Cryptocurrencies that enable anonymous digital payments are referred to as privacy coins. Bitcoin was seen as a privacy coin when it was first introduced, and it found application as a means of payment on numerous dark web marketplaces. However, due to the increasing integration of cryptocurrencies into the existing state payment systems, regulatory requirements, e.g., KYC or as per Anti Money Laundering Systems, led to the weakening of anonymity in the Bitcoin ecosystem.

Transactions with Bitcoin are therefore not anonymous, but only pseudonymously. Therefore, an attempt is being made to expand the pseudonymization present in the Bitcoin ecosystem to make it as completely anonymous as possible. The beginnings of privacy coins and digital cash can be found in the history of crypto anarchy and cypherpunks.

Perception
Privacy coins thus represent a subtype of cryptocurrencies that make it more difficult to trace coins and, as a payment medium, restore fungibility similar to that of banknotes. 

Privacy Technologies
To ensure the highest possible anonymity of payment transactions based on public DLTs, various, sometimes competing, technological approaches are currently being developed. The development towards higher protection of the privacy known from Bitcoin is often compared to the development from the original HTTP protocol for web browsers to HTTPS, which is common today.

The following privacy technologies are currently being tested;

1. Coin Join
2. Confidential Transactions
3. Stealth Addresses
4. Ring Signatures
5. Zero-Knowledge Proofs
6. Mimblewimble
7. Dandeloin++
8. Taproot + Schnorr Signatures

Criticism
The anonymization methods described can all contribute to significantly improved privacy. However, the degree of anonymity gain is strongly dependent on the respective framework conditions e.g., B, the proportion of anonymous transactions in the total number of transactions made. 

The technologies used in privacy coins have a comparatively high level of complexity and are therefore prone to programming errors or bugs. In addition, privacy technologies deliberately make traceability on the blockchain more difficult, which can contribute to the fact that attacks on the respective crypto ecosystem are difficult to detect. 

References;
1. Privacy Coin