Privacy coins as their name suggest, are coins or cryptocurrencies that are focused on privacy. The transactions of these coins are completely anonymous and they can’t be tracked by anyone. Some people might think that cryptocurrencies like Bitcoin and Ethereum are also privacy coins and their transactions are anonymous, but the reality is that the transactions of these coins are pseudonymous and under certain conditions, they can be tracked.
By the way, privacy coins did not grow as they were expected to. Monero and Zcash which are the largest privacy coins by market cap did not perform well in 2021, while many other cryptocurrencies including Bitcoin recorded new highs in the same year.
In this article, we want to go through the reasons that have led to privacy coins’ misfortune and investigate the causes of their failure. Stay with us.
Privacy coins are inefficient
History has shown that people will choose to focus on privacy, only if it is efficient and accessible. In other words, they prefer to use a platform that is more convenient and less private, rather than one which is more private and less convenient.
This is one of the biggest reasons for privacy coins’ failure. These cryptocurrencies are difficult to use and making transactions using them has so much technical complexity. If privacy coins want to achieve public acceptance, they have to do something about this problem.
People don’t pay much attention to privacy
History has also shown that people do not pay much attention to the concept of privacy. As we mentioned in the last part, they prefer other issues including convenience over privacy, and they don’t want their transactions to be completely anonymous. They like to use a monetary system that doesn’t require KYC and isn’t controlled by a central authority, but they don’t see the need to make totally untraceable transactions.
Privacy coins are more vulnerable to regulations
One other big reason for privacy coins’ misfortune is that they are highly vulnerable to new regulations. Cryptocurrencies, in general, are not officially accepted yet. They are being regulated in some jurisdictions and they are banned in some others. This problem is doubled regarding privacy coins. They seem like a threat to governments and regulators and users know that if regulators start to confront cryptocurrencies, privacy coins are the first victims.
As we mentioned throughout the article, privacy coins got off to a good start, but they failed to keep on the same track. This might have several reasons, but in this article, we selected three main reasons, including “inefficiency”, “users’ lack of interest”, and “regulatory issues”. Do you think of any other reason for privacy coins’ failure in achieving their initial goals?
Finally, privacy coins are more vulnerable to regulations, making them a potential target for regulators and governments. Despite the challenges, Crypto Desk remains committed to offering its users a safe and secure platform to trade a wide variety of cryptocurrencies.