There are so many-branched aspects of cryptocurrencies, such as store of value tokens, utility tokens, decentralized finance (deFi) tokens and the latest rave in the form of Non-Fungible tokens (NFTs). Individuals who have not done a deep dive on the cryptocurrency exchange ecosystem would barely know privacy coins.
These coins are digital currencies that protect transactional paths and veil any attempt at knowing details of the exchange. This is cryptocurrency but with extra features of security. The digital currency gained traction because few details of both transactional parties are recorded on the ledger (although transaction details are made visible), a concept first introduced by the Bitcoin blockchain.
Privacy coins possess a technology that encrypts any activity that would make transactional information visible to outsiders. It is also established on blockchain technology. XVG, BEAM, ZEC, and XMR are a few of the handful of privacy coins, with the latter two the most popular of the lot.
The Legality of Privacy Coins
Controversy has surrounded the authenticity and the need for a private cryptocurrency and with these currencies being a major catalyst for underground activities. They have also been the main targets of white coats of the financial industry with KYC laws strung tight to squeeze out privacy coins.
Reasons Why Privacy Coins Have Failed
Since the launch tokens of these private cryptocurrencies, there has barely been any measured growth which is somewhat of a surprise even in the underground fair as there is still a big preference for the first digital currency, Bitcoin.
Neutrality to privacy
It might be difficult to wrap around one’s head but there is little bother these days about privacy concerns, at least with the teeming population. This cannot be said for the wealthy few. As much as a large percentage of the population appreciated the privacy features that the Bitcoin blockchain and other cryptocurrency exchanges like Redot.com offered, they were never prepared to go down the rabbit hole of cryptocurrency. They couldn’t care less. It took them a long while to get to grips with the concept of digital currency and would not be ready to commit themselves to another novel crypto.
The social landscape is riddled with multiple applications that would seek the permission of users to access their personal data and this request is most of the time granted without batting an eyelid. Data mining is big business in the 21st century and despite outcries from various people about big companies misusing this data for selfish purposes, these cries were brief and ended in a whimper.
The interpretation of privacy by the populace can mean that all transaction details are not revealed to their peers, friends and families which can easily be interpreted as individuals who are within the lower class and a little below the middle class. They do not care about stringent privacy measures because there is barely much to give much ado about.
Then there are the other sectors of the population who are enamored with every privacy technique to keep away big companies but do not really bother about the security that comes with private cryptocurrencies because of the price of such service.
Privacy is not smooth sailing
Privacy these days is most of the time considered as an afterthought if there is nothing tangible to protect. It is a basal instinct. When the hypertext protocol was introduced it was sparingly used for some websites but when it became very rampant and cheap to adopt and implement it is now used for every website. Https was the perfect security protocol that ensures encryption between two computer networks during communication. This feature was stealthily included in all websites and despite the big nature of the change, there was barely any reaction by users to this change. These changes were not instigated by the users either
When this is placed in sharp contrast to some privacy coins which would require more technicality than HTTPS and would require a great deal of effort from the user before it can be used. Users would rarely bother to go through that experience for additional security.
A firm “NO” to privacy coins
There is barely any reason why a large percentage of the population would want to barter in privacy coins. Of course, they would want the necessary safety measures in storing their assets but that is just it. The complexity and the price of dealing in privacy coins is a street they do not want to go through. There would be the counterargument that people are already dealing with privacy coins on the Ethereum blockchain and Bitcoin blockchain but those systems provide additional features than just privacy.
A particular coin on the Ethereum privacy system called Tornado cash leverages on the Ethereum blockchain by providing the privacy that private cryptos provide on smart chain contracts and with fewer hassles. Also when it comes to the expenses of privacy for this coin on the Ethereum privacy system, the burden is shared in-house rather than levied on users.
In parallel comparison to privacy coins such as Monero (XMR), modalities are poor, strenuous, and expensive to deal with at the moment.
Easy targets for financial white coats
There is no particular individual or organization that would love to continually be a target for financial regulators. That is the case of privacy coins right now, they have become a poisoned chalice. It took a while for regulators to get around the idea of cryptocurrencies in the traditional finance ecosystem and for the same reasons as the veiled nature of transactions.
After a handful of delistings in major countries, the governments of such nations are putting efforts to stamp out privacy coins. Unlike the forerunners of cryptocurrencies (Bitcoin and Ethereum) where there was a pushback by digital currency believers against government incessant attacks against crypto, there is little or no struggle to defend privacy coins.
For facilitators of privacy coins, it would continually be a waste of time and resources pushing an agenda like this. Things might probably change in the distant future but right now it is a firm NO to privacy coins.
