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- The clamor around Central Bank Digital Currencies is growing, but privacy concerns remains high.
- This has given privacy tokens like Monero, Dash and ZCash a lead to champion this innovation.
At the slight mention of privacy cryptocurrencies, the first options that come to mind are Monero (XMR), ZCash (ZEC) and Dash (DASH). These privacy-centric tokens are a solution to the possible privacy violation from the potential launch of Central Bank Digital Currencies (CBDCs). Notably, CBDCs are speculated to put users at risk of censorship from the government which will control its issuance and use.
Privacy Violation, a Deal Breaker
No matter the different advantages such as safety, greater financial inclusion, low account maintenance fees, and faster transactions amongst others that CBDCs offer, many netizens believe that it does not compare to the fact that users have to give up their privacy and financial freedom.
While speaking at the Transform Payments USA 2023 Conference in Texas, the United States Treasury’s Assistant Secretary for Financial Institution Graham Steele pointed out that CBDCs present a significant user privacy challenge.
He highlighted the fact that privacy concerns and a lack of institutional trust are already a few of the reasons why many remain unbanked. Steele added that some communities may be more privacy sensitive and have heightened concerns about private or public entities accessing their personal information. He, therefore, advised any region or government considering a potential CBDC launch to also explore the use of private technology to gain users’ trust.
Unlike CBDCs, Monero, Dash and ZCash possess certain features and tools that ensure that transactions carried out on their respective networks are anonymous. In the opinion of many, they provide users with total financial freedom and so far, they have received an outstanding level of adoption.
Monero, which is the largest of the three, has a market capitalization of $2.4 billion. ZCash (ZEC) and Dash, on the other hand, have a market cap of $400 million and $330 million respectively. This is not to say that these privacy coins have been wholly accepted. Rather, their emergence has been a source of concern to regulators in the United States and Europe.
Regions like Australia, Japan, and South Korea have prohibited their use on their shores and banned crypto exchanges from listing them.
Which Token Offers Real Privacy? Monero, Dash or ZCash
These three crypto offers users different levels of privacy and in the same way, their degree of preference is different from one another. XMR was launched as far back as 2014 by Riccardo Spagni. Like Bitcoin (BTC), it utilizes the Proof-of-Work (PoW) consensus algorithm which consumes much energy to verify transactions. Monero uses features like ring signatures, RingCT, and stealth addresses to tackle the issue of privacy. It is mostly regarded as superior in terms of privacy but less secure.
ZEC, which was launched in 2016 also utilizes the PoW consensus mechanism like XMR. ZCash differs in so many ways from the other two privacy cryptocurrencies. It has a different mining algorithm, different supply limit, different value in the market and differing privacy elements from Monero. Also, its level of anonymity can be altered in some instances by using shielded or transparent addresses.
To know which offers the best privacy might be wholly centered on preferences which can be influenced by many factors including the liquidity and ease of use. In all, each brandishes their own strengths and weakness but based on its letter of adoption as showcased by the market cap, Monero can be given the trophy for now.
