Midnight vs Monero, Zcash, Aleo, and Railgun: How Privacy Works

We all know blockchains are powerful. But they’re usually also way too transparent.

You can think of Bitcoin or Ethereum like a public Google Sheet, where anyone can scroll through every transaction ever made.

Wallet balances, transfers, and contract interactions – it's all out there in the open.

Great for transparency? Hell yeah.

Also not so great if you wanna keep your financial activity private.

That’s why privacy crypto coins exist.

So, How Does Privacy Work In Crypto?

Most blockchains are suuper public.

Anyone can look up wallet balances, transfers, and smart contract activity. That transparency can be useful, but it also means users and businesses might end up exposing financial information they’d normally want to keep private.

That's where crypto privacy projects come in handy.

Projects like Monero, Zcash, Aleo, and Railgun all try to solve this problem – but they go about it in very different ways.

Monero focuses on private payments. Zcash lets users choose between public and private transactions. Aleo is built for private apps, while Railgun adds privacy to DeFi on existing blockchains.

Then there’s Midnight.

Midnight isn’t a privacy coin. It’s a blockchain designed to help developers build apps that protect sensitive data.

It uses something called programmable privacy.

Basically, apps can keep information private, while still revealing or proving the specific details they need to.

For example, someone could prove they passed an identity or compliance check without sharing their identity, account balance, or full transaction history.

So instead of an all-or-nothing approach to privacy, Midnight lets developers actually choose what stays private, what can be verified, and who gets to see it.

Let’s break down how today’s leading crypto privacy projects work, what each one does well, where they fall short, and how Midnight takes a different approach.

Monero ($XMR): The Cash-in-Your-Pocket Privacy Coin

When people talk about privacy coins in crypto, the conversation often turns into Monero vs Zcash – the two privacy coins with the biggest market caps.

Let’s take a look at Monero first.

Monero ($XMR) launched in 2014 and very quickly became known as the go-to coin for private payments – and maybe a little too much dark web stuff.

Monero’s goal is pretty simple: Make crypto transactions that are private by default, every single time.

To make that work, Monero combines a few clever pieces of tech:

1. Ring signatures: Hide the sender by mixing your transaction with a bunch of other transactions.
2. Stealth addresses: Create a brand-new one-time address for every payment – so outsiders can’t link transactions back to the same wallet.
3. Ring Confidential Transactions (RingCT): Hide the amount being sent, so nobody can see how much money moved.

On top of that, it uses a network privacy system called Dandelion++, a way to hide the sender’s IP address before the network sees it.

Put all of that together, and Monero behaves a lot like digital cash. Once Monero moves, it’s super difficult for anyone to trace where it came from (or where it went).

That’s why Monero often shows up at the top of any list of privacy crypto coins.

But that same level of privacy comes with trade-offs.

Monero is optimized for a single thing, and that’s private payments.

That means it doesn’t do smart contracts, and therefore can’t do anything DeFi. And thanks to pressure from regulators, some exchanges have been forced to delist Monero entirely.

So while Monero is still the king of private transactions…it probably won’t ever be a platform where developers can build private apps.

You can think of Monero as a solid steel vault door. Once it’s closed, nobody can see inside. Total privacy – no exceptions.

Monero Overview

Zcash ($ZEC): Privacy When You Want It

Zcash ($ZEC) is the other essential name that shows up on any list of top privacy crypto coins.

Zcash launched in 2016 and brought something new to the table: zero-knowledge proofs, specifically a type called zk-SNARKs.

That might sound complicated, but the idea is actually pretty simple:

zk-SNARKs let you prove something is true, without revealing the details behind it.

The network can verify a transaction is valid without seeing who sent it, who received it, or how much was transferred.

Zcash lets users choose between two types of transactions:

1. Transparent transactions (t-addresses) work just like normal Bitcoin-style transfers. Everything’s public and visible on the blockchain.
2. Shielded transactions (z-addresses) are the private option. They use zero-knowledge proofs to hide the sender, receiver, and amount.

This optional privacy model has one pretty big advantage: it makes Zcash easier for exchanges and regulators to deal with.

Users can even reveal certain transactions later if they need to prove something for auditing or compliance.

But there’s a catch – in practice, most people never use the private option.

Shielded transactions on Zcash required a lot of computing power for a long time, and many wallets didn’t support them. Because of that, most users just stuck with transparent transfers.

But Zcash has made improvements over time, including a major upgrade called Halo 2.

Halo 2 got rid of the need for something known as a “trusted setup,” making the privacy tech more efficient.

Even with this update, shielded transactions remain mostly unused, but this could change with necessity over time.

An easy way to picture Zcash is like a door with adjustable blinds.

Most of the time the blinds are open, and everyone can see through the door. But if you want privacy, you can close them shut.

Zcash Overview

Aleo ($ALEO): Private Apps From the Ground Up

Now we’re getting into the newer stuff.

Aleo ($ALEO) was created in 2024, and is part of a newer group of crypto privacy projects that focus on growing past just private payments.

Instead of only hiding transactions, Aleo is designed so developers can build apps where the data stays private.

Aleo is kinda like Ethereum, but with privacy built in from the start.

Developers write programs for Aleo using a language called Leo. That code gets turned into zero-knowledge proofs – the same tech that Zcash uses to hide and verify its transactions.

That means Aleo apps can keep things hidden, like account balances, user inputs, even parts of a program itself.

How does Aleo make this work? It splits the network into two jobs:

1. First are provers. These machines do the heavy computing work of creating the zero-knowledge proofs.
2. Then there are validators. Validators simply check that the proofs are correct, and add them to the blockchain.

The hard work done by provers happens off-chain, so that the network doesn’t get overloaded.

Overall, Aleo is a powerful idea. But of course, it still has a few challenges of its own.

