The Ultimatum As To What Government Regulation Means For Privacy-Focused Cryptocurrencies- Part 1
Many crypto investors are questioning the regulation of cryptocurrency. Here is a discussion to highlight why it is considered a danger for the investment.
The Science Behind Crypto Investments
Most of the crypto investors ask a popular question which includes what is the idea behind the government regulation for privacy-focused cryptocurrencies. The crypto ecosystem must be widely acknowledged due to its security and robust character of the underlying technology. Based on the blockchain it comes with private keys stored in decentralized ledgers making it difficult for hackers to get access to these coins. Therefore here starts the need for cryptocurrencies which are based on a technology that holds the promise for the future. Here is a compelling note on the necessity of government regulation for cryptocurrency investment.
In the cryptocurrency ecosystem, the drumbeat of government regulation for these cryptocurrencies becomes louder as what do current developments mean for coins focused on user privacy? It was observed that in recent times, governments and regulators around the world have highlighted the utility value of Bitcoin and cryptocurrencies to criminals. Thereafter, for example, Treasury Secretary Steven Mnuchin recently commented that he wants to make sure that cryptocurrencies do not fall into the hands of bad guys. Therefore their attention is expected to make cryptocurrencies transparent so that consumers and businesses are comfortable with using them. Hereby this comes as good news for institutional and business investors whereas they may be a setback for privacy-focused coins that have enhanced or in some cases doubled down on bitcoin’s privacy features.
In this case does regulation and increasing transparency in the Bitcoin ecosystem spell the death knell for privacy-focused coins? It is therefore more specifically should investors bother to invest in such coins given the prospect of regulation that might strip them of privacy features?
Why Is There A Need For Privacy-Focused Coins?
It is therefore to understand the future of privacy-focused cryptocurrencies where it is first important to understand the need for such coins although it claims to be anonymous, and Bitcoin is a public currency. Therefore these Bitcoin transactions are recorded on a public ledger as it may be not possible to trace bitcoins addresses back to their rightful owner, but possible to know the details of these transactions such as the amounts and subsequently the location of the cryptocurrency.
Additionally when it is linking your real identity to a Bitcoin address, others can see details of your financial transactions without your permission. Then what’s more that Bitcoin can be stolen from an exchange that does not have adequate security measures as well as in sum, Bitcoin is not a secure and private as its developers would like you to believe.
Therefore these privacy-focused coins improve on bitcoin’s flaws making transactions and identities untraceable. Here for example, Monero which is the most well-known of all privacy coins which was developed using the CryptoNight Proof of Work protocol using ring signatures which obfuscate the public ledger thereby making it impossible to detect all the source and endpoints of this transaction.
Why Are They Going For Cryptocurrency?
Thereby among other things, in practical terms, this means that it is not possible to know the consolidated total of Monero coins held by a particular node. Therefore not surprisingly the WannaCry ransomware hackers chose to convert their stash into Monero to evade detection by authorities.
Thereby for more evidence of Monero’s robust privacy measures becoming evident during the US government’s seizure of AlphaBay, which is dark net’s most popular marketplace. It was found that even as after they closed it down, authorities said they were unable to estimate the amount of Monero as it was the most popular cryptocurrency used for transactions thereby floating around in the same marketplace.
There is hereby another example of the cryptocurrency that incorporates the privacy features is the Dash which is competing with the likes of Litecoin and Bitcoin becoming a cryptocurrency for daily use. Therefore the privacy feature is called PrivateSend and thereby uses the CoinJoin technique of mixing up the transactions making it difficult to identify the owner and recipient of coins for certain transactions in the blockchain.
To Be Continued In The Next Post
The discussion doesn’t end here. There are more factors to be discussed, especially in the following discussion. Make sure you know the true reasons behind the governments imposing regulation to prevent money laundering and other frauds related to the money regulation. Here the need for the hour is that the crypto investors while securing their investment must also make sure they do not go on to deal with the darknet marketplace.