TraderTraitor.com · Field notes · Field note 03

Privacy coins: what they hide, and what they don't

Bitcoin and Ethereum are glass houses: every wallet, payment and balance is public forever. Privacy coins pull the curtains. Here is how much each one really hides, what still gives people away, and why the walls are closing in.

At a glance

HiddenPartly or only if you choosePublic

Coin	Who sent it	Who got it	How much	Private by default
Bitcoin, EthereumFor comparison
Monero (XMR)Ring signatures and one-time addresses
Zcash (ZEC), shieldedZero-knowledge proofs, like Tornado Cash
Zcash (ZEC), transparentThe see-through mode many people still use
FiroBurns coins and re-mints them with no history
DashOptional mixing, similar to Bitcoin CoinJoin
RailgunA privacy layer for tokens on Ethereum

Monero is the only major coin where every transaction is private, which is also why it is the one regulators and exchanges push back on hardest. With Zcash and Railgun, privacy is real but optional, and the crowd you hide in is only as big as the number of people who switch it on.

What they don't hide

The way in and the way outBuying a privacy coin on an exchange means showing ID. Selling it for dollars means showing ID again. The private part sits in the middle, and both ends are on record.

The swap itselfSwapping Bitcoin into Zcash or Monero, on THORChain or anywhere else, leaves the Bitcoin side fully public. Analysts can see money go dark and where it went dark.

Timing and amountsSend 4.37 coins in and take 4.37 out an hour later, and the match is easy, however strong the maths in between.

Your internet connectionThe coin can hide the payment while your phone, IP address or wallet app still leaks who you are.

PeopleMost cases are cracked through mistakes: reused wallets, a screenshot, an exchange account, a brag in a chat. The coin keeps its secret. The person rarely does.

What they do protectYour salary, savings and spending from being read by anyone with your address, from nosy contacts to thieves picking targets. That is why ordinary people use them.

Why this matters for the big hacks

Stolen Bitcoin and Ether can be watched forever, which is why most of the $6.4 billion taken from Binance on 29 October is still sitting in plain sight on our FBI address list. A privacy coin is the one place the trail can actually go cold. THORChain added native Zcash swaps in October 2026 and has shown Monero working on a test network, which puts a cross-chain door into the dark within reach of anyone who uses it, hackers included. THORChain has been paused since 31 October after a glitch, which has slowed the Binance laundering. See the money trail.

Where the law is heading

2023–2024Big exchanges delist Monero in many markets, including Binance worldwide and Kraken in Europe.

Mar 2025The US lifts its sanctions on Tornado Cash, but the people who build privacy tools still face prosecution. How Tornado Cash works.

Oct 2026THORChain launches native Zcash swaps.

Jul 2027EU rules bar regulated crypto firms from handling privacy coins or anonymous accounts.

Holding a privacy coin is legal in most places today. Using one to hide stolen money is not, anywhere. Rules differ by country and are moving fast, so check where you live. Nothing here is legal or financial advice.

Sources: Cointelegraph on the EU 2027 ban, ForkLog on the EU rules, THORChain blog, including its Zcash launch and Monero test posts, crypto.news on the THORChain pause, TRM Labs on the Binance hack.