Privacy Coins and Their Future
Cryptocurrencies were positioned as anonymous money, not controlled by centralized authorities. But in practice, things turned out quite differently. While digital money was something like an exotic hobby of a narrow circle of people, did not have much practical use and was used quite sharply, this was completely true.
Despite the transparency of the blockchain, it was almost impossible to find the owners of wallets. Single voices of specialists who questioned the possibility of maintaining incognito in the blockchain were not heard at that time.
Now the situation has changed radically. Deanonymization of users has been greatly simplified. Several factors contributed to this at once: the increased number of users and their activity, the improvement of the technical and methodological base for the study of large data arrays, and financial interest from governments.
The first sign was the successful investigation of the activities of the Silk Road trading platform in 2011. In 2021, hackers successfully attacked and disabled the computer systems of the Colonial Pipeline. The attackers demanded a ransom of 75 BTC. However, the FBI was able to trace and get back more than 63 BTC.
Former prosecutor Katherine Hawn claims that the operation became so successful thanks to the use of cryptocurrency. If attackers used the services of the traditional financial system, it would take much more time. Actually, it is the transparency of the blockchain that largely contributes to the loyalty of the authorities to Bitcoin.
Online privacy – myth or reality?
That is, the opinion about the privacy of cryptocurrencies is nothing more than an established delusion. Moreover, there are many projects that set themselves directly opposite goals. In particular, the protection of copyright and related rights or property rights to any object by tokenizing the intellectual activity product itself or any documents is hardly possible without disclosing the name.
Although this is not the case for some coins, they position themselves as completely private. On such networks, transactions are either untraceable or impossible to link a wallet address to a specific person. The most famous and popular privacy coins are Monero and ZCash. That is, after converting BTC to XMR or ZEC, the electronic trail is interrupted.
Is there a future for private coins?
Confidential cryptocurrencies are in a difficult situation. They are still available on centralized cryptocurrency exchanges, but the number of such sites is decreasing. Cryptocurrency exchanges are becoming more cautious about private coins, and this trend is intensifying.
The continued use of private coins will be difficult if crypto regulation continues to tighten, especially with regard to KYC/AML procedures. Investors also worry about the risks associated with investing in confidential assets.
Despite all the difficulties, there is a future for confidential coins, but it is unlikely to be cloudless. The XMR price forecast based on the technical analysis of the chart remains moderately optimistic, but it is actually impossible to predict further developments.
The authorities are not enthusiastic about the existence and use of private coins. Their regulation may change at any time. In some countries, private coins are already illegal. The trend already exists, but has not yet become global.
As long as user convenience and demand for private coins remain low, perhaps regulators will look at private coins through their fingers. As soon as the popularity of such assets begins to grow and seems threatening, regulators will immediately begin to act.
The risks and possible consequences of investing in private coins remain unpredictable. If you are still considering investing in such coins, be careful and follow the news. It is possible that one day you will no longer be able to use your coins.
