Definition:
A privacy coin, as its name implies, is a type of cryptocurrency which hides data about its users. Some of the information that privacy coins obscure includes user identities, location, and wallet balances. While privacy coins use the same blockchain technology as other cryptocurrencies, they use various methods to protect senders and receivers during transactions.
Explanation:
Privacy coins were developed to address the flaws of other cryptocurrencies, such as Bitcoin. While Bitcoin uses public keys, which cannot be linked to real-world identities, all transactions are recorded on a public ledger. This makes it possible to trace transaction details, such as the amounts and the origin of the Bitcoins.
Privacy coins use different technologies, such as stealth addresses and ring signatures, to conceal transaction details. Thus, making it difficult to trace the history of transactions. Some of the most popular privacy coins include Monero, Zcash, Dash, and PIVX.
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