Greetings dear steemit friends, I hope you all have enjoyed this week like I have. No doubt, it was a great opportunity for us to learn new concepts and dive deeper into the ocean of knowledge regarding cryptocurrency. Today I am going to write about Privacy Coins as it is my homework task given by dear professor @levycore. So, I won’t waste any time and let’s start.

Why do we need Privacy Coins?

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Digital assets like Bitcoin were introduced as an alternative regulatory system for conventional currencies controlled by governments. Unfortunately, because of its artificial nature, several proponents fear that there is insufficient confidentiality to protect users, particularly in authoritarian nations that forbid or ban cryptocurrencies.
It is an undeniable fact that Bitcoin provides less confidentiality than fiat currency, because it is a public block chain that might perhaps reveal the genuine person behind a public address to anyone with sufficient resources to conduct a thorough analysis of its chain. To circumvent this issue, privacy coins such as Monero and Dash were introduced and also important to deal with this problem by enabling users to send and receive anonymous assets. Since then there have been many more privacy coins.

What do we mean by Privacy Coins?

Privacy coins are a class of encrypted coins that power anonymous and private blockchain transactions by hiding their place of origin and destination. Some of the strategies employed include obscuring the true amount and address of a user's digital wallet and mixing several transactions to avoid chain analysis. But on the other hand, Bitcoin allow anyone to check public addresses and activities, which makes tracking deposits and withdrawals very easy.

Advantage of Privacy Coins:

Nevertheless, privacy coins take two separate things into account; untraceability and anonymity. Untraceability make it hard for third-parties to practically track transactions using services such as a blockchain analysis and anonymity hide identity of a person behind a transaction.

Disadvantage of Privacy Coins:

One of the major disadvantage of privacy coins is that, it is illegal to use in many countries because of its anonymity and untracebility. Governments cannot track transactions and thus, it is a danger to financial security. Moreover, hackers also invade in such systems to manipulate transactions and cause harm to assets of investors and traders.

1) Choose a Privacy Coin and perform a fundamental analysis of the coin in detail.

There are multiple privacy coins available now as I have mentioned below, you can see:
• Dash
• Monero
• Zcash
• Beam
• Grin
Among these privacy coins, I have chosen Dash to briefly describe in my homework task

DASH

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Dash was first introduced by Evan Duffield and Kyle Hagan. Initially, these two software developers named it XCoin but after two weeks, it was known as Darkcoin. In March 2015, Darkcoin was renamed again and Dash was proposed to be its identity name. It was done to portray a positive image in market. This coin was an alternative of Bitcoin as it contained anonymity and untracebility features that made hard to track and analyze transaction pathways. The Dash Core Group ensured its clients of more secure usability and protection of privacy.

Bitcoin vs. Dash

The major difference between bitcoin and dash is in their consensus algorithms. Although both of them run on Proof of Work mechanisms, but Dash is dominant as it provides an extra layer which hosts master nodes powered by Proof of Stake mechanisms. Therefore, Dash is highly rated among traders because of its easy to use characteristics and fast transactions at low costs. It uses the InstantSend factor that make near transactions more convenient and fast. Moreover, it also enables to choose whether to open transaction for public inspection or not, while Bitcoin lacks such private policy.
Dash is different from other privacy coins in terms of its design and algorithms. It is dominant over others because it has an extra layer of Proof of Stake mechanism.

Is Dash Network Secure?

This is one of the primary question that invades in everyone’s mind and I believe one has a right to search and analyze every pros and cons of an entity. So the answer to this question is not much peculiar. Basically, Dash uses two level network to make its transactions secure. The first level comprises of mining operations following Proof of Work mechanism that solves complex cryptographic glitches and more than half of the nodes should approve transaction before it can be added to blockchain. Duffield, the founder of Dash used X11 algorithm that is among the safest and state of the art cryptographic hashes in advanced cryptocurrencies.
The second level compromises of masternodes following Proof of Service mechanism where masternodes are evaluated on the basis of providing efficient services to the network. Masternodes supervise the network and also possess the ability to reject new blocks, if there is any malfunctioning in their approval. ChainLocks feature of Dashenhances the security by placing a group of masternodes that supervise new blocks after an interval of every 12 hours. This enables to protect the network up to 51% from cyber-attacks.

Where can we buy Dash?

Dash is available on following exchanges such as:
• Huobi Global
• Kraken
• OKEx
• Coinbase Pro
• Binance

Moreover, it can be traded for fiat currencies, crypto coins like Ether (ETH), Bitcoin and stable coins like USD coin and Tether (USDT).

