Private Cryptocurrency: What Does It Mean? Types Of Private Cryptocurrencies

Last night, crypto investors got a shock of their life, when news for a proposed cryptocurrency regulation bill scheduled for the winter session of the parliament surfaced.

Reuters

Also Read: How India's 'Ban' On Cryptocurrency Will Affect You, If You Have Money In Bitcoin Or Ethereum

The reports highlighted that they were doing this to ¡°prohibit all private cryptocurrencies¡± while providing certain exceptions for the ¡°promotion of the underlying technology and its uses.¡±

This news contributed to the tumbling of crypto values across the globe, including Bitcoin¡¯s which dropped to $55,460.96. Ethereum fell by 0.86 percent to trade at $4,167.

This made most of us think, what does the government really mean by ¡®private cryptocurrencies¡¯? Isn't every crypto, based on its blockchain nature, private to boot? However, a little digging offered a bit more clarity to this kerfuffle.

Reuters

Is Bitcoin a private cryptocurrency?

According to an article on Investopedia, Bitcoin, Ethereum and other popular cryptocurrencies, even though they promise full anonymity, it cannot be guaranteed 100 percent as most blockchain transactions are recorded on the public ledger.

This makes for the cryptocurrency to be easily tracked by government agencies. However, the bill could be directed towards cryptocurrencies that put greater emphasis on anonymity.

Also Read: India To Soon Ban Mining, Holding And Trading Cryptocurrency With New Law

What are private cryptocurrencies?

There are some selected privacy-oriented cryptocurrencies that promise to offer enhanced security features, such as hiding the identities of the person transacting as well as hiding the transactions entirely, making them untraceable.

Such cryptocurrencies use proprietary technologies to completely eliminate any traces of the transaction, the participants or the amount transacted.

Reuters

Examples of private cryptocurrencies

Some examples of popular private cryptocurrencies include Monero -- a crypto that uses ring signatures and stealth addresses that hide identities of sender and receiver and even has abilities to hide transaction amount, or ZCash that uses a crypto tool dubbed Zero-Knowledge Proof allowing participants to hide their online address from others, along with hiding transaction amounts.

Some other examples of private cryptocurrencies offering similar services include DASH, Horizon, Beam and Verge.

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Private cryptocurrencies can cause trouble

The completely private nature of such cryptocurrencies means that it can be used by criminals for tasks such as money laundering or making illegal transactions, allowing authorities to have absolutely no control over it, and this could, by extension, be a threat to national security.

Also Read: Google Bans Fake Crypto Trading, Mining Apps From Play Store

While there is no clarity on what the bill proposal means exactly when it says private cryptocurrencies, we should take this with a grain of salt. However, if this actually is the case, and you¡¯re not transacting using these ¡®private cryptocurrencies¡¯, you should be fine for now.

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