The crypto space has a lot to offer to this dynamic generation of youths and even the elderly. One doesn’t know how the crypto market would perform the other minute, therefore, it is considered the most volatile financial market. However, another matter of concern that should be highlighted is the cryptocurrency privacy policies associated with each crypto. Since digital currencies are available to anyone in any part of the world devoid of uniform regulations, it is difficult to monitor the activities and transactions associated with them. Therefore, every crypto has its own set of codes that adhere to privacy security regulations.
Understanding Crypto Privacy Concerns
The crypto space came into existence with the advent of Bitcoin (BTC), the largest cryptocurrency, in 2009. Subsequently, other cryptocurrencies such as Ethereum (ETH), Litecoin (LTC), and Solana (SOL) were launched in the succeeding years. The most important factor that influenced the development and coding of such digital currencies was the cryptocurrency privacy concerns. Therefore, each crypto is based on a different algorithm and has a unique hash code. Moreover, the volatility and swinging price actions of the crypto market also demanded the formulation of security settings that would ensure the protection of the crypto holders from any error, malpractice, or fraud.
Stablecoins are the digital currencies that try to curb price volatility by pegging their market capitalization to any other currency, financial instrument, or even commodities. Most stablecoins have a stringent security policy that enables the public to get information about the transactions made worldwide. This is done to prevent misuse of crypto possessions, and that no single possession can be traded twice by its holder. Bitcoin works in accordance with the aforementioned concept. For this purpose, it uses the SHA-256 hash algorithm. In contrast, there are some virtual currencies such as Monero (XMR) that provide complete anonymity to their holders and traders.
Proof Of Work
Proof of work (PoW) is an essential part when it comes to crypto security. It is a system that is designed to prevent unethical trading, frauds, or any other wrongdoings on the part of the crypto holder or any third party. It functions using the hash algorithm. Let’s consider Bitcoin as an example and understand the concept better. So, we mentioned earlier that the largest crypto token uses the SHA-256 hash algorithm. Every set of the information entered would generate only one hash. Therefore, any slight change in the given information will lead to a completely different and unfamiliar hash code. Users holding Bitcoin would know of any discrepancy by looking at the hashes generated.
Now, in the times of modern tech and computers, it is not feasible to use the hash algorithm all throughout the world and for every set of transactions. Therefore, the Bitcoin blockchain puts forth a specific level of complexity in order to turn the process into ‘work’. This particular advancement is beneficial for the surveillance of mining activities. However, just the use of PoW doesn’t ensure that the crypto utilizes transparency or not. For instance, Monero is based on PoW but it ensures complete privacy for the traders.
Cryptos Devoid Of Privacy
A majority of stablecoins including Bitcoin, Litecoin, and Ethereum do not provide any privacy to their holders or traders. Every transaction made is out in the public and can be tracked in case of an emergency or if any malicious encounter is detected. This system that doesn’t provide privacy is beneficial in deterring any scams. Further, crypto scams can be tracked easily if committed. In the absence of such security arrangements, people might lose millions of possessions in such scams that are prevalent in recent times.
Squid Game Coin Scam
One of the most recent scams in the crypto space is the Squid Game coin (SQUID) scam. The meme coin was named after a Netflix T.V. series, Squid game. Last year in early November, the Squid Game coin scam occurred which resulted in the loss of millions of dollars as it crashed by almost 99.9%. The sudden loss in value was shocking as it initially gained by a whopping 2,30,000%. At that time, other meme coins like Dogecoin (DOGE) and Shiba Inu (SHIB) had also started trending which aided the coin’s popularity.
On November 1, 2022, the Squid Game Coin hit its peak of $2,856.64 at around 5:00 a.m. ET. Within a span of a few minutes, the coin lost most of its value and was nearly at ‘zero’. Its investors lost more than $3 million when the coin slumped. They could have prevented this mishap had they listened to official warnings. CoinMarketCap, a popular platform to check the performance of a majority of cryptos, issued a warning on its website that stated “We have received multiple reports that the website and socials are no longer functional & the users are not able to sell this token in Pancakeswap. Please do your own due diligence and exercise extreme caution. This project, while clearly inspired by the Netflix show of the same name, is not affiliated with the official IP.”
