2020 Will See Privacy Coins Get Mainstream Adoption : Monero Fix

"It's very hard to develop total privacy. It's not necessarily the case that privacy coins are completely anonymous. It's also worth noting that privacy coins -- like other cryptocurrencies -- operate on an immutable ledger," Grigg said. "This means evidence of criminal transactions will exist forever. Should someone find a way to view privacy coin transactions, any criminality found can be retroactively investigated and potentially prosecuted. We've seen that with cases involving Bitcoin from many years ago, including activity connected to the Silk Road."

"I think they're essential. I think they're great. I think we should embrace them. There's no reason why we should leak information about who we send money to. These are very interesting, and law enforcement will always complain that these new technologies are going to prevent them from doing investigations," he said. "Is law enforcement going to need to adapt to these new reality? Probably yes. If you have these privacy coins, you're going to have to work a little bit harder, and you're going to have to develop new methods to investigate people. But I don't think they really change the balance of powers between the offenders and law enforcement. There's nothing to be afraid of."

The cryptocurrency Monero has all the qualities to be adopted as the only true privacy coin. Monero also has a dynamic block size which is pretty cool from a scalability perspective. Monero was also the first privacy coin that really got mainstream adoption within the crypto space.

But privacy coins built on their own blockchains, such as Monero's XMR, still have a firm hold within the larger cryptocurrency community, even as regulators and exchanges seek to limit their adoption.

The top privacy coins (by market cap) are Monero, Zcash, Oasis Network and Secret. However, not all privacy coins are alike. Monero is an outlier in many ways due to the level of privacy it offers. Unlike Monero, Zcash, Secret and Oasis Network offer an option for transparent transactions that are published on the blockchain. The developers at Secret argue that striking a balance of transparency and privacy may be necessary for mainstream adoption of privacy coins.

On Aug. 8, 2022, the U.S. Treasury Department barred customers in the U.S. from using Tornado Cash, a decentralized mixer protocol that enables private transactions on Ethereum, sparking questions around privacy protocols and privacy coins generally. This guide will tackle the questions around privacy coins and how they work.

While regulators seem to be gradually favoring Bitcoin, at least over other cryptocurrencies, they have not been supportive of privacy coins. Several nations have imposed bans, while others have restricted access to them. In fact, many imagine that governments will soon be able to suppress privacy coins too.

Even if bans restrict mainstream access, privacy coins will still continue to exist, and so will the marketplaces to trade them. In fact, a study found that regulators seeking to ban privacy coins will find it difficult due to the decentralized aspect of the coins. Researcher Rob Gleasure from Copenhagen Business School said,

Financial authorities in the United States as well as other parts of the globe have been scrutinizing privacy coins in recent times. However, the latest Cryptwerk data has revealed that the number of businesses accepting monero (XMR) across the world has risen to 950, while 28 crypto payments processors currently facilitate XMR transactions.

At a time when some governments and financial authorities around the world, including the United States and South Korea, amongst others, are working hard to kick privacy-protecting cryptocurrencies out of existence, monero (XMR) adoption has continued to grow globally.

While Perkins Coie has explained the importance of privacy coins in its September 2020, whitepaper, authorities continue to see these digital currencies as a great tool for bad actors and it remains to be seen whether privacy coins will win this epic battle in the end.

As explained in a medium post by Dash creator Evan Duffield, while most cryptocurrency projects have no concrete plans to scale up their projects and get past the massive barrier to mainstream adoption, Dash will be able to rival the likes of PayPal and Visa by using its existing infrastructure rather than just relying on eventual technological advances in hardware and networking that might never come.

In the following, we will take a closer look at Monero and ZCash, two projects that are getting much attention as the most prominent privacy coins, and are the main competitors of Dash in this regard. In fact, Monero was launched with the idea of introducing a private cryptocurrency that aims to be a digital medium of exchange featuring intractable payments, unlinkable transactions, and blockchain-analysis resistance.

The only way we could see Zcash break out of high Bitcoin correlation and skyrocket in price is if it reaches some form of adoption, which needs to be preceded by regulatory acceptance (or at least certainty that there will be no restrictions when it comes to transacting privacy coins).

Zcash will most likely stay highly correlated to Bitcoin until the end of 2021, as there were no signs of major regulatory changes to privacy coins. However, some exchanges (such as the aforementioned exchange that delisted privacy coins) started delisting cryptocurrencies with privacy features, indicating that Zcash could possibly underperform Bitcoin. When it comes to exact price predictions, Zcash will most probably move in the price range of $180-$220 by the end of 2021.

Ransom demands are made using cryptocurrencies as a medium for payment. Cryptocurrencies are easily accessible and hard to trace. In the first six months of 2021, ransomware payments totaling $590M USD in cryptocurrency were made, more than the $416M USD reported for the whole of 2020.Footnote 17 While Bitcoin has long been the payment method of choice and still dominates ransomware demands, we assess that it is very likely that cybercriminals will increasingly demand ransom payments in privacy coins, such as Monero, to further conceal their identity and obfuscate their activity from law enforcement.

2020 was the year of widespread crypto adoption and price gains, making crypto fraudsters and those in regulatory noncompliance the prime target for enforcement actions. VASPs must adhere to local laws when doing business with their citizens. Aside from deep fines, personal liability and potential jail time loom for those who willfully disregard anti-money laundering laws in many jurisdictions.

2020 saw a flood of new crypto regulations, as well as sweeping enforcement actions against VASPs and their executives for lack of regulatory compliance. The chart below shows the widely varying levels of maturity and sophistication in AML/CTF regimes around the globe. The gaps in these regulations present avenues that can be exploited by money launderers and terrorist organizations. Specifically, the money laundering potential of crypto-to-crypto exchanges and privacy coins are not well addressed by lawmakers attempting to regulate digital assets based on the physics of fiat currency.

The Singapore branch of OKEx and the Singaporean exchange Upbit delisted privacy coins based on their interpretation of FATF guidelines in September 2019. In November 2020, Colorado-based ShapeShift also delisted privacy coins Zcash, Dash, and Monero.

The jury is still out on the ultimate impact CBDCs will have on the global economy. The development of CBDCs by different countries at varying rates poses questions about global adoption and interoperability. While the countries listed below have made strides in CBDC development in 2020, many countries still lack the legal structures to allow for CBDCs.

It appears to be a roadblock for privacy coins in general. One that will persist as long as crypto regulation is still a murky grey area. But the privacy coin sector will always have strong advocates, and right now Monero offers everything a privacy coin enthusiast looks for.

Andrew is a writer and digital marketer from New Zealand, now based out of South East Asia. Along with his work in many areas of the e-commerce space, Andrew has a keen interest in cryptocurrency, especially altcoins and projects focused on mainstream crypto adoption 2b1af7f3a8

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2020 Will See Privacy Coins Get Mainstream Adoption : Monero Fix