the privacy features. This has triggered a certain exodus of users who prize privacy.
Zcash
Ticker: ZEC
Market Cap: $829Mio
#CMC: 58
Exch num: 60+
Market Cap: $829Mio
#CMC: 58
Exch num: 60+
Zcash emerged in 2016, after Monero and Dash, as a fork of Bitcoin. Its developers claim it to be a cryptocurrency that ensures complete privacy of transactions. Zcash uses the zk-SNARK technology (zero-knowledge proof protocol) to encrypt transactions. This technology validates transactions without revealing their components (sender and recipient addresses, transaction amount). No data of transactors are published in the public decentralised ledger, except for the validation of the transaction, to ensure anonymity.
The privacy feature of Zcash transactions is also optional as with Dash. Zcash has two types of addresses: a z-address and a t-address.
A z-address is protected by the zk-SNARK protocol, i.e. it is a fully private address.
A t-address is a public, open-source address, which works just like Bitcoin.
Funds can be transferred between z-addresses and t-addresses, but only z-to-z transactions are completely confidential.
Today, almost all crypto exchanges work with public t-addresses by default.
Only the desktop native Zcash wallet grants options to shield transactions. According to statistics, the total number of z-addresses does not exceed 5%, i.e. confidential transfers are used by a very small user community.
Final words
As we see, neither Dash nor Zcash have yet been able to compete with Monero due to the optional shielding of transactions and the limited list of wallets that support this feature. So far, nothing threatens the dominance of Monero.
