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What are private cryptocurrencies and what are public cryptocurrencies

31 Jan 2022 By : Sanskar Ranka
Southeast Asia’s Lar

Public coins offer a degree of anonymity but focus on other areas. Others place privacy first and foremost.

Anonymity vs. Privacy

Before examining the details of various cryptocurrencies, let's take a moment to consider how anonymity and privacy work in the blockchain world.

All blockchain-based cryptocurrencies offer some degree of anonymity for users because they allow users to operate under pseudonyms. However, anonymity and pseudonymity are not the same things as privacy. Bitcoin transactions can be traced, as can those for many other coins and tokens that were not designed with privacy in mind. Addresses can be linked and transaction amounts can also be traced. Privacy totally disintegrates if someone can reveal the true identity linked to an address.

Indeed, the very nature of a public blockchain makes transactions traceable. All transactions that occur on an open blockchain can be viewed by any person that has access to the blockchain. The degree to which they are traceable depends on the cryptography employed by the project team. Public coins not focused on privacy tend to be linkable and traceable, while privacy coins use a variety of stealth tactics to break one or both of those characteristics.

 

Public Cryptocurrencies

True privacy comes with advanced cryptography and is why most of the cryptocurrencies in use today offer no privacy features beyond basic anonymity, or rather pseudonymity. They provide ways for users to be anonymous, but that is only to the extent of maybe not revealing your original name or so. The wallet address linked to you can still be configured through a trace.

In case someone knows that the wallet address is yours, all privacy is lost.

This is what "public cryptocurrencies" mean in the technical sense. Bitcoin, Ethereum, Litecoin are examples of this.

They are happy being public, in the sense that traceable and linkable transactions on their blockchain don’t affect the product, only possibly the end user.

 

Private Cryptocurrencies

As already stated, True privacy comes with advanced cryptography, these are popular tokens designed to be private by default by hiding transaction details. These cryptocurrencies are still public in the sense that they have public open ledgers, but transaction information is obfuscated in varying degrees to protect the privacy of the end-users. It is also important to point out that there is a difference between secrecy and privacy. Every human has the right to privacy and fighting for that right doesn't mean you have something to hide.

Although cryptocurrencies are often associated in the popular imagination with privacy, in reality, most cryptocurrencies provide only basic levels of pseudonymity. Essentially, popular crypto coins like bitcoin offer the same level of privacy that you get if you buy something using cash in a store where no one recognizes you. In this scenario, your transactions are anonymous, but the transaction amounts can easily be traced. And if someone can determine your identity, all privacy quickly evaporates.

However, a handful of cryptocurrencies, such as Monero, Zcash, DASH, Horizen, and Particl, fall into a different category. Designed to provide true privacy and not just anonymity, they include special features that make it effectively impossible to trace users' identities and, for some of the coins, the transaction amounts. While some of these private cryptocurrencies have trade-offs (like master nodes in the case of Dash) that make them less attractive from a privacy perspective, others achieve privacy in a fully decentralized way.

 

Conclusion

Both the types, Private and Public Crypto Assets follow one simple function, transparency in the transaction and a trail of asset holding which makes them fit for a number of basic features and uses followed for the usage of technology. The specific usage and application is a wide-open subject totally dependent upon the expectation of the user.

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