What are privacy coins?

A key ideology in cryptocurrency is the constant pursuit of privacy. But until privacy coins provide easy-to-use, effective solutions at scale, privacy will remain a privilege reserved for the crypto-savvy. What are privacy coins?

All you need to know about privacy coins

For individuals who want to opt out of government or other third-party oversight in their financial and business relationships, end-to-end encryption is a must. However, privacy coins typically lack an end-to-end approach that can help users perform other necessary functions, such as personal messaging, file sharing and data exchange. 

Monero is generally seen as the gold standard of the privacy niche, and for good reason. It is the longest-running of the major contenders, boasts the largest market capitalization, and has successfully protected XMR transactions from prying eyes for years. But that hasn’t stopped Monero users from being identified and imprisoned over and over again. 

Now the goal is not to justify criminal behavior or argue about what constitutes a crime – criminals should be arrested. But the fact that those using Monero for illegal purposes are routinely exposed and detained suggests that XMR is not properly serving its users. By tracking the ins and outs of Monero, communication channels, web activity, etc. Monero users can lose their anonymity even if they use the coin exactly as intended. 

The Monero website hack, in which an attacker planted a coin thief on the site, proves that anyone can be tampered with, regardless of how knowledgeable they are about cryptography. The centralized solutions used with Monero and other privacy coins are not perfect, as evidenced by the recent NordVPN hack. 

And if we take a step back, how accessible will Monero itself be to the average person? Despite more than a decade of existence, the cryptocurrency is incredibly inaccessible to the average person on all fronts. XMR and coins like it carry an even bigger learning curve. Realistically, what percentage of the population is equipped to properly use Monero and value-added services to adequately protect their anonymity? That figure is well below 1%. And due to the ongoing trend of exchanges excluding “solely privacy” coins, that number may continue to fall even lower. 

For privacy coins to fulfill their purpose, they need to create comprehensive, user-friendly applications that the average Joe can wrap around.