The decentralization of cryptocurrencies is their most valuable asset. However, every technology has its pros and cons and so does decentralization. This is where privacy coins step in. The blockchain is like a public accounting ledger where each transaction – after being verified – creates a block and multiple blocks create a blockchain. This process of the creation of blocks is most commonly done through miners – individuals on the network who contribute their computing powers into verifying transactions. The verification of transaction makes the procedure completely transparent – which although an attractive prospect also has its downside.
The increasing digitization has led to concerns of privacy and the subsequent advent of priv. Privacy coins are expected to become even more widespread as people are becoming more concerned about their rights to privacy with even wild speculations that privacy coins have the potential to become the face of cryptocurrencies.
What is a privacy coin?
Privacy coins are programmed to be opaque – as opposed to the basic concept of blockchains. The privacy blockchains are designed to conceal the identity of the sender and receiver and the amount of transaction. Pseudo addresses are utilized to mask the actual addresses of the sender and receiver.
Privacy cryptocurrencies like Monero also employ a unique mining mechanism in order to protect the integrity and privacy of the network. The mechanism is called the egalitarian concept. The egalitarian concept perpetuates the idea of equality for all. For privacy, the coins also are different from traditional cryptocurrencies as they are fungible. While other cryptocurrencies also offer some level of fungibility, each Bitcoin – for example – has a unique identification. In the case of privacy coins, they are completely fungible.
Can Monero or privacy cryptos become the future?
While the privacy aspect of the coins is attractive, it is also a source of major lash back for the cryptocurrencies. Privacy coins have a notorious reputation for being a hotspot for criminal activities. Transaction data being publicly available may hinder illegal activities but privacy coins do the opposite – it attracts the attention of the wrong groups.
While cryptocurrencies like Monero does appear to have a positive future outlook, it is hard to comprehend that they will become the face of the whole crypto space. They not only attract the attention from the wrong groups but also from regulators. As cryptocurrencies become more widely accepted, regulators have focused more of their attention towards the, in order to be able to navigate through the vague regulatory frameworks. Monero and the likes are expected to bear the brunt of such regulatory scrutiny.
