The Real Case About Privacy Coins vs Cryptos with Traceable Public Ledgers

Money Jul 14, 2021

I've been busy in recent weeks with various commitments, which is why I haven't been able to post anything. I've also successfully set up Monero public nodes after purchasing several servers in Europe to support the Monero community. Currently, I really have multiple tech projects and investments that require my attention.

This is not investment advice, by the way; it's just me expressing my opinion about what I think is unwarranted fear, both within the crypto community and beyond, regarding privacy coins.

So, many people are concerned about the potential banning of privacy coins due to their untraceable nature and their misuse by bad actors. There have been recent news reports highlighting the use of Monero in ransomware attacks and cryptojacking.

Now, let me tell you something. Monero has attracted bad actors primarily because of its default privacy features. You don't have to take extra steps to conceal how much you have, where you send it, or where you receive it, even if your wallet address is public. Additionally, you can use one-time addresses to collect payments without linking the receiving end to you. That's the advantage of Monero.

Bitcoin, on the other hand, is pseudonymous. Your identity is not directly associated with your address, unless you inadvertently reveal ownership of the wallet. However, anyone can track the inflow and outflow of funds from a Bitcoin wallet, trace where it's sent, and potentially associate it with an individual or company. For instance, if you send Bitcoin to a traceable seller for a product to be delivered to your door, there is a possibility of association.

I have discussed this issue with an old friend who designs hacking software in the darknet, regarding Monero being a preferred currency for cybercriminals and potentially more susceptible to regulation. He isn't really worried. According to him, they wouldn't have any issues using Bitcoin if necessary. Bitcoin, being more liquid than any privacy coin available, is their second choice. The preference for Monero mainly stems from the ease of hiding their identities compared to Bitcoin. With Bitcoin, they have to take extra steps and remain vigilant to prevent mistakes, especially during the liquidation process when they need to convert crypto into cash. From this conversation, my conclusion is that while Monero is currently the preferred choice, regulators may as well consider banning Bitcoin if they decide to take action.

Update: Monero introduced atomic swaps not too long ago. Now, Monero and Bitcoin holders can exchange their cryptos for the other securely, without any third party, something that was not possible before.

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