PowerKee’s Bastion of Privacy #3
Market conditions have been undeniably bullish for cryptocurrencies in recent months. Sentiment data is at record highs and the price of Bitcoin has been flirting with $20k territory.
In previous releases, we outlined why there is a pressing need for privacy-focused cryptocurrencies. Governments and corporations have been taking increasingly authoritarian stances and our privacy rights have dwindled as a result.
Bitcoin is no longer a valid solution as it has become extremely complex to stay private while using the largest cryptocurrency network. Privacy coins are an attractive alternative and are straightforward to use.
In the latest Bastion of Privacy release, we explore how privacy coins have fared in recent market conditions. We highlight how some privacy coins have outperformed but emphasize why privacy coins are likely to take on a new level of importance after a bull market.
Privacy Coin Performance Versus Bitcoin
(Source: Tradingview.com)
The largest privacy coin by market capitalization — Monero — has outperformed Bitcoin year-to-date. At the time of writing, Monero has recorded an appreciation of ~185% while BTC has increased by ~152%.
One factor fuelling the outperformance of Monero may be the inflow of new capital. When new entrants to the cryptocurrency market consider privacy coins, the most likely recipient of their funds will be the biggest privacy coin. Similarly to the winner-takes-all effect, there are benefits for those in first position.
(Source: Tradingview.com)
The second and third-largest privacy coins by market capitalization — Dash and Zcash respectively — are currently underperforming Bitcoin. These coins have outperformed Bitcoin for the majority of the year but dipped below in recent months as Bitcoin began appreciating relentlessly since October.
Once again, there are benefits to being in first position and Bitcoin has had an exemplary performance after the surged interest in cryptocurrencies. After Bitcoin approaching $20k, cryptocurrencies may be on the precipice of a new bull market. If conditions similar to 2017 resurface, privacy coins will reach a new level of importance.
Why Privacy Coins Become Increasingly Important After a Bull Market?
If we observe a recurrence of 2017 market conditions, Bitcoin and the wider cryptocurrency market will grow by multiples of its current value. A senior Citibank analyst recently forecasted that Bitcoin could reach $300k by December 2021.
If such conditions materialize, the scrutiny facing cryptocurrency holders will be much higher. Governments will be concerned about tax evasion and will tighten regulations so that every cryptocurrency transaction has a KYC party on both ends. Rumours have already emerged about the introduction of such regulations.
Privacy coins will be one of the few cryptocurrency options that will allow users to maintain their anonymity. This year, we have already observed major governments seek to further their control of cryptocurrency value transfers.
A key example is Chinese authorities shutting down OTC desks and imprisoning founders. Such events will only exacerbate as crypto prices rise. Privacy coins will take on a new echelon of importance as governments impose their power.
Some privacy coins like Monero have outperformed in recent market conditions but many others have underperformed. However, as market conditions get more bullish, expect privacy coins to play a greater role and receive a greater share of the capital inflow.
About PowerKee
PowerKee is a cryptocurrency network that makes privacy easy. Users can transact cheaply and instantly while maintaining anonymity. The PowerKee protocol uses a mixture of zero-knowledge proofs and coin mixing to provide strong privacy assurances to its users.
