Privacy coins are simply coins that let you transact privately. Peer-to-peer transactions are not always private. With a public ledger like Bitcoin or Ethereum, transactions are open for the world to see. Anyone who knows your public address knows how much crypto you hold and where you’ve sent them. Privacy coins help address this problem by hiding 3 key information: the sender address, the receiver address, and the amount of transaction.
Beldex privacy coin utilises the Cryptonote privacy protocol to anonymize transactions. It uses three key elements of cryptonote namely,
Ring Signatures: Ring signatures are used to obfuscate the sender, where the sender’s input is mixed with inputs from many others. Thus the sender’s identity is obfuscated.
RingCT: Ring Confidential Transactions make it possible to verify the inputs and outputs in a ring transaction. Thus, the amount sent by the sender is obfuscated.
Stealth Addresses: Stealth addresses protect the identity of the receiver. The stealth address is an integrated address that can be shared with the sender to receive funds, but doesn’t compromise the receiver’s identity. Funds sent to the stealth address are received at the main address.