Privacy-Preserving Cryptocurrency Updates
This week marks the one-year anniversary of my company's token launch on Base, the Ethereum layer 2 network founded by Coinbase, one of the world's largest centralized exchanges. While it may seem contradictory for me to support, or at least maintain neutral feelings toward such a company, I believe there's a valid use case for centralized exchanges. Beyond trading, publicly verifiable ledgers like Ethereum provide accountability and immutable data that can be invaluable for both corporate and personal use, depending on the circumstances. If this approach doesn't align with your values, you can always purchase different tokens or trade on decentralized exchanges.
That said, my intention was to explore relatively recent, or at least lesser-known, privacy-preserving updates to well-established cryptocurrencies. I'm sure I'll return to emerging technologies at another time. Overall, this general direction points to increasing demand for the ability to make transactions that can only be easily confirmed by the parties involved. Key reasons for this demand include privacy for investors, protection for those wishing to avoid being targeted as high-value individuals, and safeguarding individual freedoms for those living in oppressive regions. For brevity's sake, let's examine Bitcoin, Litecoin, and Monero as primary examples.
Bitcoin was once a common way to make transactions between individuals wishing to circumvent traditional finance, such as credit cards. Now Bitcoin is a household name. However, lesser-known but significant protocols have been slowly introduced. Silent Payments allow users to maintain a unique static Bitcoin address while generating new addresses as sub-accounts for each transaction. This makes each payment unique and more difficult to trace for those not involved in the exchange. This is similar to Litecoin's MWEB (MimbleWimble Extension Blocks) update, though the key difference is that MWEB extends confidentiality to transaction amounts in addition to providing sub-accounts within a single static wallet address. Although users must opt in to use this feature, it has received international scrutiny from major centralized exchanges.
Now let's examine Monero, the infamous, or perhaps not so well-known, privacy-focused currency. Monero has faced significant negative attention and is barely available on any centralized exchanges in the US. From its inception, Monero was created to enable private transactions between individuals and has maintained its reputation for this capability. Several countries have banned the coin or increased pressure to the point where it's been completely delisted from exchanges. This includes the US Internal Revenue Service posting bounties seeking knowledge of Monero tracing technologies.
Whether I agree or disagree with international efforts to restrict these technologies is beside the point. In my industry as a developer working primarily with Ethereum, its public ledger has increased our credibility via transparency and verifiable transactions. However, the reality of today's political climate is a reflection of the world we live in. Even years after the creation of privacy-preserving technologies, these developments continue to make privacy in cryptocurrency a relevant and evolving topic.