Monero and ZCash are two of the top choices for privacy-centered cryptocurrencies. But these two coins are not one and the same, with some preferring one over the other. So, if you're concerned about your privacy but want to invest in crypto, should you choose Monero or ZCash? Which privacy coin is best?
What Is Monero?
Monero (XMR) was launched around the same time as other big coins, such as Ethereum, in 2014. Riccardo Spagni is Monero's founder, though its origins can be traced back to CryptoNote, another crypto protocol that no longer exists.
Like Bitcoin (and originally Ethereum), Monero uses the proof of work mechanism, which requires the use of miners to verify transactions and keep the blockchain secure. But there are some key differences that separate typical coins like Bitcoin and privacy coins like Monero.
Though cryptocurrencies offer a higher level of privacy than traditional cash, most coins are pseudonymous, not anonymous. Ethereum, Bitcoin, Dogecoin, Tether, Litecoin, and many other popular cryptocurrencies fit this description.
This is because crypto blockchains often display the wallet addresses involved in a given transaction, which can theoretically be linked back to a person.
Monero tackles this issue by using a number of nifty security features, including ring signatures, RingCT, and stealth addresses. Let's delve into how these work.
1. Ring Signatures and RingCT
Ring signatures give Monero users a way to protect their identity in a transaction. A single-ring signature can be performed by any member of a single group. Each member of the group has keys, and one user is required to verify and facilitate the transaction. It is not known by exterior users who in the group signed the transaction, which allows the true signatory's identity to be hidden.
Ring signatures use something known as triangular distribution to grab a number of public keys from the blockchain. These keys are then used in a group to create the ring signature.
RingCT (Ring Confidential Transactions) is the protocol that gave way to a better version of ring transactions. RingCT was first used in a Monero block in January 2017, and eight months later, this feature became compulsory in every transaction.
In short, it is RingCT that allows transaction amounts to be hidden in Monero transactions. This is known as a "Multi-layered Linkable Spontaneous Anonymous Group signature" and provides a more robust privacy model for users by obscuring more important data.
2. Stealth Addresses
Stealth addresses are not unique to Monero. Other privacy coins, like Verge, also use this protocol to protect users. Initially proposed in 2014 by Bitcoin developer Peter Todd, stealth addresses have proved their usefulness in privacy coin transactions.
You can think of stealth addresses as somewhat similar to burner phones. A stealth address is a one-time, temporary cryptocurrency address that can be attributed to the recipient of a single transaction. Once this address is used once, it is immediately discarded, so it can never be used to monitor or trace a user's activity and identity.
What Is ZCash?
Zcash (ZEC) is a little younger than Monero, having been launched in October 2016. Beginning as Zerocoin (a Bitcoin hard fork) in 2015 and then switching to its current name in 2016, ZCash has become one of Monero's top competitors over the years.
Like Monero, Zcash uses the proof of work consensus mechanism. But Zcash uses a different mining algorithm, has a different supply limit, and a different value in the market.
Zcash also has differing privacy elements from Monero. Zcash is actually not private across the board. In fact, you can alter your level of anonymity when using the Zcash blockchain. This is done through selecting either shielded or transparent addresses.
1. Transparent Addresses
Transparent addresses are just like those used by the majority of crypto blockchains. A transparent address is displayed fully on the blockchain, meaning any transaction you carry out will also display your wallet address on the blockchain.
It's worth noting that all multi-signature transactions conducted on the Zcash blockchain cannot be shielded. This kind of transaction will always be transparent.
2. Shielded Addresses
Shielded addresses are not visible on the Zcash blockchain. You can choose to make your transactions shielded, though Zcash's origin as a Bitcoin hard fork means that this is totally optional.
Shielded addresses differ from stealth addresses in that the former encrypts and hides your permanent wallet address, whereas the latter generates a one-time random address that is fully displayed on the blockchain.
Both the sender and recipient addresses are encrypted in shielded transactions through the use of the Zk-Snark protocol. Zk-Snark is a zero-knowledge proof algorithm that stands for Zero-Knowledge Succinct Non-Interactive Argument of Knowledge.
Shielded addresses also have a memo field in which the sender can provide the recipient with important information pertaining to the transaction. This memo field is also totally encrypted, meaning only the sender and recipient can use it.
Monero vs. Zcash: Which Is More Private?
When it comes to privacy, Monero is considered the superior choice simply because its privacy features are mandatory.
As previously discussed, Monero's ring signatures, which obscure users' identities, are mandatory for all transactions. Zcash, on the other hand, does not use ring signatures and gives you the option of using either a transparent or shielded address. This means that, if you want, you can fully display your wallet address on Zcash's public blockchain, as you would with Bitcoin, Ethereum, and other typical cryptocurrencies.
However, Monero's stealth address feature isn't mandatory. You can choose whether or not you want to generate a one-time address for a given transaction, which means you can choose the less secure option if you wish. Because of this, Monero could be considered less secure than ideal.
Some prefer Zcash simply because its transaction fees are lower. However, Monero transactions are usually processed in less time. So, there's a bit of back and forth here.
Zcash is a useful crypto if you're only looking to make certain transactions private, whereas Monero is the choice for those who want total anonymity.
Be Careful When Choosing a Privacy Coin
If you're looking for a trusted privacy coin, make sure you're taking note of the protective features being offered. You may find that one of your prospective choices far outweighs the other or that there are other factors, such as price, that also make you think twice. By doing this, you can find the right privacy coin for you and make a well-researched investment.
