Why Privacy Coins May Not Go Mainstream In 2020

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Why Privacy Coins May Not Go Mainstream In 2020

In light of the recent comments of Coinbase CEO, Brian Armstrong, on the promise privacy coins’ shows in 2020, including Monero (XMR) and ZCash (ZEC), we look at the challenges that face the world of privacy coins and why global adoption is still a long way off from happening.

Before starting on why mainstream adoption will be a mountain for privacy coins in 2020, let’s understand what privacy coins (aka Anoncoins) do and why they are important to the crypto ecosystem.

A case for privacy coins

Privacy blockchains have two main features in common; account balances remain private/hidden, and the transaction details are masked to make them completely private and anonymous. How is this different from Bitcoin? Public blockchains such as BTC and ETH are anonymous but do not mask the wallets whence the transaction originated or the account balances. This shows the need for privacy coins for those who wish to keep such information from being recorded on an immutable public blockchain.

Coinbase CEO, Brian Armstrong is the latest high profile figure to praise the growth of privacy coins, stating coins with such features will without doubt skyrocket over the course of the next decade. A post published on Coinbase blog, Brian says,

“I believe we’ll eventually see a “privacy coin” or blockchain with built in privacy features get mainstream adoption in the 2020s.”

This affirms John McAfee’s, creator of the McAfee DEX, beliefs that privacy coins will be the future in the cryptocurrency industry.

However, there remains tough challenges across the field that looks set to cripple the growing stance of anoncoins including Monero, Dash and ZCash in the coming decade.

1. KYC/AML rules becoming compulsory

The most crucial barrier privacy coins will need to overcome is the regulatory pressures for exchanges to adhere to Know-Your-Customer and Anti Money Laundering compliance. Given the feature of privacy coins, “anonymity and privacy”, setting regulation on crypto exchanges on KYC/AML compliance beats the need to use private coins.

2. Delisting from exchanges

The KYC/AML rules set have seen a couple of exchanges delist privacy coins from their platforms which lowers the adoption rate for anoncoins. In the final quarter of 2019, two South Korean crypto exchanges, Upbit and OKEx announced they will be delisting privacy coins. With regulation against privacy coins becoming tougher, adoption of privacy coins may hit a stumbling block in the coming years.

3. BTC’s greater share?

While privacy coins enhances the use of cryptocurrencies across the field, the growth of mixing agents such as CoinJoin diminishes the overall use of privacy coins. It’s no secret that Bitcoin is not as anonymous as the community once believed it was, which led to the creation of privacy coins. However, with BTC becoming more and more anonymous with mixers such as CoinJoin taking root, will privacy coins survive?

Conclusion

There are a number of exchanges still dealing with privacy coins with Tron DEX the latest to integrate anoncoins trading on site. Justin Sun, CEO at Tron Foundation tweeted,

While I remain firmly entrenched on the idea of anoncoins, the coming decade looks set to provide a couple of more challenges which may affect the coin from going mainstream. Notwithstanding, a growing focus on making BTC anonymous may see a number of investors switch to the top cryptocurrency.

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Why Privacy Coins May Not Go Mainstream In 2020
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Why Privacy Coins May Not Go Mainstream In 2020
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In light of the recent comments of Coinbase CEO, Brian Armstrong, on the promise privacy coins’ shows in 2020, including Monero (XMR) and ZCash (ZEC), we look at the challenges that face the world of privacy coins and why global adoption is still a long way off from happening.
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Author: Lujan Odera

Been in the field since 2015 and he still love everything blockchain and crypto! FC Barcelona fan. Author and journalist. Follow him at @lujanodera.

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Lujan Odera 384 Articles

Been in the field since 2015 and he still love everything blockchain and crypto! FC Barcelona fan. Author and journalist. Follow him at @lujanodera.

Follow Lujan @