The Elephant in the Room
The state of financial privacy in 2020
The state of financial privacy in 2020
The erosion of personal privacy is gaining momentum since the coronavirus pandemic took hold. Worldwide, there have been numerous calls by governments and social commentators to increase the surveillance of citizens in hope of controlling the virus. Corporations such as Google and Apple, along with countries such as Singapore, Germany, Belgium, USA, and South Korea have been utilizing smartphone data in different capacities to monitor the movements of citizens.
Many believe the implementation of new surveillance measures will calcify and become the new norm, setting precedence for further encroachment.
Mainstream media has also begun supporting the notion of increased surveillance to serve social and financial needs. A recent Bloomberg opinion piece discussed the need for increased surveillance, pointing out the financial system we operate within is fractured and inefficient when dealing with wide spread social and economic problems.
Once again, government over-reach of citizens’ privacy is a considered solution to our problems.
Countries such as Sweden (which is expected to go entirely cashless by 2023) have been leading the charge in moving to a cashless world, and in Australia the government is preparing to ban cash transactions over ten thousand dollars in order to increase monitorization.
This road to a cashless society is being sped up by the coronavirus pandemic. There is correlation between countries where ‘cash is king’ and a high number of coronavirus infections. Many retail stores are now too afraid to accept cash due to possible virus transmission, with some outright refusing to transact with cash.
The erosion of privacy, and the gradual transition from cash to digital financial transactions leads us to murky waters. Will we be able to conduct private financial transactions five to ten years from now?
Throughout the past decade, unorthodox individuals turned to Bitcoin in order to transact privately. This led to the inception of popular online darknet markets such as the Silk Road. However, many of the darknet markets proved to be unreliable and short-lived. It soon became apparent to Bitcoin users that Bitcoin is not private, and many of those conducting transactions in relation to darknet markets were identified and prosecuted.
Blockchain analytic companies such as Chainanalysis gained traction and suddenly Bitcoin tumblers were found to be ineffective. Blockchain analytic companies take advantage of Bitcoin’s transparent blockchain, analysing data and tracking transaction outputs. The blockchain analytic company then sells this information to cryptocurrency exchanges and government organisations so they can link Bitcoin addresses to specific users. Many Bitcoin advocates tout Bitcoin can be used privately via the use of newer tumbling technologies, however this is a somewhat arduous process with no guarantee of its effectiveness. In December 2019 Chainanalysis demonstrated how they tracked transactions mixed via Wasabi Wallet that were associated with the PlusToken scam. Tumbling also leads to the possibility of coin taint, whereas certain Bitcoin may be perceived to be less valuable because they can be identified as being associated with nefarious activities, and as a result exchange services may confiscate coins when a user attempts to sell them.
While Bitcoin holds many desirable characteristics of sound money, many prominent figures within the Bitcoin space have repeatedly discussed on the need for default privacy and fungibility. However, as was seen in previous years’ block size dispute, the issue of privacy will come with great lengthy debate as stakeholders attempt to reach a consensus that does not impact upon the characteristics of Bitcoin.
As change within the social and financial landscape continues to accelerate, those seeking financial privacy may turn to Monero.
Monero is the elephant in the room.
Monero is a cryptocurrency similar to Bitcoin and shares many of the same characteristics of sound money, however it also provides default privacy. Unlike other privacy focused cryptocurrencies, privacy isn’t opt-in, so all transactions and wallet amounts are unknown and indistinguishable from one another. Every unit of Monero is valued equally as no matter its history. This allows Monero to be truly fungible, and eradicates any possibility of coin taint. It has proven this in a number of cases. For example, exchanges have been hesitant to list Monero due to KYC/AML compliance issues it raises because it is impossible to determine transaction history.
If Monero provides financial privacy solutions, why is Monero being ignored?
Firstly, while most deem privacy to be important, many are yet to find it necessary to adopt privacy technologies. There are many easy to use privacy solutions such as Signal or DuckDuckGo, however these are not widely used as users opt for convenience instead. As surveillance increases and data collected is harnessed to marginalize or punish users, it is like that privacy technologies will become extremely desirable. Additionally, acquiring Monero can be difficult or inconvenient for some, as cryptocurrency exchanges must comply with laws and regulations, and may perceive it to be a risk listing an untraceable cryptocurrency. This also leads to lower liquidity than other cryptocurrencies.
Monero remains a community driven project. Public figures such as John McAfee and Crypto Vigilante continue to advocate the use of Monero ahead of Bitcoin. Due to its humble and open-source nature, Monero isn’t widely promoted even though it maintains the third largest cryptocurrency community on Reddit after Bitcoin and Ethereum.
In respect to the technology, Monero’s hashrate has steadily been increasing over time, and the number of daily transactions taking place on the Monero blockchain are higher than ever. The Monero Research Lab continues its research in order to improve the protocol. Over the past few years these improvements resulted in cheaper transaction fees, and enhanced scalability and privacy.
In just a few years from now, it is extremely likely traditional financial systems will not provide the capacity to transact privately. Banks will be required to ask questions regarding why certain transactions took place, and recorded transaction data will be sold to third parties. As the erosion of our privacy continues to accelerate, it won’t be long until Monero gains the use and recognition it deserves, and price reflects this.
Monero is what people think Bitcoin is.
More information regarding Monero can be found at:
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