Bitcoin has in the recent past been the preferred medium of exchange on the dark web. However, many cryptocurrencies have popped up for users to choose what is best and that which suits their needs and the nature of their transactions. Bitcoin provided higher anonymity than the fiat currencies and now other crypto coins provide much higher anonymity than it. The signs are now clear that it is losing its prominence in the arena. A detailed blockchain study of bitcoin transactions have proven not to be as anonymous as they are perceived and can actually be used to break Tor anonymity.
The important aspects of any cryptocurrency transaction are threefold: the amount being sent, the senders address and the receivers address. The major problem with bitcoin transactions is that all these important aspects are public and hence traceable by cross referencing. Therefore, a cryptocurrency which provided complete anonymity on these three aspects in addition to faster and cheaper transactions was deemed successful.
These specific features have been the motivation behind the development of most cryptocurrencies primarily focusing on anonymity and privacy. These include, Dash (DASH), Monero (XMR), ZCash (ZEC), Komodo (KMD) and Bytecoin (BCN).
We focus on the two most popular anonymous cryptocurrencies in on the dark web marketplaces as well as other cryptomarket: Monero and Zcash. This is based on comparison of their privacy, anonymity and the risk factor.
Monero (XMR) cryptocurrency
Monero is a Proof-of-Work (PoW) type of cryptocurrency launched on April 2014 and is based on a CryptoNote Protocol utilizing hashing logarithm referred to as CryptoNight which makes it even more resistant to ASIC development. It originated from one of the early altcoins called Bytecoin. Monero has gained popularity among dark web users due to some of its qualities that makes some dark web venders prefer it to other crypto coins and has been in use for two years now. Unlike Zcash, Monero is older and hence not new on the dark web.
Zcash (ZEC) Cryptocurrency
Zcash on the other hand was launched on October 2016 as a Proof-of-Work (PoW) cryptocurrency using the Equihash hashing algorithm and zk-SNARK protocol that utilizes zero intelligence proofs to achieve high levels of anonymity.
According to Zooko Wilcox, the CEO of Zcash, Zcash cryptocurrency is a privacy focused digital coin which despite being new in the cryptomarket will bring revolution and set a pace on the anonymity and the privacy of its users. This is through the state of art and science called cryptography which as contributed to its popularity and market capitalization to over 2.5 billion dollars in 2018, joining the list of top cryptocurrencies.
Anonymity and privacy
Both Monero and Zcash are well known for their confidentiality in transactions. After looming speculation that Monero transaction can be traced, they have incorporated unique features such as the one time signatures based on CryptoNote protocol that makes the transaction history anonymous. However, the team is not yet tired as they are coming up with a new technology to increase the privacy of users, to be launched soon. The technology will introduce the Ring Confidential Transactions (Ring CT) which will help users hide amounts, and the transactions will also be untraceable.
When it comes to anonymity, Zcash is not very different from Monero but still remains a favorite for most users who choose to avoid any third party from accessing their transaction data. Zcashs zk-SNARK protocol system implements an ultimately untraceable encryption which masks all transaction and also protects them from any cyber threat. In comparison to CryptoNote, zk-SNARK is not accessible from anywhere and requires specific key details to allow a Trusted Set Up. This also helps avoid fraud in the blockchain.
Zcash appears to be significantly ahead of Monero on adoption curve. Most wallets can support Zcash as both Trezor and Ledger provide support. However, these two only support t-addr whose purpose is similar to bitcoin which easily provides support. This means Z-Addrs requires more wallet development than the T-Addrs.
On the other hand, Monero lacks the ability to turn its privacy system on and off due to its complicated blockchain. The making of its lightweight wallets which ensures skilled level of privacy is also complicated making it slower in gaining support with traditional mobiles apps and hardware wallets.
On the question of whether or not an optional privacy feature is a good or bad, it is yet to seen if Monero and Zcash carries the day in terms of providing higher privacy and anonymity. However, each individual has to decide which virtual currency to use based on the need and nature of their transaction.