Privacy Coin War: Short-Term Monero and Long-Term Zcash With Grin/Beam As Wild Cards

Privacy Coin War: Short-Term Monero and Long-Term Zcash With Grin/Beam As Wild Cards

Executive Summary

One of the most misunderstood tenants of crypto, is the thought that Bitcoin and Ethereum are anonymous; in reality every transaction can be traced very easily using simple block explorers (I,II).

We believe privacy coins will be the next crypto emphasis wave as consumers and businesses realize they can now transact, hold funds, and engage in the digital world with actual anonymity. While the majority of privacy coin transactions were historically used for illicit activities we believe privacy coins address real use cases.

Source:FxEmpire.com, 51pct.io

For instance, if a citizen of a corrupt foreign government wants to safely transfer their funds to support their family in another country or more simply if everyday consumers want to transact in the digital world without trading their privacy for a shiny user interface (i.e. Facebook). The number of hacks has been astounding (Marriott, Target, Equifax), and we believe the promise of privacy coins will go mainstream once consumers realize just how much of their data they are handing over for a like, a tweet or a favorite.

The purpose of this report is to simplify the highly complex technical nature of the world’s two largest privacy coins; Monero and Zcash and to shed light on new cutting edge technology (MimbleWimble) implemented in new protocols such as Grin and Beam.

Monero vs Zcash Overview

In a private transaction, all three elements must be anonymous: The sender’s address, the amount being sent and the receiver’s address. Monero and Zcash approach this situation in very different ways. The goal is to create coins that are fungible, where units are interchangeable and worth exactly the same amount, in contrast to Bitcoin which is not fungible since each coin can be tracked.

Monero provides privacy by default, there is no opt-in or opt-out situation. This ensures that the entire network of transactions has its privacy aspects from the start. Monero leverages three technologies to ensure privacy; Ring Signatures, Stealth Addresses and Ring Confidential Transactions.

A fourth less discussed item is hiding a user’s IP address; Monero and Zcash are both working on technologies known as Kovri and Dandelion, respectively, to hide user’s IP addresses.

Zcash is a newer privacy coin, born from a fork of Bitcoin’s code. Zcash leads with a much newer and more advanced privacy technology known as zk-SNARKS, or “Zero-Knowledge Succinct Non-Interactive Argument ofKnowledge”.

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Recognition

51percent runs its work by industry experts to ensure it is of the highest quality. Thank you to Rocco, Itamar Rogel, Sam Corso and Ryan Gentry for their input, feedback and corrections on this report.

Disclosures:Tom Shaughnessy does not own tokens in Monero (XMR) or Zcash (ZEC) and has no stake in the Grin or Beam projects. This research is strictly informational and is not investment advice. Do not buy or sell any securities based upon this research. This research strictly reflects our views and opinions which can be wrong. 51percent did not receive compensation to create this report, outside of our subscription paying members.

Additional Disclosures:

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  • The author, Tom Shaughnessy, owns tokens in Ethereum, MakerDAO, 0xProtocol, HYDRO, Civic, Polymath and Gladius. These are subject to change.
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51percent Crypto Research provides institutional crypto research spanning extensive reports on specific projects to unbiased thought pieces on the industry for analysts, hedge funds, family offices, asset managers and investors. The firm offers detailed valuation models, actionable picks and an industry leading podcast featuring the top leaders in crypto. Learn more at 51pct.io.51percent also offers an industry leading crypto research podcast (iTunes, Spotify and Podbean).

 

 


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