2017 was a really good year for cryptocurrencies, its combined market cap peaking at $654 billion, representing an increase of almost 3,600%.
The Two Driving Trends
The surge in interest for cryptocurrencies has been driven by to major trends: the interest of having these coins accepted as decentralized currency, or the interest of seeing blockchain technology become a primary platform for payments.
Cryptocurrencies like bitcoin and Litecoin fall into the former category. Bitcoin has been accepted by many businesses, and it’s been constantly adding new names to the list. The fact that bitcoin was made a legal currency in Japan only helps its case.
The other part of the crypto community wants blockchain technology to become a solution for issues regarding money transmittance. Firstly, blockchains are decentralized, meaning there is no main data center that can be seized by criminals. Data is instead stored on serves and hard drives on various places around the globe. Secondly, there is no need for an intermediary, thus lowering the transaction fees. And lastly, blockchain transactions are faster, almost instant, seeing as proofing of encrypted transactions happens 24/7.
Latest Crypto Trend: Privacy Coins
A new emergent trend in the crypto space are privacy coins. The privacy coin has the same vision as bitcoin that virtual coins can serve as a primary means through which goods and services can be bought, but adding more anonymity and privacy to the mix.
One popular bitcoin misconception is that such transactions are completely anonymous. While this is in some part true, seeing as you don’t have to provide an ID number or bank account, information found on the digital ledger can still be traced back to you.
Privacy coins can be viewed as another stage of bitcoin’s primary ideal. They were created to ensure that the user can perform monetary transaction anonymously. While beneficial to many legitimate users, many consider it the type of tool which many cybercriminal would use to hide their identity.
Notable Privacy Coins
The most popular privacy coin is Monero (XMR), currently ranked as the world’s 11th cryptocurrency, with a market cap of nearly $5 billion.
Monero runs an open-source protocol called CryptoNote that conveys the user’s financial information. Unlike most cryptos that use an unchanging signature, Monero’s CryptoNote usues ring signatures when verifying transactions. A one-time spend key, known as a stealth address, is generated by the sender of XMR, the recipient being the only party that can find and access those funds. Thus the transactions cannot be linked to the sender.
Verge relies on Tor and I2P networks to conceal IP addresses. Its Simple Payment Verification technology sees that transactions are settled at an impressive speed of 5 seconds.
While cryptocurrencies in general have a lot of benefits to offer, and no one can deny their recent popularity, they run the risk of being a disappointment to their investors regarding their technological adoption.