However, the website now mentions that the currency can be traded freely on major crypto exchanges and the crypto project is currently “ostensibly run” by its developers. The SQUID token was valued at $0.11 (approximately) at the time of writing.
Monero: The Crypto That Provides ‘Privacy’
Throughout the article, we have numerously mentioned Monero (XMR) which provides privacy to its traders. However, the features of the coin have not been discussed yet. This decentralized coin works on a distributed ledger that is public but includes privacy securing codes. The holders and traders of XMR are untraceable at any point. The developers claim that this privacy cryptocurrency is “secure” despite the fact that it provides complete privacy to its users. This feature makes it different from most known cryptocurrencies around the world. Also, it is one of the best privacy coins known to us.
The privacy provision ability acts as the Monero coin’s limitation in getting listed at the major crypto exchanges globally. Currently, it can be traded on Binance without any hassle. However, major exchanges like Coinbase have refrained from listing the coin owing to security reasons. Therefore, the reach of the crypto is limited somehow. In the future, if the developers are able to prove that it is indeed “secure” then the situation might get better.
At the time of writing, the XMR token saw a see-saw trading session in line with the swinging price actions of major coins that have been fluctuating between red and green statistics. According to data on CoinMarketCap, the coin was up by 1.74% and traded at $168.20, though it was in the ‘red’ just a few seconds prior. Currently, there are over 18 million Monero tokens in circulation.
Firo Crypto: Monero’s Competitor
Amidst the list of privacy cryptos, one cannot omit Firo (FIRO), which is considered one of the biggest competitors of Monero. The Firo coin was launched about two years after Monero, that is, in 2016. FIRO is also known for its crypto privacy provision just like XMR does and is even considered to be one of the best privacy coins like the latter. The Firo crypto is also known as Zcoin. It uses a hybrid of PoW and LLMQ systems to ensure security while providing complete privacy to its customers. In the past year, the coin touched the peak of $11.98, however, it then dipped to a low of $1.18 during the recent crypto crash sessions. In contrast, it was seen reversing the trend when it was valued at $2.91, up by 2.53% at the time of writing.
Demerits Of Privacy Provision
There are several disadvantages or demerits of providing cryptocurrency privacy. The masses would be negatively affected in the absence of security policies. Some important implications of cryptocurrency privacy provision are discussed below.
- Untraceable Scams: In the case of any crypto scams, it would be impossible to track the individual, group, or entity involved. Moreover, huge investments of crypto investors are lost in the process. Further, such criminals who intrude into others’ possessions are relieved of any penalty or punishment.
- Hedge Funds Involvement: Major hedge funds such as Citadel are involved in investments made in the crypto market. These investment firms play a significant role in the price movements of stocks, cryptos, and other instruments. The act of ‘spoofing’, wherein the investor acquires a large stake in any stock or crypto but doesn’t keep it, highly influences the price movements. Regulatory bodies such as the SEC have detected such malicious attempts several times and Citadel has been in limelight for such controversies repeatedly. If privacy was provided to these hedge funds, such activities would have never been identified.
- Possible Bans and Limited Listings: Privacy cryptocurrency tokens have been banned by associations like the Japanese Financial Security Agency (FSA) citing security concerns. Moreover, the United States Secret Services gives an edge to other cryptocurrencies that are non-privacy in nature. Moreover, crypto exchanges cannot list such coins in order to abide by the regulations. Therefore, these privacy coins might be delisted or never be listed at all.
The crypto space is so dynamic in nature that privacy and regulations often can’t go hand in hand. Moreover, increasing accounts of trespassing, scams, and unpredictable changes in the crypto space have made it obligatory for cryptos to maintain transparency. Therefore, cryptocurrency privacy cannot be provided in considering the current environment. However, in the coming years, privacy coins like Monero might be able to prove their security policies to be enough to restrict any mishaps. This development would surely change how the crypto market works now. However, there are seemingly no traces of such an update currently.
- Top 7 Best VPN For China: Tested And Working - 19/10/2023
- 7 Best VPN For Canada: How To Dodge Five-Eye Security - 16/10/2023
- Top 5 Best VPN For UAE & Dubai That Accepts Crypto - 15/10/2023