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Key points
- Copenhagen Business School has published a study on private cryptocurrencies.
- Focusing on Monero, the report highlighted the disruptive potential of coins for privacy.
- Research has found that regulators are unlikely to be able to block the privacy coins anytime soon.
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According to a study published in the Journal of Information Technology, attempting to ban private cryptocurrencies would be nearly impossible for regulators due to the decentralized and privacy-protecting nature of tokens.
Privacy coins are unstoppable
The report was compiled in collaboration with Trilateral Research’s applied research and innovation team and scaled up the popular private currency Monero.
Privacy coins work differently than cryptocurrencies like Bitcoin and Ether – payments are untraceable, helping users to maintain privacy. Where every Bitcoin transaction can be easily linked to a user’s address, Monero uses an obfuscated public ledger to hide the details of each transaction.
Pointing out the difficulties regulators are likely to face in stopping privacy coins, Copenhagen Business School researcher Rob Gleasure said:
“If decentralized privacy-preserving cryptocurrencies become popular in the future to the point where they can be routinely traded without users having to convert to other currencies and systems, there is no obvious way for regulators to enforce post-regulation. hoc “.
Gleasure suggested that authorities would benefit from adapting and preparing for the possibility of not being able to prevent the spread of private coins in the future. “What regulators don’t realize is that those who control the code will control the rules,” he said. “So far, they haven’t accepted it and deny it.”
The study, explained Dr Robin Renwick of Trilateral Research, observed the community of Monero developers and users to draw the results.S. Crypto Briefing reached out to Renwick to hear his thoughts on how privacy coins will play a role in the future of the cryptocurrency landscape:
“I think it’s possible that governments will try to completely ban any cryptocurrency that attempts to provide a level of privacy above the current” status quo. “This will ensure that privacy-protecting currencies become the way to protest the financial system in charge. Don’t forget that privacy violations and violations have become the mainstay of the financial system. ”
He also reflected on an alternate outcome where governments are more accepting of private cryptocurrencies. He says relaxed regulations and a deeper understanding of the dangers of transparent coins like Bitcoin could lead to wider adoption of privacy coins, “just like how users are starting to realize the nefarious. [Big Tech companies like] Facebook and Google. “
In both Renwick scenarios, private cryptocurrencies would still be around, although the suggested results differ greatly depending on the government intervention. Given the nascent stages of the cryptocurrency space as a whole, it is still unclear whether privacy coins could ever see mainstream adoption, nor to what extent authorities will attempt to eliminate payment systems that preserve privacy.
However, cryptocurrencies have risen focal point for government officials in recent years.
In the past, much discussion has fallen on the role cryptocurrencies sometimes play in criminal activities such as money laundering and drug dealing, thanks in large part to the importance of Bitcoin on darknet markets such as Silk Road.
While Bitcoin has in many ways been considered an asset class since the days of the Silk Road extensively documented arrest, private cryptocurrencies still represent a largely unknown area of the ecosystem. Yet, Justin EhrenhoferMonero community leader said privacy for all tokens is becoming the priority for many.
He told Crypto Briefing:
“Regulators and compliance professionals should soon realize that Monero isn’t the only project that offers useful privacy features. Other “ privacy coins ” offer inherent privacy enhancements or opt-ins for which they must be prepared. Bitcoin and Ethereum, which are widely supported, are also adopting new privacy enhancements. These technologies can no longer be ignored. “
Monero is considered by many to be the de facto privacy currency. Its market cap stands at around $ 2.1 billion today, making it the 15th-ranked cryptocurrency.
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