What Are Privacy Coins and Why Do They Matter?

Exploring Monero, Zcash, and CBDCs

Sep 27, 2024

Digital transactions are at an important crossroads. Governments around the world are rushing ahead with central bank digital currencies (CBDCs) in an effort to centralize and control commerce. As more commerce moves online, our every day purchases are increasingly tracked and dissected by banks and credit card companies. Cash is being phased out at the same time.

Privacy coins like Monero and Zcash offer an alternative. While still an under the radar alternative, privacy conscious individuals should have at least a basic understanding of this technology. As adoption increases, privacy coins will become a more mainstream alternative to surveillance payments like CBDCs, credit cards and Venmo/Paypal.

Friendly reminder - on October 9, we’re officially launching our lifetime subscription offer for Secrets of Privacy. Only 50 discounted subscriptions will be available. ⌛

For just $99—when you pay with Monero or Zcash—you’ll get unlimited, lifetime access to all of our privacy-focused content on the site. It’s a one-time payment for a lifetime of value, and the offer will only be around for a short time. If you don’t already hold some Monero or Zcash, grab some today so you’re ready to act on October 9 - interest is hot!

Get a sneak peak of the promo here.

Share Secrets of Privacy

What Are Privacy Coins?

Privacy coins are cryptocurrencies specifically designed to enhance the privacy and anonymity of users and transactions. Unlike top coins like Bitcoin or Ethereum, which operate on fully transparent blockchains, privacy coins obscure transaction details, making it nearly impossible to trace who sent or received funds. This provides a shield against unwanted surveillance, financial censorship, and even cybercriminals looking to exploit vulnerabilities in public blockchain networks.

Why Privacy Coins Are Relevant in Today’s World

As governments, corporations, and even hackers increase their surveillance of online activities, protecting your financial data is harder than ever. Data breaches and privacy invasions are on the rise, which means pro-actively protecting the privacy of your financial transactions isn’t just a luxury—it’s a necessity.

Defending Against Financial Surveillance: With most traditional cryptocurrencies, anyone can view your transaction history on the blockchain. Privacy coins like Monero and Zcash shield this data, keeping your spending habits, account balance, and personal information out of the public eye.
Preventing Financial Censorship: Privacy coins empower individuals in regions where financial systems are tightly controlled, allowing them to access and transfer funds without fear of censorship or government interference.
Strengthening Security: By concealing transaction details, privacy coins help prevent criminals from targeting users based on their financial activities.

Monero (XMR): The King of Privacy

Monero is often considered the gold standard for privacy coins. Unlike Bitcoin, which records every transaction publicly, Monero uses advanced cryptographic techniques like ring signatures and stealth addresses to make transactions untraceable. Every transaction is private by default, making it one of the most secure ways to send and receive digital funds.

How it Works (high level)

Ring Signatures: A cryptographic digital signature that enables anonymity by combining a group of possible signers, making it computationally infeasible for an outside observer to determine which member of the group actually signed a message or transaction.
Stealth Addresses: Each transaction generates a unique one-time address, making it impossible for anyone to link your Monero wallet to a specific transaction.

Zcash (ZEC): A Privacy Coin with Flexibility

Zcash offers users the option to send both transparent (public) and shielded (private) transactions, making it a flexible choice for those who want more control over their privacy. With its advanced zk-SNARK technology (zero-knowledge proofs), Zcash allows users to prove that a transaction occurred without revealing any transaction details.

Zcash’s unique encryption method allows transactions to be fully shielded, but without revealing the sender, receiver, or amount—providing a balance of privacy and transparency.

Privacy Coins vs. CBDCs: A Battle for Financial Privacy

CBDCs are in effect the opposite of privacy coins.

Governments worldwide are rushing ahead to pilot and deploy Central Bank Digital Currencies (CBDCs), which are digital currencies controlled by central banks. The trend is growing so much that we added a dedicated section on the topic in our monthly privacy news roundup.

CBDCs: The Opposite of Privacy

CBDCs, unlike privacy coins, are digital currencies issued and regulated by central authorities, such as governments or central banks. While they promise efficiencies like faster payments and lower transaction costs, they also come with significant privacy risks:

Complete Transparency for Governments: With CBDCs, central banks have full visibility into every transaction made by citizens. This level of transparency can lead to financial surveillance, where governments track individual spending, saving habits, and even restrict how money is spent.
Potential for Financial Control: Governments could impose spending limits, freeze accounts, or monitor and control how you use your money. This would make it easier to enforce economic policies but could also be a tool for social control.
Increased Censorship: CBDCs could allow governments to censor transactions, blocking payments to certain organizations or individuals, or limiting the types of goods or services you can buy.

Privacy Risks of CBDCs Spark U.S. State-Level Bans

Jul 12

Read full story

Privacy Coins: A Shield from Surveillance

On the other hand, privacy coins like Monero and Zcash offer a decentralized, user-centric approach to digital payments:

True Financial Freedom: Unlike CBDCs, privacy coins ensure that only the sender and receiver know the details of the transaction. There is no central authority overseeing or controlling how these coins are used.
Protection from Censorship: With Monero and Zcash, no government or third-party organization can block or monitor your transactions. This is particularly crucial in countries where financial freedom is restricted or in situations where users want to avoid government scrutiny. However, some jurisdictions have blocked the use of Monero and other privacy coins, so make sure you DYOR.
Preserving Anonymity: Privacy coins ensure your identity, transaction details, and financial history remain hidden, offering a safe alternative to CBDCs, which could strip away personal financial privacy.

The Future of Financial Privacy: What’s at Stake?

As the deployment of CBDCs accelerates, we could soon face a world where financial privacy is a rare commodity. Privacy coins like Monero and Zcash offer a vital safeguard for those who value their right to conduct digital transactions without surveillance. They stand in stark contrast to the level of control CBDCs might introduce, making them important tools for those looking to secure their financial independence.

Wrap Up

Privacy isn’t just about what you browse online—it extends to how you spend your money. Monero and Zcash represent a future where financial freedom and privacy go hand-in-hand, giving individuals the power to protect their data. In contrast, CBDCs will introduce a new level of surveillance that could erode personal financial privacy. As privacy risks continue to grow, privacy coins will be a relevant tool for anyone looking to secure their financial transactions and information.

If you have any questions about the promo, send us a message. 👇

Looking for help with a privacy issue or privacy concern? Chances are we’ve covered it already or will soon. Follow us on X and LinkedIn for updates on this topic and other internet privacy related topics. We’re also now on Rumble and YouTube. Subscribe today to be notified when videos are published.