Secrecy and Privacy: A Trend for 2022?

By bengy | Idle Musings | 24 Jan 2022


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One of the underlying strengths of cryptocurrencies and blockchains is the open and publicly transparent nature of the on-chain transactions. There is no hiding of your on-chain movements, and this has given rise to an industry of tracking, chain-analysis and front-running. Now, there are many use-cases where this sort of extreme transparency is definitely a good thing. Contracts that have some reputation at stake for the participants, DeFi protocols, asset ownership and many other applications have the need for this particular advantage. There are also other applications where this sort of hyper-transparency could also be used to great advantage, such as election donations, charity and fundraising.

However, it would be folly to suggest that this sort of transparency is great for every situation. One of the most critical problems is in privacy of personal transactions and finances. Given the growing use of chain-analysis and the relative naiveness of the general crypto-public about the dangers of address reuse, the dangers of having your personal wealth and finances revealed for everyone to see is quite obvious!

Of course, there will be some who argue that having personal control of your finances and digital assets means that you are also responsible for the privacy of those finances as well. So, having single use addresses (treated more like invoices) and phenomenal opsec so that none of these addresses (and any possible linking UTXOs) are ever linked to a public or real life persona. Given that most of the public can barely handle making unique and non-dictionary passwords... well, you can see the problem with assuming that the general public should have the ability to deploy flawless state-level opsec/spycraft skills... where the slightest slip-up results in traceability.

So, I think that this will be a trend that will start to pick up momentum as the growing userbase of cryptocurrencies realise that isn't as private as they thought. Many have mistaken the long and indecipherable Bitcoin wallet addresses to be super-secret spy codes... untraceable and completely secret. However, the truth is far from that... so, I suspect that there will be demand for currencies (and computation layers) that have this sort of privacy built-in, thus realising the true dream of a perfectly fungible cryptocurrency.

 

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Although there are a few cryptocurrencies and computation layers that currently offer privacy built-in or as a service, the best known and most widely used is Monero (XMR). With its built-in secrecy and zero-knowledge protocols, Monero properly fulfils the concept of a truly fungible digital currency. Of course, you could argue that fiat currency isn't completely fungible either with the unique ID numbers that are printed on each of the banknotes, but it is close enough.

Monero stands out from the rest in terms of adoption and market capitalisation... but most importantly by the fact that its privacy features are non-optional. They are there by default and not an optional feature like some other privacy focussed coins.

On the other hand, Bitcoin (which is assumed by the general public to be private and fully fungible) is not completely fungible. Each Bitcoin is not completely indistinguishable from another Bitcoin due to the legacy history of transactions that is attached to the UTXOs that form the balance of your wallet. The Bitcoin that was part of a drug ring, or attached to a real-life persona is very different to the freshly minted Bitcoin that appeared in the last block as the coinbase reward.

I think that as the growing awareness of the hyper-transparency of blockchains and cryptocurrencies grows, and the growing awareness that we aren't all super spies with impeccable opsec grows... the demand for privacy related protocols and coins will grow. Even if we are not all hyper-privacy conscious (and the fact that we just give away our information on the internet shows that), we all have an element of "none of your business" when it comes to our personal wealth and finances.

 

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Monero (XMR) has suffered some delistings from some major exhanges and jurisdictions due to the fact that privacy has been equated to criminal behaviour. This is a common straw man argument against most privacy protocols (equivalent to "if you have nothing to hide...") and it places the ease of criminal evidence finding above the privacy of the general population. That MIGHT be fine if that was all it would be used for, but we know that corporations and governments should be given this information by informed consent rather than as a blanket consent. Mass surveillance should not be the substitute for proper protocol and detective work.

So, one of the exchanges where you can purchase Monero is at BitYard. As we know, after the red slaughter of the past few days, it is a good time to shore up conviction positions on interesting possible trends. Secrecy and Privacy are two things that I think will be important in the coming years.

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I can also be found cross-posting at:
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Handy Crypto Tools

Ledger Nano S/X: Keep your crypto safe and offline with the leading hardware wallet provider. Not your keys, not your crypto!
Binance: My first choice of centralised exchange, featuring a wide variety of crypto and savings products.
Kucoin: My second choice in exchanges, many tokens listed here that you can't get on Binance!
FTX: Regulated US-based exchange with some pretty interesting and useful discounts on trading and withdrawal fees for FTT holders. Decent fiat on-ramp as well!
MXC: Listings of lots of interesting tokens that are usually only available on DEXs. Avoid high gas prices!
Huobi: One of the largest exchanges in the world, some very interesting listings and early access sales through Primelist.
Gate.io: If you are after some of the weirdest and strangest tokens, this is one of the easiest off-chain places to get them!
Coinbase: If you need a regulated and safe environment to trade, this is the first exchange for most newcomers!
Crypto.com: Mixed feelings, but they have the BEST looking VISA debit card in existence! Seriously, it is beautiful!
CoinList: Access to early investor and crowdsale of vetted and reserached projects.
Cointracking: Automated or manual tracking of crypto for accounting and taxation reports.
Stoic: A USD maximisation bot trading on Binance using long-term long strategies, powered by the AI/human system of Cindicator.
StakeDAO: Decentralised pooled staking of PoS assets.
Poloniex: One of the older regulated exchanges that has come into new ownership. I used to use it quite a lot, but have since stopped.
Bitfinex: Ahhh... another oldie, but a goodie exchange. Most noted for the close affiliation with USDT and the Basic "no-KYC" tier!

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bengy
bengy

I am a Musician (Violinist/Violist) specialising in Early Music living in The Netherlands. I have a background in Mathematics and Physics due to an earlier tertiary level study... and so, I'm still quite interested in Science and Technology related stuff!


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Idle Musings

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