Privacy Coins

Reasons for Privacy

While the public perceives that anyone intending to maintain their funds privately must be doing something illicit, this is not always the case and a generalization cannot be made.

Individuals whom have amassed large sums of crypto-assets, available to view on the public blockchain, can be targeted BY others looking to undertake illicit activities (i.e. theft). For that reason, among other (legally), a generalization of “privacy=illegal” cannot be made fairly.

History of Privacy Coins

This hole found in the crypto-market was quickly filled by aspiring privacy coins. DASH was created as fork of the Bitcoin protocol, Bytecoin came into existence and then saw its price streamline next to zero. The latter gave birth to Monero via hard fork, which has by far been the most successful as proven by studies and history.

Laws & Regulations

The first statement made in this journal does have certain merit if funds are never transferred from that wallet into an exchange account (or any platform) that has undertaken KYC. Regulations outlined by the FATF have required exchanges to perform stricter KYC and identification information to be attached to all transfers.

For aspiring ‘HODL’ers, a crypto purchase will likely be performed through an exchange. Even if that individual then sends the funds to a cold storage wallet, that wallet will be known to have been linked to that exchange account and hence that person.

For existing ’HODL’ers, as Bitcoin is not widespread for everyday use and is subject to high volatility, individuals wishing to use their capital gains would need to cash out in some sort of way and that, more often than not, requires an exchange that requires KYC.

The Future of Privacy Coins

In general, the cryptocurrency market has mainly moved in tandem with Bitcoin reigning above them all. As any market matures, sectors start to emerge and decouple; one of them will become privacy coins.

As regulations clamp down on anonymity and turn blockchains into ‘mostly’ identified users. Those seeking privacy will likely flock to privacy coins and with that boost of demand their price can appreciate.

Whether exchanges will keep them listed or not is another story and that’s a decision that may be enforceable by regulations.

Which?

There are multiple privacy coins, with the most popular one being Monero (XMR). Some have turned from a privacy coin into ‘privacy on request’ for enterprises such as DASH (originally named XCoin & DarkCoin). Others have been found to be often traceable such as ZCash.

The same study that found ZCash to be somewhat traceable claimed that Monero is in fact confidential and untraceable which puts it up for a “double win”. Why double? Because it has the first movers’ advantage; most individuals know Monero as THE privacy coin so if they are rushed into a decision XMR would likely be their choice.

Disclaimer: None of the information stated in this article/journal shall be taken as financial advice or a recommendation under any circumstance.