The fact that the first part of the word cryptocurrency literally means “hidden” should tell you something about the importance of privacy to the founders of blockchain technology. They and the earliest adopters had seen how easily people’s lives were laid bare by the harvest and sale of online personal data.
They sought solutions then. They continue seeking solutions now.
They aren’t alone. More than 60 percent of Americans said they “would like to do more” to protect their online data, according to a 2016 Pew Research Center study.
The deep and growing desire for better online personal data protection is also driving the evolution of privacy in cryptocurrency. It’s why privacy-focused currencies like Monero and Zcash are gaining ground.
While critics claim only criminals want to hide their identities during financial transactions, there are any number of perfectly legal reasons why anyone would want the same. The Craigslist murders come to mind.
But not all privacy coins are created equal, said Charlie Shrem, Bitcoin pioneer and principal at Crypto.IQ. “When it comes to cryptocurrency, anonymity or true privacy is all or nothing.”
Shrem said Monero is anonymous by default, meaning every single transaction is automatically “opted in” to the Monero multi-layer, multi-key method of assuring privacy. All transactions look alike to anyone paying attention. Think zebras hiding among zebras.
But with Zcash, users must opt in to have their transactions be anonymous, and many — up to 95 percent — do not. That makes it easier for governments and bad guys to spot the users who are clearly more invested in privacy, whatever their motives. Think zebras hiding among antelope.
The lesson here is if you want anonymity in a coin, whether the coin is for your use or an investment, look closely at how anonymity is set up.
“It’s either everyone has to use the anonymous factor or no one uses the anonymous factor,” Shrem said. “Because if you can’t hide your transactions in everyone else’s transactions, you are not truly anonymous.”
Charlie Shrem is a Bitcoin pioneer, a social economist and digital currency trader. His work in this field is legendary. In 2011, at the dawn of the crypto era, he founded BitInstant, the first and largest Bitcoin company. In 2013, he founded the Bitcoin Foundation and serve as its vice chairman. Since then, Charlie has advised more than a dozen digital currency companies, launched and managed numerous partnerships between crypto and non-crypto companies, and is the go-to guy for some of the world’s wealthiest entrepreneurs. In short, he is the ultimate insider at the epicenter of the crypto universe.
Crypto.IQ is a premier advisory firm providing expert research, education and advice in the world of cryptoassets. The company is unique in that it combines the unparalleled expertise of crypto pioneer Charlie Shrem with the unparalleled market knowledge of three Wall Street experts with more than a century of combined financial industry experience. Together, they have managed and traded more than $1 billion in assets. In a world of “instant experts,” who have little knowledge or trading experience, the Crypto.IQ team offers the proven depth, insight and knowledge to help their clients achieve success.
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