Glossary > Privacy coin

Privacy coin

What is a privacy coin?

A privacy coin or anonymity enhanced coin (AEC) is untraceable on the blockchain and protects users’ privacy and anonymity.

We often hear that Bitcoin and other cryptocurrencies are anonymous. But in fact, they are only pseudonymous. Since every transaction is public, anyone can trace what happens on blockchains.

This is the reason why privacy coins or anonymity enhanced coins (AECs) exist. It allows the user to transact anonymously as the origin and destination of the coins are obfuscated (by hiding information or mixing for example). This also makes the coins untraceable on the blockchain via blockchain analytics tools. Some well-known privacy coins are Dash (DASH), Monero (XMR), Zcash (ZEC), or Grin (GRIN).

Users should be cautious when transacting with privacy coins. Indeed, they represent a higher money laundering/terrorism financing risk than other cryptocurrencies. For example, the FATF considers that the use of privacy coins constitutes a key risk indicator.

Scorechain Blockchain Analytics platform supports the Dash blockchain. It enables users to track Dash transactions and assess the level of risk helping them be compliant with regulations worldwide.