BTC vs. Anonymous Coins

Bitcoin has been the #1 player in the crypto market for over a decade, and it’s the reason why digital coins even became popular in the first place. Hundreds of alternative or altcoins have become available over the years, but it seems it’s the anonymous tokens that are attracting huge attention.

What are anonymous coins, and how are they different than Bitcoin? Is it true that BTC doesn’t offer true anonymity? Our comparison will provide answers and help you learn more about both options!

Understanding Bitcoin’s Pseudonymity

Crypto transactions are appealing because they offer decentralization and a high level of privacy. The fact there’s no intermediary ensures direct transactions where you don’t share personal data with the middleman. But while Bitcoin transactions are private, they aren’t completely anonymous.

BTC offers pseudonymity, which means there’s a way to connect the transaction to your identity. After you create a Bitcoin wallet, you will receive an address. That digital wallet address is how you send or receive Bitcoins. And while you keep things private, there are ways to connect the public wallet address to your identity.

Many traders have expressed concerns that pseudonymity isn’t the anonymity level they wanted. It’s why they decide to exchange BTC to XMR or other anonymous tokens, which go the extra mile to ensure the transactions are untraceable.

Rise of Anonymous Cryptocurrencies

Private or anonymous cryptocurrencies focus on maintaining the highest privacy level for their users. These networks apply different technologies to enable features that make tracing impossible or incredibly difficult.

The most notable anonymous coins are:

• Monero. XMR uses ring signatures and stealth wallet addresses to keep the identities of transaction participants a secret.
• Luna. Terra suffered a collapse in 2022 and migrated to a new Terra 2.0 blockchain, and the new LUNA token has become its native coin used for paying transaction fees and other purposes. You can check the LUNC vs LUNA comparison to learn more about new and original Terra tokens.
• Dash. PrivateSend is a technology that mixes your transaction with others, ensuring that tracing the funds to their origin is incredibly difficult.

BTC vs Anonymous Coins: Transparency & Adoption

Here is a comparison of the main features that will help you learn more about both Bitcoin and anonymous coins.

Bitcoin Features

BTC uses a public ledger to record transactions. Think of the ledger as a network that acts as a record book of all transactions completed on the network. The ledger confirms that the sender has enough funds to transfer, and it verifies and stores transaction info.

Bitcoin has a huge store of value, especially if you consider its scarcity. The estimation is that over 93.6% of all BTCs have already been mined. The more we get close to the maximum, the more likely the price is to go up, which makes this an important BTC benefit.

As for privacy, you could say BTC offers strong privacy with its pseudonymity approach. There’s a discussion about implementing features that could boost user anonymity in the future.

See Also

The Principal Risks of Working with Cryptocurrency and Security Issues

Anonymous Coins Benefits

The main advantage of anonymous currencies is the highest level of privacy you can get. In today’s cyber world, with hackers and those ready to exploit security vulnerabilities everywhere, using networks that take user confidentiality and security seriously is imperative. Apart from personal safety, some practical uses of anonymous transactions could include charitable donations or paying for business services without the competitors being aware of it.

BTC vs Anonymous Coins: Technological Innovations

What can we expect in the future from these tokens? Let’s see a brief overview of what could be lying in store.

Bitcoin Development

Implementation of the Taproot code has already been done via a soft fork in the Bitcoin network. The code involves using multisig or other scripts to achieve better privacy levels. A reusable Taproot address is another feature that is waiting for a formal proposal, as well as trampoline onion routing. Alias SCID is also in progress, and it could stop the simple linking of payments to a single node pubkey/alias.

Anonymous Coins Features

Features available depend on the coin, but the most notable ones include:

• Ring signatures. The idea is to obfuscate transactions by ensuring no one can determine the key used for the signature.
• Stealth addresses. These are disposable addresses only used for a single transaction, which makes it tricky to determine payment origin or destination.
• Zero-knowledge. Some coins confirm the transaction without storing the information in the public record on the blockchain.

Future Landscape and Coexistence

There seems to be no dilemma that Bitcoins and anonymous tokens will coexist in the crypto market, especially in the next several years. It’s hard to believe BTC is going anywhere since it’s the most popular coin among the public. Anonymous coins are attracting more advanced users looking for maximum anonymity, so you could say each option has its audience.