Firstly, it’s a completely new ecosystem.

It’s a standalone Layer 1 chain, so it doesn’t automatically get the huge number of developers, users, and tools that networks like Ethereum already have.

Developers also have to learn its new programming language, Leo, which takes time.

So, although Aleo opens the door to fully private apps – building a whole new developer ecosystem doesn’t happen overnight.

Instead of just a door, you can think of Aleo as a private office building.

Everything happening inside the building stays hidden, but the building itself proves work is getting done.

Aleo Overview

Railgun ($RAIL): Privacy Layer for DeFi

Railgun ($RAIL) has a similar aim to Aleo.

It makes smart contracts and DeFi private – but it takes a totally different path to get there.

Instead of launching its own blockchain, Railgun works as a privacy layer on top of existing networks like Ethereum, Polygon, and other EVM chains.

How? It works like this:

Instead of moving your assets around publicly on the blockchain, you deposit them into a private pool first.

From there, you can keep using your usual DeFi like normal – but without exposing your activity.

Just like Zcash and Aleo, Railgun uses zero-knowledge proofs (zk-SNARKs) to hide the details of your transactions, while still proving that everything’s valid.

In practice, that means users can trade privately, swap tokens, and interact with DeFi apps without the entire internet being able to see their wallet activity.

To get on the good side of regulators, Railgun also introduced something called “Private Proof of Innocence.”

This lets users prove that their funds aren’t connected to sanctioned wallets, without revealing their full transaction history.

Railgun’s weakness? It still depends on the blockchain it runs on.

That means if you’re using it on Ethereum mainnet, you’re still going to be dealing with Ethereum’s gas fees and network congestion.

And since Railgun sits on top of existing chains, it mostly focuses on hiding transactions and DeFi activity, rather than enabling entirely new types of private applications.

You can think of Railgun as a privacy room inside a public building.

The rest of the building is transparent, but you can step into that room when you want your activity hidden.

Railgun Overview

Midnight (NIGHT): Programmable Privacy for the Real World

Now we get to the new kid on the block: Midnight.

Midnight is a privacy-focused L1, and the first partner chain to Cardano, and its whole idea revolves around something called programmable privacy.

Here’s an easy way to think about it:

If Monero is private cash, Zcash is optional privacy, Aleo powers private apps, and Railgun adds privacy to DeFi…

Midnight is trying to bring those ideas together into one system that's easier to use in the real world.

Midnight doesn’t force everything to be completely hidden like Monero, or leave privacy mostly optional like Zcash.

Instead, it lets developers choose exactly what stays private and what gets revealed. They call this idea rational privacy.

In a nutshell, apps can keep sensitive data hidden while still proving certain things are true.

For example, a system could prove that:

• It meets regulatory requirements
• Someone’s identity is verified
• The funds actually exist
• Taxes were reported correctly.

But the most important part is they can do it without exposing sensitive information.

Under the hood, Midnight uses…you guessed it…zero-knowledge proofs, combined with encrypted data that can still be verified by smart contracts.

This lets developers build entire apps that keep sensitive data hidden.

Overall, you can think of Midnight as a smart glass building.

The different windows can be customized to switch between transparent and opaque, depending on what needs to be shown and who needs to see it.

Optimizing for Midnight Adoption

So yeah – the tech is pretty sweet.

But Midnight’s also actively addressing another major sticking point that other projects struggle with – and that’s adoption.

Here’s what Midnight is doing to make things easier for the ecosystem:

1. Easier for Developers

Instead of introducing a whole new programming language like Aleo does, Midnight lets developers build using Compact, which has syntax that closely mirrors TypeScript.

That’s a language millions of web developers already know.

So instead of learning a whole new system, developers can start building privacy apps using tools that already feel familiar.

2. Fixing the gas fee headache

Midnight uses a token-resource model.

• $NIGHT is the main token used for governance and staking.
• $DUST is used to pay for transactions and protects transaction metadata.

$DUST is generated by delegating $NIGHT, and then it gets used as the fuel that powers smart contract operations on the network.

This helps to stop people from spamming the network, avoids cannibalizing the token, and separates token value from operational costs.

3. Selective Disclosure

As touched on above, Midnight supports selective disclosure.

That means an app running on Midnight can reveal specific pieces of information, without giving up everything. The decision the developer makes is rational, supporting their users’ needs, as opposed to forced.

What does that look like?

A Midnight app could prove that someone passed a compliance check, without revealing their identity or financial data.

That would open the door to all kinds of things that regular DeFi can’t currently do – the same things that prevent it from being able to properly compete with some traditional financial systems.

Think compliant DeFi, keeping company data private, identity systems that protect personal info, and regulated finance apps.

The key word here is compliance – but compliance without forced transparency.

4. Cross-Chain Privacy

Midnight also doesn’t have to work all on its own.

The privacy layer for multiple blockchains, not just Cardano.

So apps or assets from other networks could tap into Midnight’s privacy tools when they need them.

Midnight Is A New Approach.

The Midnight Network provides smart contracts.

You can customize the smart contracts to work with any application, and make sure it complies with local laws and regulations.

Program in privacy where its needed like protecting financial or medical information, and transparency where it makes sense.

Midnight makes both possible – instead of choosing one or the other, it makes privacy rational.

Apps can keep sensitive data hidden by default, while revealing only what is needed. Verifiability without exposing the underlying data.

Privacy isn’t all-or-nothing anymore. With Midnight, it can be tailored.

That’s what makes programmable privacy powerful.

As the world's value moves online, leaving your personal data wide open to the public internet just doesn't work.

Programmable privacy lets you protect your digital world so you can keep what’s most valuable to you safe.

Want to see how it works?

Midnight Overview

Monero vs Zcash vs Aleo vs Railgun vs Midnight