This article was inspired by the Cointelegraph which article I read yesterday titled: “Is Bitcoin’s Increasing Anonymity a Threat to Privacy Coins?”. My post today is not written as a response to it, nor is it an attempt to debunk it. I disagree with the author a little, but I still think that he wrote a good article. It made me think for myself – which is exactly what good articles should do.
The article generally takes a dim view of the future of privacy coins. My opinion is the opposite of that. Let me tell you why, and then you can decide for yourself.
The thrust of the author’s main arguments is twofold:
- Bitcoin is becoming more private and will thus render privacy coins irrelevant.
- Government regulations against privacy coins may stifle their use.
It is correct to say that Bitcoin is becoming more private. Bitcoin has always been anonymous by design, though it is quite possible to link an identity to an active BTC address if you have sufficient resources and time to do so. The fact that Satoshi Nakamoto has never been publicly linked to his address demonstrates that one can remain anonymous with BTC.
BUT: the reason Nakamoto can remain anonymous is that he isn’t using his BTC, it lies dormant. Rest assured that if he ever did move his coins, they would immediately be flagged by a large number of organisations who would follow them and attempt to trace them back to his real identity. For this reason, third parties have been making BTC more anonymous to use, specifically through mixing services. The Cointelegraph author mentions other future upgrades to BTC which may make it more anonymous, though I don’t necessarily agree with him or think that those running BTC nodes will agree to implement them.
Either way; increased privacy for BTC could mean that privacy coins are no longer required, especially once mixing services are more freely available e.g. they are integrated into most BTC wallets by default.
Unfortunately for BTC, I don’t think that it has the ability to replace privacy coins in that way, and too his credit, the Cointelegraph author also expresses his doubts and labels this “a worst case scenario”. A good privacy coin (such as Monero, ZCash or PIVX) is built for privacy from the ground up. It is designed for zero-knowledge transactions and complete anonymity. Its blockchains don’t store data that can compromise the identities of its users. In contrast to this, the Bitcoin blockchain stores everything to do with inter-party transactions: wallet addresses of both the senders and recipients, transaction times and transaction amounts. Adding privacy onto Bitcoin is like installing an after-market sunroof in a car: sooner or later it is going to leak.
I don’t think privacy coins ever need to worry about BTC becoming a viable threat to their core function.
Regulation of Privacy Coins:
There are moves to ban privacy coins. Some countries have already banned them, others have proposed doing so. There are even those who wish to find a way of tracing privacy transactions.
To me this is laughable.
As long as there is just one safe place to host the minimum number of nodes for such coins to run, they will remain able to operate. I wish to go on record as saying that there will always be such a place. Even if places like Malta or Liberland were to decide against allowing them (which they almost certainly won’t) then there will always be a North Korea, an Iran or some other anti-Western government country which will do so just out of spite. With geopolitics in its current tumultuous state, you may even find that much larger players such as Russia or China become willing to adopt such a stance on principle.
All that is then required is something such as a VPN or the Tor network – which will effectively allow anyone to maintain access to their privacy coins of choice.
I said this recently, and I’m saying it again (because I have seen a lot more of it since then): Don’t let your government get inside your head!
Far too many crypto enthusiasts (especially American ones) are still locked within the prisons created in their own minds by government propaganda.
Slow down and listen to me carefully: if you are afraid of what your government may do to you if you use cryptocurrencies in a way that it does not approve of, then you have a perception problem.
I tell you again: your government can only control your crypto activities if you allow it to!
It does not matter to me if my government bans privacy coins, I will still use them. Obviously you mustn’t be stupid about it – don’t use them in the open unless you are particularly seeking the publicity that government prosecution may bring. but use them through a VPN or similar service and you should be just fine.
No government has the power to fight decentralised entities! Isn’t BitTorrent still functioning? Isn’t ThePirateBay still up and running after numerous government attempts to shut it down? The fact of the matter is that the government has no way of fighting everybody at once. Those examples don’t even run on blockchains! Government can’t target you if you fail to comply with it’s unjust regulations.
I remind you that you have no moral obligation to side with your government against crypto. Any law written to limit the individual from using his or her own money on a decentalised, internet-based platform is blatantly an unjust law. It is a law created to prevent the common man from exercising his God-given freedoms. Such a law is not right!
In the same way that cannabis users have ignored government regulations the world over, so cryptocurrency users must do so too. Unlike cannabis users, we have the anonymity of blockchain technology on our side to protect us, especially when we use privacy coins. That is what those coins were designed to do! You have nothing to fear from government in that regard.
Even if government chose to prosecute a few people for this “crime”, they would find it extremely difficult to do so. It takes a lot of money and other resources to build up sufficient evidence. The amount of data which they would have to sift through and attempt to correlate is immense. While the US does have such data processing ability, even it would struggle. I foresee that a few unlucky persons will be prosecuted, just to make an example of them, in much the same way that the occasional Napster user was prosecuted in the past. The difference between using crypto and using Napster is that crypto is not stealing from anybody and so it is not criminal to use it – no matter what your government may say to the contrary. Instead, they want you to stop using crypto so that they can continue to steal from you by forcing you to use their fiat money. I very much doubt that privacy coins will be successfully targeted by any prosecution attempts. Theoretically it would be semi-possible, though information would be fragmented at best and would prove very difficult to base a case on.
For the reasons stated above, I believe that privacy coins will always have a place in the crypto market. In fact: I believe that privacy coins will become ever more popular as people steer away from their corrupt governments. Who cares if a few centralised exchanges ban privacy coins? The future of crypto exchanges lies in DEXs – decentralised at their core and virtually impossible to regulate successfully. I hold a few privacy coins and I am very bullish on them in the long-term. If anything, I will be increasing the percentage of my crypto portfolio which is held in privacy coins.
Authorities are scared of cryptocurrencies and they are especially scared of privacy coins. Zero-knowledge proofs are a nightmare scenario for a system which links an identity to every cent moved and which seeks to carefully control and manipulate the supply and value of money in its favour. For this reason we have an obligation to ensure that centralised entities lose their stranglehold over the money supply and that we regain the freedom to transact freely with one another. Who gave anybody the right to take that away from us in the first place?
Make sure you have no prisons in your mind. Forget about Big Brother and the monsters which he tells you are under your bed; he is lying to you. The real monster IS big Brother and the only thing he is really afraid of is YOU!
Now decide for yourself.
Yours in crypto
“The secret to success: find out where people are going and get there first”
~ Mark Twain
“Crypto does not require institutional investment to succeed; institutions require crypto investments to remain successful”
~ Bit Brain