- An Europol official recently found that Monero (XMR) transactions could not be traced between the sender and receiver.
- Europol is said to be looking closely at anonymous coins, which was why officials were looking at Monero. In recent years, Europol has made efforts to reduce the usage of anonymous coins, including Bestmixer which was one of the most popular Bitcoin mixing services.
- New legislation is expected to come in 2020 in the U.S. Congress which would push coin exchanges to record crypto assets’ transaction history and origins to cut down on the usage of cryptocurrencies for illegal activities.
- Monero would not be able to comply with this. The German Finance Ministry also expressed concerns about the increase of Monero usage in November 2019.
Some exchanges have already delisted Monero and other coins because of the inability to trace transaction information and IP addresses. Recently, some South Korean exchanges including OKEx Korea and BitBay removed Monero citing the FATF rule which says that cryptocurrency exchanges need to retain buyer and seller information for each transaction.
Privacy and untraceability are the main reasons why Monero became popular in the first place. In fact, the coin rallied after the Europol was released because it further proved to enthusiasts that the cryptocurrency is not traceable.
It mainly relies on three technologies to ensure privacy, which are Stealth Addresses, Ring Signatures and Ring Confidential Transactions (Ring CTs). Ring CTs group real XMR coins from the sender with decoys sent from other points in the blockchain to hide the real input. Previously, only 10 decoys could be added to every transaction.
However, the Monero Research Lab released Triptych on January 6, which builds on Ring CTs to allow a larger number of decoys to be used and making it harder for someone to trace the true value of a transaction. Triptych does this by making the byte size of ring signatures scale logarithmically with the number of decoys instead of linearly.
This shows that Monero is working hard to maintain its privacy characteristics, even as regulatory scrutiny around privacy coins increases. While Triptych is still in the research phase, Monero developers are still looking at other improvements to increase privacy including Lelantus, Omniring and CLSAG.
How will the Europol report affect the prospects of Monero? It seems that the report reinforces exactly why Monero enthusiasts love the XMR coin and builds more confidence in the cryptocurrency. While the risk remains that governments may crack down on Monero, which would destroy the value of the coin, Monero users don’t seem to be too affected by it as the value of the coin has continued to increase.
There is a growing base of people who insist that privacy is a need for everyone, not just criminals. With governments cracking down on cash usage, people have even less privacy to who they transact with and the value that they transact.
On social media, there is even speculation that Europol might not be telling the truth about not being able to trace Monero. This might be a move by Europol to lure more people to Monero and trap them when Europol traces the parties in Monero transactions.
In the short term, there certainly seems no hindrance to Monero’s prospects from the Europol report. However, in the long term, Monero users may want to keep watch on Europol’s next move as any major crackdown or ban on Monero would completely wipe out the value of XMR coins.
Author: Javier Solorio