Bitcoin Might Lose Cloak of Anonymity to 2 New Upstarts

Bitcoin Might Lose Cloak of Anonymity to 2 New Upstarts

  • November 9, 2016
  • /
  • James Evans

Bitcoin has risen to international prominence as an alternative to fiat currencies because it provides a degree of privacy not found in fiat currencies. You don’t need to reveal your name or any other details of your personal identity when you use Bitcoin for transactions. In fact, transaction details are converted into a string of letters and numbers designed to protect the identity of both buyers and sellers.

The anonymity cloak helps to keep Bitcoin decentralized and devoid of government control or interference. However, Bitcoin transactions are not completely anonymous because each transaction is recorded permanently in a public ledger. Now, Bitcoin users have to grapple with the reality that modern investigative and analytic techniques have started to make it possible to peel away the covers of anonymity in Bitcoin transactions.

Sadly, the fact that Bitcoin might not be as anonymous as previously imagined is already causing the emergence of new cryptocurrencies with better cloaks of anonymity. This article examines two of the latest Bitcoin wannabes.

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Meet Zcash, offering confidential transactions

zcash-logoZcash is a new cryptocurrency launched last month as ” an open and programmable financial system” that has a special focus on privacy because “companies need privacy in order to conduct their business; and we believe that privacy strengthens social ties and social institutions, protects societies against their enemies, and helps societies to be more peaceful and more prosperous. ”

Zcash’s emphasis on privacy has made it an overnight success causing the value of a unit ZES to rise all the way to $5000 soon after the launch last Friday—it has since settled to about $500. Interestingly, the founders of Zcash admit that the cryptocurrency’s emphasis on privacy could make it a choice means of exchange for illegal activities in much the same way that Bitcoin was the defacto legal tender on Silk Road before it was shut down.

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Nonetheless, the Zcash founders have generalized that

“bad guys will use anything. Bad guys use cars, bad guys use the Internet, bad guys use cash, bad guys use the current banking system. Our goal is not to invent something that bad guys can’t use, it is to invent something that can empower and uplift the billions of good people on this planet.”

Zcash Genesis Block

Meet Monero, offering untraceable transactions

monero-logoMonero is a cryptocurrency that claims to be “secure, private, untraceable currency. It is open-source and freely available to all.” The main selling point of Monero is that transaction details are kept private in sharp contrast to Bitcoin where transactions are stored in a public ledger.

Monero also goes to great lengths to ensure that transactions cannot be traced to any user by leveraging ring signatures, which are a group of cryptographic signatures with at least one real participant, thereby making it practically impossible to know the person who spent or receive funds.

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Monero – How it works and Current Market Status

Final words…

However, both Zcash and Monero are still in their early days and it is somewhat hasty to pronounce any judgment on how they are likely to fare against Bitcoin. Bitcoin enjoys a first-mover advantage in the cryptocurrency market and it is not likely to cede marketshare over to newcomers overnight. More so, Bitcoin is time-tested and proven after withstanding series of mishaps that could have rendered it useless as a currency.

More importantly, Bitcoin has been able to find fair value against the U.S. dollar after it went through some impressive skyrocketing and crashes in its value. Hence, people are more likely to use Bitcoin for the stability it offers instead of going through the stages of acceptability with every new currency that debuts.