Bitcoin has this myth around it that it's an anonymous currency - we all know that that's not really true. Yes, it's not like a bank account where your name is clearly stated so there is some level of anonymity, but bitcoin transactions can be traced back to the original sender.
There are actually some cryptocurrencies that are truly untraceable and anonymous: Bytecoin and Monero.
I have started a new series on my Steemit Blog: Introducing Altcoins that are either new or particularly interesting.
My first post of this kind was about Stellar Lumens, a cryptocurrency that started off as a side project from ripple, but quickly became popular by itself too.
This time, let's take a look at the untraceable currencies Bytecoin and Monero!
1) BYTECOIN - THE ORIGINAL ANONYMOUS CRYPTOCURRENCY
Overview
Name: Bytecoin (BCN)
Algorithm: CryptoNight
Market cap: $437,915,948 (Top 9)
Current price: around $0.00239
Launched: 2012
Mission Statement: "Bytecoin is the private untraceable cryptocurrency launched in 2012. Bytecoin is the first enterprise-ready solution."
Bytecoin is often nicknamed the "original" anonymous cryptocurrency.
As you can see, Bytecoin is definitely not new - it's been around since 2012, and 5 years are like a lifetime in the fast-paced world of cryptocurrencies!
But it wasn't until recently that Bytecoin received huge public interest, with market cap and currency values skyrocketing this month.
Bytecoin even managed to climb the Top 9 spot in the ranking of cryptocurrency market caps!
In that short period of time, Bytecoin saw a 5x increase in its market cap, increasing from around $80 million to $400 million, and the daily trading volume increased from $340,000 to unbelievable $48 million.
Take a look at this screenshot of the Bytecoin price- and market cap history - you can clearly see the huge spike from may 2017!
How does Bytecoin work?
Bytecoin uses the proof-of-work algorithm CryptoNight. Due to ring signatures and stelath addresses, its protocol CryptoNote is able to provide transactions that are both totally unlinkable and totally untraceable.
Usually, anyone can check all your incoming transactions of a certain address. CryptoNote makes transactions unlinkable by creating multiple unique one-time keys for each transaction.
A standard CryptoNote transaction is generated by the following sequence covered in the white paper. Bob decides to spend an output, which was sent to the one-time public key. He needs Extra (1), TxOutNumber (2), and his Account private key (3) to recover his one-time private key (4). When sending a transaction to Carol, Bob generates its Extra value by random (5). He uses Extra (6), TxOutNumber (7) and Carol's Account public key (8) to get her Output public key (9). In the input Bob hides the link to his output among the foreign keys (10). To prevent double-spending he also packs the Key image, derived from his One-time private key (11). Finally, Bob signs the transaction, using his One-time private key (12), all the public keys (13) and Key Image (14). He appends the resulting Ring Signature to the end of the transaction (15).
Bytecoin and Bitcoin?
Bytecoin is sometimes confused with a soft-fork of Bitcoin - but that's absolutely not the case.
Bytecoin is its own, independent currency with a totally different technology compared to Bitcoin.
2) MONERO - SECURE, PRIVATE, UNTRACEABLE
Overview
Name: Monero (XMR)
Algorithm: CryptoNight
Market cap: $589,934,213 (Top 8)
Current price: around $40.50
Launched: 2014
Mission Statement: "Monero is a secure, private, untraceable currency. It is open-source and freely available to all."
Monero (originally called BitMonero) is a fork of Bytecoin, released in 2014.
It uses the same CryptoNote technology as Bytecoin and is just as anonymous, but there are a few key differences: compared to Bytecoin, the block rewards from Monero were doubled for each block. Also, there were countless improvements and adjustments made from the previous Bytecoin.
Monero is an independent currency and the developers are probably tired of being compared to Bytecoin, but the similarities can't be overlooked.
Monero is basically the improved version of the "original anonymous cryptocurrency"!
Let's take a look at Monero's price- and market cap development:
There's no doubt about the fact that untraceable cryptocurrencies are on the rise.
There might be multiple reasons for that - but it really seems like many (cryptocurrency) users are more and more concerned with their privacy, and enjoy the benefits of untraceable transactions.
What's your opinion about these totally anonymous cryptocurrencies - do you use or even prefer them?
Cover 1 and 2, Images: 1, 2, 3, 4, 5, 6, 7, Sources: 1, 2, 3, 4, 5, 6, 7
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