How Do Privacy Coins Attempt to Solve the ‘Tainted Coin’ Problem?

The 'tainted coin' problem arises when a cryptocurrency unit's value is diminished due to its association with a publicly known illicit transaction. Privacy coins solve this by obscuring the transaction history by default.

By hiding the sender, recipient, and amount, all coins become indistinguishable from one another. This ensures complete fungibility, as no coin can be identified as having a 'bad' history.