Private Blockchain And The Future Of cryptocurrency
If there is any reason behind the open blockchain used for the creation of Bitcoin, it is the fact that bitcoin was new then and needs features that will prompt people to use it, and the government to overlook it. If Bitcoin started as a privacy coin, I doubt if we will have anything like Bitcoin or cryptocurrency today.
For early adoption, one will agree that public blockchain is the best way to bring the novel financial system to the world, but with the rate at which cryptocurrency adoption is growing, it is right to think of private blockchain as a substitute for people who will no longer fill comfortable with the features of public blockchains.
Decentralization is one of the enticing features of public blockchain but at the same time, the fact that it is open to anyone becomes a challenge to this decentralized system. For every transaction one makes in an open Blockchain, every other person using the blockchain can access the details of the transaction and as well the wallet details of the sender.
This defect leads to the introduction of a private blockchain where transactions can only be visible to the sender and the receiver, except if a third party is permitted to access the transaction. Many cryptocurrency lovers welcomed it with open hands but as time goes on, cryptocurrency-related crimes attracted negative reviews to cryptocurrency and private coins in particular.
Countries were forced to ban privacy coins ( Monero, Dash, Beam, Zcash, etc) as a measure against their usage for fraudulent activities. Many investors have to drop these coins because of the government and the fact that exchanges started delisting them.
Now for a country like El Salvador that has adopted Bitcoin as legal tender, one may be in danger of exposing his wallet balance and risking being kidnapped or robbed when he pays for bills, food, or any other thing with Bitcoin, especially when the person who receives the payment has questionable character. Security in the public blockchain is of concern.
Now with the regulators channeling their energy towards the regulation of cryptocurrency, it will be difficult for privacy coins to succeed in the cryptocurrency world because they offer anonymity that can promote fraudulent activities. Privacy coins may still be in existence today but there is concern on whether they will still be in existence when the cryptocurrency world is regulated.
A point for consideration is whether the regulation of cryptocurrency and the rejection of private coins will minimize cryptocurrency-related crimes. Crime has been around before the coming of cryptocurrency and will remain in the world. The solution should be in fighting off the cause and not the medium. If government and cryptocurrency exchanges should work on improving the security of their system, crime will be reduced to an extent.