A decade of evolution has served blockchain technologies well, but cryptocurrencies may have reached a turning point in its development path.
Milton Friedman, an American economist who received the 1976 Nobel Memorial Prize in Economic Sciences for his research on consumption analysis, monetary history and theory, and the complexity of stabilization policy, once told an interviewer from the National Taxpayers Union in 1999, “I think the internet will be one of the major forces for reducing the role of government. The one thing that’s missing, but that will soon be developed, it’s a reliable e-cash. A method whereby on the Internet you can transfer funds from A to B, without A knowing B or B knowing A. How I can take a 20 dollar bill and hand it over to you and there’s no record of where it came from, and you may get that without knowing who I am. That kind of thing will develop on the Internet.”
Friedman believed that it will be a matter of time before a game-changing form of financial transaction is introduced to the world, where the invention could secularize wealth by returning power to the people. And he has proven his point exactly 10 years later, when the first cryptocurrency - Bitcoin was minted on 3rd January 2009. Over a decade, many cryptocurrencies such as Ethereum, have sprung up and aim to revolutionize the global industries through immutable, transparent, and unhackable blockchains. Privacy concern is also another important aspect that attracts people to dealing with cryptocurrencies. Although some cryptocurrencies such as Bitcoin do not have complete anonymity, these issues can be remedied through Bitcoin Mixers
(or Bitcoin Tumblers), where users mix their coins w
ith other users, to preserve their privacy.
Cryptocurrencies have become the new gold of the digital age since the concept of Bitcoin was materialized in 2008 by an unknown person or group of people using the name Satoshi Nakamoto. The year 2020 could mark the start of the "Golden Age of Cryptocurrencies" because of the growing interest of institutional and retail investors worldwide. Cryptocurrencies have become a new way of investing and accumulating wealth, as well as a means of payment for goods and services.The Privacy Future of Cryptocurrencies
Given the intangible nature of Bitcoin, the cryptocurrency is treated as something that is mined, stored, and whose mathematically proven finite supply ensures that its value rises and surpasses unlimited fiat currencies like the US dollar. The rise of Bitcoin has drawn many cryptocurrency proponents led by libertarians, cypherpunks and anarcho-capitalists who want little to no involvement from governments, who are debating over the regulation of cryptocurrencies when it comes to the future of cryptocurrencies. Government regulations on cryptocurrencies can be a double-edged sword. While regulation ensures that cryptocurrencies transactions are not used for illicit purposes such as theft and abuse, it could not safeguard users' anonymity and transfer the control of one’s assets to individuals. Governmental concerns with privacy coins, cryptocurrency mixers and the use of cryptocurrencies for illicit activities are redundant most of the time.
Data from New York-based blockchain analytics firm Chainalysis and the United Nations Office on Drugs and Crime revealed that traditional fiat money is used 800 times more than bitcoin to launder money on the darknet. The results don’t take into account estimates of money laundering through conventional markets.
Also, according to a recent Chainalysis webinar, the majority of funds sent to cryptocurrency mixing services or tumblers comes from exchanges, which indicates that such funds are primarily used for privacy purposes rather than for illicit activities. Stolen funds represent only 8.1% of all funds sent to cryptocurrency mixers.
Governments across the globe are looking to challenge decentralized currencies and are increasingly looking at launching their cryptocurrencies to replace fiat currencies, which if they are successful in implementing them to the world, the very definition of anonymity in cryptocurrency will cease to exist. Some experts claimed that cryptocurrencies just can’t compete with national financial infrastructures. However, Vitalik Buterin, co-founder of Ethereum, believes that with or without blockchain technology, digital currencies will continue toward mainstream adoption and foresees the more appealing future currency to be decentralized and private.
In a recent Block TV podcast on March 4, Vitalik is hopeful for the future of cryptocurrency — specifically the fate of decentralization. He said that:
“We've been seeing many situations where even things that are perfectly legal just end up getting restricted because whoever runs the centralized chokepoints just wants to exclude some category of users and I think those are reasons why people will continue to be interested in fully decentralized digital currency.”