When Bitcoin started taking over the financial market. Different other kinds of cryptocurrencies launched like Doge coin, meme coin, etc. In the Pattern Trader App, most of them did well in their journey. Some had differential factors which proved to be right in their favour. Some get the required attention from social media. But in short there are varieties of Cryptocurrencies available. In all these, there are privacy coins which couldn’t make up to the expectations.
There are multiple reasons for the same and in this article. We will get to know about them along with the concept and working of privacy coins. So, without any further delay. Let’s start with the article.
Concept and working of privacy coins
Privacy coins are like any other cryptocurrencies but maintain anonymity at a higher level. It is based on a decentralised ledger and works on the Blockchain technology. What makes privacy coins different from other Cryptocurrencies? This is a debatable topic. There are only 2-3 privacy coins which are known to people and have quite a few investors.
While transacting in privacy coins the address of both the recipients and the amount is not disclosed. This is the only benefit of privacy coins. To maintain this the developers use some high technology. Monero has a feature of one-time-use stealth address and ringCT. These are some of the ways to maintain complete anonymity. But all these features failed to leverage users for some bigger reasons.
Four reasons for privacy coin’s failure
There are multiple reasons for the failure of this coin but four of them are major and most prominent. All these reasons prove that financial revolution could only be brought on the basis of financial advantages. Whereas this coin focuses mainly on maintaining anonymity and not on high investment returns.
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No one chose privacy coins over BTC or ETH
When privacy coins were launched many other cryptocurrencies like BTC or ETH had made its remarkable place. People are focusing on high investment returns that these coins offer. On the other hand, privacy coins didn’t have that potential to change the financial game. Rather its focus was complete anonymity. If we see the BTC or ETH they too provide privacy at some levels.
It was not some first ever introduced coin which was taking privacy to another level. There are currencies like Tornado cash which are already doing this. Plus the amount of profit was also not considerable. The poor liquidity was also an issue. To sum up, people are focusing on making money and not losing their money for the sake of some anonymity.
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It is not user-friendly
Another reason for the failure of privacy coins is the user-unfriendly nature. This was not the first time privacy was introduced on the Internet. Many other social platforms and even digital currency are providing it. But in all these platforms users don’t need to follow some extra hectic steps to achieve that. Like WhatsApp all the chats and messages are already end-to-end encrypted. Users don’t have to be a tech savvy to do that.
But in privacy coins users have to use their technical potential to achieve that anonymity. This makes the process hectic and uninteresting for the users.
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People focus more on investment returns rather than privacy
In other words, I am using Bitcoins because I want my money to multiply. Wouldn’t you all agree with this? This is the story of almost all the users of the cryptocurrency. Everyone is here for that all time highest investment returns. So, what if i say forget the returns and focus just on privacy. This is what has gone wrong for privacy coins. No one cares about that high end complete anonymity when other cryptocurrencies are making them money. Not just money these cryptocurrencies are too based on decentralised ledger which is safe and secure and provides anonymity to some extent.
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Privacy coins are weak coins
With all the above mentioned reasons and concepts, you must have understood this one. Yes, this coin has poor liquidity, except few no one wants to trade in it. So, how it can compete with crypto giants like BTC and ETH. So, clearly privacy coins failed for all these reasons. Making bigger in the financial market needs a potential coin which can bring high investment returns.