Are Privacy-Oriented Tokens In Danger?

Are Privacy-Oriented Tokens In Danger?

Cryptocurrencies are highly praised by the community for their anonymous nature. But as authorities are constantly developing strategies to regulate them what should we expect from tokens that are privacy-oriented?

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Cryptocurrencies are highly praised by the community for their anonymous nature. But as authorities are constantly developing strategies to regulate them what should we expect from tokens that are privacy-oriented?

Most governments around the world have voiced their concerns that criminal organizations and culprits of all kinds are the real beneficiaries. Money laundering and financing terrorist groups are often cited as the main threats to the global stability. Or as Steven Mnuchin says digital currencies should not fall into the hands of culprits. However, there is no way anyone can guarantee that.

So should we expect authorities to strip off cryptos of their most loved feature? Are virtual coins getting transparent and easily traceable? Undoubtedly, banks and governments would love that but what about the average crypto geek? The more speculations on cryptocurrencies future, the more privacy-oriented coins become more popular. Many projects started just to improve bitcoin’s setbacks and turned into practically untraceable digital assets. With the rise of upcoming regulations, are tokens like Monero and Dash coming to an end?

Why do we need anonymity-focused tokens?

The future of coins like the above-mentioned highly depends on the understanding that we actually need them. Despite that bitcoin claims to be untraceable and anonymous in reality it isn’t. Each transaction is recorded on a public blockchain and it is possible to access information such as location and amount of the coins transacted. Nevertheless, bitcoin wallet addresses are impossible to obtain.

Some wallets require identity verification and this makes your information vulnerable to third parties who can track your moves secretly. Perhaps the easiest way to have you funds stolen is to store them in online exchanges that provide weak security protection. Data breaches are already common in the crypto world. In other words, thanks to the hype bitcoin’s privacy is highly overrated.

Luckily, there are developers who do not like bitcoin flaws and know how to fix them. The crypto community praises Monero for its CryptoNight proof-of-work protocol. This encryption of the ledger on which Monero runs protects clients and their identities and addresses cannot be revealed. Where does a transaction start and where does it end? Nobody knows that. In addition, nobody knows how many coins a particular node hosts. Now it all makes sense why hackers convert stolen coins to Monero, right?

Monero has already covered itself with obscurity anyway. When AlphaBay, one of the largest markets on the dark web, was taken down, even authorities could not give the exact number of Monero tokens circulating in the marketplace.

Dash is another cryptocurrency that is strictly privacy-oriented. But in contrast to Monero, Dash is competing with bitcoin and litecoin in terms of public use. Dash incorporates different techniques that protect its users. For instance, PrivateSend mixes transaction flows. That means that the identification of the sender and the recipient is hardly possible. Yet, only on the Dash blockchain.

I am not a criminal, should I be interested?

Well, yes. Everyone not only the “bad guys” can utilize privacy-oriented coins. Just think how many regulations there are on commercial transactions. Private coins can help you bypass them and probably this is why they get more popular over time.

It is silly to assume that one should choose between privacy and utility when they can have them both. And Ripple and ZCach offer just that. The technologies behind those tokens are often praised by financial institutions and Ripple had already built quite a solid network of renowned names who use their blockchain products. PrivateSend, Dash’s security feature is optional, so everyone can switch it on and off anytime, according to their wish. You don’t want others to see a certain transaction? No problem, you can have it hidden.

Ryan Taylor, Dash CEO, believes that user’s safety is crucial in any case and this is where PrivateSend steps in. It automatically discourages hackers from attacking, because even if they do, fail is the only outcome. Barry Gilbert, who invests in ZCash shares Taylor’s opinion that not everything we do should be publicly available. After all, it is better some things stay private. This is especially true when it comes to money.

Another heavily protected cryptocurrency is ZenCash. Its co-founder is Rob Viglione and he has an alternative yet an interesting point of view. He says that coins that provide anonymity can help citizens in countries with repressive governments. Take Venezuela as an example, it is in the middle of a severe hyperinflation and many people use crypto assets to protect their finances. Zimbabwe citizens even pay bitcoin premiums in order to have their fiat exchanged.

Are governments going to let them be?

Authorities’ main goal is to make each transaction transparent and trackable but this may lead to a market crash because your average crypto trader does not want to be monitored. However, the more restrictions come into action, the higher the interest in untraceable coins. Well, at least this is Sheffield Clark’s opinion.

If the regulations become a common practice in the following years, maybe the key factor to define a token price would be its privacy.

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