Explained: What are privacy coins, why has their adoption been slow?

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The world of cryptocurrencies is evolving at a breakneck speed. Newer coins and tokens with additional features keep getting introduced every now and then. However, not all are able to leave an impact.

Privacy coins are one such type that has so far seen less-than-expected adoption.Privacy coins were introduced to keep user transactions anonymous leaving no trace of how the money moved through the network. This makes tracking transactions difficult and can be used to keep financial activities under cover.But what’s so different about privacy coins? Many people believe that most cryptocurrencies offer a great deal of anonymity and privacy. While this is true to some extent, it is not all that hard to reveal a user’s identity.Take Bitcoin for example.

The legacy coin’s blockchain is public. It provides a certain level of anonymity as the transaction record will only show a user’s public wallet address. However, with the right tools and know-how, anyone can link a person’s wallet address to their identity.

And, if one is using a centralised cryptocurrency exchange, the person will need to go through the Know Your Customer (KYC) process, which reveals identity to the exchange.Also Read: Explained | What are hard forks and soft forks in blockchain?Keeping this in mind, many cryptocurrency traders felt the need for a coin that completely shields a person’s identity. This is where privacy coins came into the picture.What are privacy coins?A privacy coin does exactly what its name suggests. It obfuscates a user’s identity and other transactional information that can be used to identify them.