Before we can look into cryptocurrencies lets look into privacy in general and how the current banking system works.
In the modern world our data is collected, bought, sold and shared to an extent that has never been seen before. Someone born today may have a record of their entire life available online as well as data on everything they have searched for, every message they have written, even the ones they never sent and every picture they have taken. There will be a log of every product this person has bought, every job they have had, infact it is hard to think of something about their life that will not have been logged.
This data is then sold or shared and is used to manipulate people. Whether this is in small inoffensive ways like trying to sell products relevant to the person or in much more nefarious ways like influencing voting patterns the fact of the matter is that the whole point of this large scale data gathering is the manipulation or control of the individual.
This is also assuming that the data isn’t lost or stolen and made publicly available which has occurred many times and will occur many times more.
We don’t really want to get into general online privacy too much here because we are a cryptocurrency website and that isn’t the focus of this article, but we would recommend looking into ways to stay private online if this is of interest to you. If you are curious about the data these companies hold on you it is possible to make a Freedom of Information request for a copy of that data, as outlined here.
With the current system banks do have a duty to protect your data and in general they do not do the worst job in the world at this, however, if you do a quick search for “bank hacked” or “Credit Check hacked” you will find many results that confirm that the banks and the companies they share your data with have had data breaches and the likelihood is that these will happen again.
How are Cryptocurrencies different?
Cryptocurrencies aren’t a revolutionary new system that will make all of your data private, however, they do allow you to store money in a way that is much more private than the current systems allow.
With most cryptocurrencies if someone has your wallet’s public address they are able to see every transaction in and out of that wallet. This may seem a little public, however, there is no way of working out how many wallets you own, who you are or where you are from the wallet address.
The transaction history is a very important part of the wallet and your privacy. Some currencies leave the transaction log open which can be a concern for privacy as all of your transactions can be backtracked to the original inception of the currency, however, there is still no way of knowing when this currency entered your hands. For example, you could have transferred the funds from 3 or 5 or a thousand different wallets and there is no way of knowing where you entered this “chain” of transactions.
For some currencies privacy is more of a focus than others. For example, Monero is a privacy focused coin whilst Dash is a “normal” coin with privacy features and Bitcoin doesn’t have any specific privacy features.
For a start all three of these coins are much more private than a “standard” banking system where your details are bought and sold or shared.
With Monero all transactions are encrypted meaning that it is (pretty much) impossible to find out any information about where your funds came from or where they went. This does mean that it is one of, if not the, most private cryptocurrency. On the other hand this does have a trade off in terms of transactions times and costs.
With Dash most transactions occur “normally” like Bitcoin and can be traced, however, if you wish you are able to send a transaction using the PrivateSend features, how exactly this works is covered in another article. This privateSend uses a mixed transaction which means that a transaction of say, £100, would be broken up into £1 transactions which would be “mixed” with other people’s £1 transactions. This is done in rounds and past a certain number of rounds is (pretty much) impossible to backtrack. The benefit of having “optional” privacy is that the normal transactions of Dash are faster and cheaper than those of Monero.
A useful way of utilising this feature might be to have 1 or more wallets that hold larger portions of your funds which are funded via PrivateSend then use these to fund your day to day wallet which you would then make smaller transactions with. This would mean that whilst someone could see the small amount of money in your day to day wallet they would not be able to work out how much you actually hold.
From our point of view there is no specific “right” answer for this and how private you are is entirely up to you, however, we do believe that privacy is important for all users and often overlooked. Our point of view is that it is critically important that how private you remain online is in your control. If you want to be entirely private that should be up to you and not up to corporations.