THE CASE FOR PRIVACY COINS

Written by: Daniel Russo

It has been a massive bull run for cryptocurrencies throughout 2017, with the only major selloff occurred around Christmas. We also saw a massive influx of retail investors near the year end who were also inexperienced and sensitive to price volatility. Quite frankly, I believe many of them would be bag holding for some time. For this reason, the trend for cryptocurrency in 2018 is uncertain. My belief is that privacy coins like Monero, Verge and PIVX would be more than likely to see a rise in this coming year.

Monero runs an open-sourced protocol known as CryptoNote, which is its primary source of anonymity. Most cryptocurrencies use an unchanging signature when verifying transactions, whereas Monero’s CryptoNote uses ring signatures, which is similar to a joint bank account with multiple signers, but with the actual signer remaining unknown. A one-time spend key -- officially known as a stealth address -- is generated by the sender of XMR (Monero’s coin), with the recipient being the only party who can detect and spend those funds. In other words, the transaction isn’t linkable to the sender, making it an attractive option for those seeking anonymity and privacy.

My belief is that privacy coins would be more than likely to see a rise this coming year.

Verge, which is possibly the best-performing cryptocurrency in the entire space, is another key player. Between Dec. 31, 2016 and Dec. 23, 2017, Verge’s coin (XVG) increased in value by more than 1,500,000%. Verge’s methodology is that it relies on Tor and I2P networks in order to make IP addresses untraceable. Furthermore, its Simple Payment Verification technology ensures transaction settlement in around five seconds, which is far and away better than many of its peers. With a number of secure mobile wallets already being offered, including the Tor Android Wallet, it’s clearly a coin that’s making a lot of noise.

Governments and central banks became more aware and wary of the Blockchain and Fintech innovation, with China outright banning exchanges and ICOs, and the US proposing a Bill which allows the IRS to access investor’s private keys and track their funds. Privacy coins are less vulnerable to government regulations, meaning if governments were to put additional restrictions on major coins like Bitcoin, Ethereum and Ethereum Classic, we can expect a massive shift of market capitalization to privacy coins. Despite the overwhelming demand for bitcoin, 99% of bitcoin purchases are for speculation purposes. It is too slow and terrible at scaling for any substantial practicality. Privacy coins such as Monero have much faster transaction speeds and would be more meaningful as a medium of exchange, even if it be for tax evasion or other illegal underground activities. Nevertheless, this makes a strong case for an organic increase in the value of privacy coins in 2018 and beyond.