Market Volume of Dash Coins

A total number of 18, 921, 005 dash coins can be issued, although it depends on governments that what do they decide for an allocation of 10% block rewards. If there is no allocation of this block reward percentage, then a total of 17, 742, 696 dash coins can be produced. Proof of Work consensus protocol is used for mining new dash coins in which emission rate is reduced by 1/14 or 7%, in each interval of 383 days. Miners are awarded 45% of dash coins, masternodes are given other 45% and rest 10% is reserved for future use.
Below you can see a clear scenario of Dash coin in crypto market.

Screen taken from CoinMarketCap.com

Current state of Dash Coin

Screen taken from CoinMarketcap.com

In the above demonstration, you can see that I have chosen 1Day time frame chart and the latest trends are on screen. In the last 24 hours, it is down by 1.92% and current price at 9:34 am (5th June, 2021) is $187.06 USD and trading volume of $479, 441, 606 USD. However, a maximum supply of 18, 900, 000 dash coins is available in market. Its current ranking is #32 at CoinMarketCap index.

2) Describe the steps in creating a wallet for the Privacy Coin of your choice. (Screenshot required)

In order to create a wallet for privacy coin (Dash), I will use an application of Trusted Wallet that is available of Google Playstore or apple store.

Step I

Go on google Playstore on android or apple store and search trust wallet in search bar as shown below:

Step II

Now you can see the Trust Wallet application, you can download and install it from here. I have installed it earlier in my phone so I will click on open

Step III

As I open the application, I can see the following window. Now, I have to click on ‘ Create a new wallet’

Step IV

By clicking on ‘Create a new wallet’, following window has opened. I will click on privacy terms & conditions.

Step V

As I agree to the terms and conditions, this application provides me an option to back up my wallet if in case of recovery. I click on the tick icon and continue

After I click continue, I am provided with 12 words that have a sequence. I have to remember this particular sequence in order to access my wallet. These words are private and application doesn’t allow to take a screenshot of it. But once you reach till here, you can also see these words in your application.

Step VI

As soon I enter the correct sequence of my recovery words, I land on the main page of Trust Wallet Application. Trust wallet is a multi-coin wallet, but I have to create a wallet for Dash coin only. So I will click on the right top corner of the screen showing filter icon.

Step VII

Now I can see many coins for which I can create a wallet, I will scroll down and search for Dash Coin. I will click on it.

Step VII

Below you can see that I have created a wallet for Dash coin.

3) Explain the reason you chose the Privacy Coin. (State the advantages and disadvantages)

Dash coin is one of the most famous privacy coins that are untraceable and anonymous as compared to Bitcoin or other cryptocurrencies. But we cannot deny the fact that it has some disadvantages also. Now I shall discuss both good and bad attributes of Dash coin, without wasting any moment.

Advantages of Dash Coin

• The transaction speed of Dash coin is much more than Bitcoin.
• The transaction costs are very low.
• Dash coin provides an option of InstantSend or InstantX for near and fast transactions.
• They are untraceable and anonymous as compared to Bitcoin or other digital currencies.
• It has an extra layer of security that is, Proof of Stake mechanism to make transactions more secure.
• All the operations are carried out on decentralization principles rather than the voting system. It also protects from forks (multiple divisions), when it is a component of network participants.
• Use Dash wallets allow our funds to be synchronized on different devices and platforms with same public key and same amount. This feature is not provided by other privacy coins.
• As a user of Dash coins, we can suggest our ideas and recommendations to Decentralized Autonomous Organization (DAO), it can enhance the systems by improvements proposed by clients worldwide.

Disadvantages of Dash Coin

• Due to its anonymous characteristics, they are more prone to be hacked.
• The transactions are untraceable, so many countries ban the use of such privacy coin because it is a danger to their financial security.
• Some software developers and crypto experts claim that these coins are traceable if the masternodes are controlled.
• It has less users worldwide due to its illegality in many countries.
• The Financial Action Task Force has not yet announced a solid policy for exchange of such privacy coins.
• There are also some controversies found about the decentralization of dash coins because the master nodes are controlled and operated by the core team, here arises a question on the legitimacy of decentralized nature of dash coins.

Conclusion

In this modern era of digitalization, it is yet hard to completely dominate the conventional financial systems. It is because money transactions all over the world have some legitimate pathways through which they circulate. These pathways enable to track and maintain record of transactions. But some users ought to seek privacy, so Dash coins might be appealing for them. Dash coins are untraceable as claimed by their core team and anonymous also. Moreover, it also provide secure and instant transactions in only 1 to 3 seconds.
The major hindrance in use of such coins is that governments are reluctant to adopt them because it is difficult to trace and cause harm to the financial security. Although, security exchange commissions are exploring strategies that are compatible to use of privacy coins. But some reports claims that, use of these privacy coins can play a role in money laundering, illicit activities and terror fundings. It also points towards the danger of criminal and illegal dealings. Due to these harmful aspects, it is not yet legal in many countries.