Privacy coins present an essential component of the cryptocurrency world. While cryptocurrencies claim to be completely private and anonymous, this is not usually the case since users‘ private information, including name, address, and other personal data is linked to the public key. For instance, while the Bitcoin network claims to use the Dandelion layer to hide users’ IP addresses in a transaction, it‘s still possible to monitor an individual’s transactional behaviors and network activity to a greater extent to even discover a nodes IP address. As such, privacy coins, including Monero, Dash, Verge, and Zcash, are crucial pillars in the crypto space to achieve full privacy for privacy-conscious individuals.
However, privacy coins have increasingly come under intense scrutiny from government authorities claiming that the coins are aiding financial fraud and money laundering activities thanks to their completely private and anonymous nature. Several countries, notably Japan and France, have even banned private coins, with Finance seeking a total ban on using or storing privacy coins.
While the ban on privacy coins is seeking to make it harder for criminals to conduct particular illegal activities, such as money laundering, these bans could greatly hinder efforts to achieve complete privacy in the crypto space. Below, we look at the reasons why privacy coins shouldnt be banned.
What are Privacy Coins？
For starters, privacy coin refers to unique digital assets that enable users to control their privacy and anonymity when making transactions altogether. These coins completely mask the identity of users as well as the origins of their transactions. Enabling senders and receivers to remain completely anonymous and at different privacy levels, i.e., hidden transaction balances and wallet.
Background of Privacy Coin Ban
Japan, through the Japanese Financial Services Agency (FSA), was the first country to put a ban on the issuance and transaction of several privacy coins, including Zcash, Monero, and Dash, among other privacy coins in April 2018. Following Japans ban, other countries, including South Korea and the U.S, soon followed suit.
The U.S Department of Homeland Security claimed in December 2018 that privacy coins, notably Monero and Zcash transactions, were undermining privacy and anonymity. Following the concerns, several U.S. states, including Texas, banned the use of privacy coins. France soon followed suit with the Finance Committee of Frances National Assembly, calling for a privacy coin ban. Other nations that have also placed a ban on privacy coins are India, Netherlands, and Taiwan.
5 Reasons Privacy Coins Shouldnt Be Banned
Privacy Coins Enhances Personal Financial Security
Privacy coins are essential in the crypto space to enhance users privacy and consequently alleviate the security threats posed by hackers. Through privacy coins, crypto investors can conceal their transaction history and balances in their digital wallets.
Its possible to track transactions on non-private cryptocurrencies, including Ethereum and Bitcoin, since all transactions are recorded on a public chain. However, by leveraging the privacy and security features of privacy coins, crypto traders and investors can keep their coins secure and away from the praying eye of hackers.
Enhances Privacy in Business Transactions
Privacy coins allow businesses to accept cryptocurrencies as a mode of payment to enhance privacy in their business transactions. Transactions involving cryptocurrencies are recorded in a public ledger meaning that everyone has access to it. This can make a business lose a competitive advantage over other businesses, especially when it comes to consumers who prefer privacy. Worse off, business competitors or other clients can track the payments received by a business over time for a particular product or service.
This means that some clients could be unwilling to buy goods at a particular price and even complain of overpaying. Through private coins, businesses can enhance their privacy and conceal vital financial information that ought to be kept private. Therefore, privacy coins should not be banned since they are crucial in enhancing privacy in businesses accepting cryptos as a form of payment.
Prevents Coin Blacklisting
Privacy coins are a crucial tool in the crypto space to avoid coin blacklisting, which leaves investors with extreme losses. Following increased regulations in the crypto space, crypto blacklisting has become quite common, causing massive losses on the investor‘s side. Worse off, blacklisted coins can be used for fraud since it’s hard to establish whether a coin has been blacklisted or tainted. However, privacy coins offer a seamless way of identifying and averting transactions involving tainted coins.
Privacy Coins Confers Freedom of Use
The right to privacy is a crucial human right that every human ought to provide. Privacy coins achieve this by adding an extra layer of anonymity and privacy to cryptocurrencies. Through privacy coins, individuals can make private crypto payments or donations. This wouldnt be possible if governments are going to burn privacy coins.
Privacy coins confer individuals with freedom of use, allowing users to make payments or donations to businesses or organizations without the fear of being tracked or traced.
Privacy Coins Enhances Financial Data Protection
Governments and corporations are continually monitoring individuals and peoples financial behavior and use the data for various purposes, such as monitoring tax payments or financial behavior. Privacy coins offer an ideal solution to counter the constant surveillance from government authorities and other third parties and enhance financial data protection.
While Bitcoin and Ethereum are less traceable than other traditional payment methods such as PayPal, they dont offer a high level of privacy than privacy coins. In essence, banning privacy coins would limit financial data protection exposing investors to excessive surveillance.
Closing Words
In the crypto space, privacy coins come in handy to alleviate crypto‘s flaws making transactions untraceable and masking users’ identities. Given the immense contribution of privacy-focused coins in the crypto space, it would be utterly absurd and disastrous to ban privacy coins. There are countless legitimate reasons privacy coins should be in the cryptocurrency space.
Considering that privacy is a fundamental human right, there is a need to have financial information kept private to enhance security. Privacy coins unlink users and the finances, efficiently integrating full privacy and anonymity synonymous with the crypto space. Nonetheless, private coins can still be used for illegal activities, and therefore governments need to regulate rather than completely ban them.