For users who value financial privacy, cryptocurrencies have always been extremely relevant alternatives. Cryptocurrencies like Bitcoin have their history of origin deeply rooted in this basic ideal, beset with a general distrust of institutions that hold a lot of power. Thus, the decentralized and untrusted system on which all other cryptos are based was born.
Privacy features don't facilitate crime
From the outset, it should be noted that crypto's emphasis on privacy has resulted in the defamation of Bitcoin - viewing it as the currency of drug dealers and bad actors. However, such an attitude towards crypto has changed dramatically in the past few years, with cryptocurrencies like Bitcoin having seen increasing adoption, with BTC even being regarded as the best performing asset of the last decade by mainstream media. .
Although Bitcoin offers greater privacy, that doesn't necessarily mean it guarantees anonymity. Over the years, the rise of privacy-centric cryptocurrencies like Monero and Zcash has given users access to privacy features that Bitcoin could never offer. Although there continue to be cases of bad actors exploiting such features as a means to their harmful ends, the presence of such elements is neither unique nor exclusive for cryptocurrencies and digital assets.
What is more interesting is the fact that the basic features of confidentiality has now tend to warrant immediate suspicion on the part of governments, regulators and the general public.
At the beginning of the year, when Chainalysis published its 2020 report on cryptographic crime, it was noted that the scams were the most “popular”, with many users losing their money not because of privacy, but at because of a lack of adequate regulations.
In fact, in a recent interview with Stephan Livera, Rafael Yakobi - chief counsel at The Crypto Lawyers, noted how the industry is now geared toward declining levels of confidentiality, one of the consequences of increased regulatory control on digital assets. He stressed,
“The result is that consumers suffer from the lack of competition. And they also suffer because their privacy suffers from the only particular type of, I don't know if you could call it regulatory capture, but the particular type of capture that has occurred. "
However, despite evidence to the contrary, the notion that his financial data can benefit from confidentiality measures still raises eyebrows. In other words, privacy always involves a harmful association.
The Bitcoin can it be the right balance?
The privacy features of Bitcoin are not as advanced as those of many privacy pieces like Monero and Zcash . The privacy protocols of the latter two coins are able to provide a greater degree of anonymity to its users, compared to the world's largest crypto - Bitcoin .
In fact, a recent report had tried to understand the security measures implemented by confidentiality pieces like Monero and Zcash , while studying their robustness. In the case of Monero , it was found that it was able to maintain the desired level of traceability, unlike many of its competitors, namely Zcash , which suffered from poor implementation of its database protocol. 'users, says the report.
“ Monero promotes dissociability by generating a single-use address for each transaction exit. Monero promotes intrasiveness by requiring that each entry in a transaction be combined with certain lure entries called mixins. "
This degree of anonymity is not something Bitcoin can offer. While layer two solutions like Lightning Network and Taproot & Schnorr have tried to improve the privacy features of the royal coin, its development issues continue to hamper it.
While this can be seen as a problem for Bitcoin , the lack of complete anonymity within the Bitcoin network can alleviate regulators' apprehensions about digital assets. Right now, Bitcoin continues to be the preferred currency on the dark web, and implementations that bring Bitcoin closer to the privacy coin ecosystem can trigger more red flags for regulators around the world.
The report also noted the difference between Bitcoin and other privacy coins available on the market, adding,
“The anatomy of an armored transaction varies from that of a normal Bitcoin transaction . Under Bitcoin , each transaction is validated by linking the addresses of the sender and the recipient, as well as the input and output values on the blockchain. The zk-SNARKs allow the nodes to validate the transactions without revealing any information on the addresses or the values involved. "
The fact that Bitcoin's privacy features aren't as ideal and absolute in terms of coins like Monero can end up being a blessing for the coin. As the world moves from traditional forms of heavily guarded fiat money, Bitcoin may well become common ground for regulators and users.
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