Comparing Privacy Coins: Monero vs ZcashJun 13, 2023
Cryptocurrencies that offer the highest level of privacy to users are called private coins.
Their main goal is to keep transactions anonymous by concealing the identity of users who send and receive crypto. Two of the most popular privacy coins are Monero (XMR) and Zcash (ZEC). Both these coins have the same goal to provide secure and private transactions, but they are different in their approach to privacy.
- In this article, we will consider the features and functionalities of both assets, get to know what is safer Monero or Zcash, analyze their respective advantages and drawbacks, and compare them to understand the role of privacy coins in blockchain technology.
Understanding Monero (XMR)
Monero is a privacy-focused cryptocurrency that was released in 2014.
It has several key features that make it a perfect choice for those who prioritize privacy:
- Monero uses stealth addresses to conceal the receiver's identity by creating a one-time address that can't be traced back to a user's wallet;
- Monero employs ring signatures to obfuscate the origin of a transaction by mixing the transaction with several others;
- Another key feature of Monero is RingCT, which conceals the amount of cryptocurrency sent in a transaction. This is done by adding several fake inputs and outputs to the transaction, thereby making it harder to trace the actual amount being transacted;
- Monero makes use of Kovri’s function, which hides a user’s IP address and location by routing transactions through multiple nodes.
While Monero’s privacy features make it a strong contender among privacy coins, it also has some drawbacks. One significant issue with Monero is its level of centralization. As of 2021, over 80% of Monero’s total hash rate is controlled by just two mining pools, raising concerns about the security and decentralization of the network. Additionally, the lack of regulatory clarity around privacy coins like Monero could limit its adoption among mainstream users and investors.
Understanding Zcash (ZEC)
Zcash is a privacy-focused cryptocurrency that was launched in 2016.
- It uses zero-knowledge proofs (ZK-SNARKS) to provide privacy to users. ZK-SNARKS - is a cryptographic method that enables validation of transactions without disclosing information. any information about the sender or receiver;
- Zcash gives users the option to make shielded or unshielded transactions. Shielded transactions are fully private and use ZK-SNARKS to conceal every aspect of the transaction, including the amount being transacted. However, unshielded transactions are not private and function similarly to Bitcoin transactions, which are visible on the blockchain.
One significant criticism of Zcash is that users can migrate back and forth between shielded and unshielded transactions. This means that Zcash users who choose to transact on the public blockchain will not receive the same level of privacy protection as those who use shielded transactions.
Comparison of Monero and Zcash
When comparing Monero and Zcash, there are several key differences to consider.
- One notable difference is in their usage and market cap. Monero has gained a reputation as being the go-to privacy coin, with a market capitalization of over $3.5 billion. In contrast, Zcash has a market capitalization of around $1.5 billion and a smaller user base.
- Another key difference is their approach to privacy. Monero's ring signatures and RingCT offer more comprehensive privacy features than Zcash's selective use of shielding, although this also means that Monero's transactions may be larger in size.
- Additionally, Monero's centralization issues may be seen as a drawback, while Zcash's transaction migration issues present significant privacy drawbacks.
How to buy Monero and Zcash?
- Buy XMR and ZEC via a Reputable Exchange
Various crypto exchanges such as Coinbase, Kraken, Binance, and OKX are offering to buy XMR and ZEC with a bank card.
It should be mentioned that the largest exchanges are often centralized and may restrict trading activities and lock your funds anytime. So exchanges definitely are not a go-to for your long-term holdings.
- Buy XMR and ZEC right from your Wallet
If you want to know which wallet supports Zcash and Monero – take a look at Arctic Wallet. It offers great functionality and has an in-built buy/sell and exchange option.
Also you can find such features as:
- Asset statistics in Portfolio;
- Full transaction history tabs;
- Customizable commissions for sending coins.
|Source: Arctic Wallet App
Privacy coins like Monero and Zcash have faced regulatory scrutiny in recent years due to concerns about their use in money laundering and other illicit activities. The future of privacy coins is uncertain in the face of increased regulation, but they continue to play a crucial role in blockchain technology.
Monero and Zcash both offer privacy features that set them apart from other cryptocurrencies. While Monero's privacy features are more all-encompassing, Zcash offers more selective privacy options. Both coins have their respective advantages and drawbacks, and their future in the face of regulatory concerns is uncertain. However, the role of privacy coins in providing secure, anonymous transactions for users cannot be overstated, and they will continue to be an important part of the cryptocurrency landscape.