SDBS #30: Privacy Plan in Wake of Recent Bittrex Delistings
Summary
Today’s post will briefly describe the team’s reaction to Bittrex’s delisting of the three major privacy coins XMR, DASH, and ZEC. We also give our plans in the wake of this news.
In short, the development team will not jeopardize any of XST’s markets in the foreseeable future, meaning the availability of cryptographic privacy on the Stealth blockchain is on hold until the regulatory and/or exchange environments are favorable. I will explain below what we mean by a “favorable environment”.
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Our Reactions to the Delistings
Our first reaction to the three delistings is that we are disappointed that privacy appears to be a “toxic feature” for coins on US cryptocurrency exchanges. Although Bittrex gave no reasons for its actions, it is obvious from the features and prominence of these three coins that privacy must be the root of the issue.
Second, we acknowledge that Stealth intends to implement privacy features, and therefore could be a target for delisting. We want to assure the community that we will work in the near-term to retain all of XST’s markets, even though our plan is and has always been to become the highest performance and most secure privacy coin.
Our commitment to existing markets means we will put privacy features on hold.
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Stealth Addresses
Some community members have expressed concern over stealth addresses. The Stealth blockchain protocol does indeed support “stealth addresses”, but they are not a true privacy feature. Stealth addresses simply allow a user to have a public address where anyone can send to it, but the blockchain information reveals no connection between the public stealth address and blockchain transactions. In other words, stealth addresses are simply a way for two parties to secretly exchange an address without requiring the parties to contact each other directly. On the blockchain level, stealth address transactions reveal no more or no less information than any other transaction, behaving the same as if the two participants exchanged an address in a private meeting. Thus, we don’t believe stealth addresses pose any threat to XST’s markets on US exchanges.
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Regulatory Outlook
I should mention that we have delayed adding privacy features to Stealth for these types of reasons. Since about 2018, regulatory compliance has been critical (and even somewhat of a burden for the team). Because of this changing environment, we have been weary of capricious decisions by both regulators and exchanges. In short, we have been awaiting interpretable signals with respect to blockchain privacy. With the recent Bittrex delistings, it is now clear that US regulators, and hence exchanges, will become increasingly hostile to coins offering strong blockchain privacy.
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Immediate Plans
Privacy development on the Stealth blockchain is on hold, although privacy still remains a critical future development goal.
The delaying of privacy features does not mean Stealth development will stop or even slow. In fact, we are now able to significantly advance the release of our unique high performance blockchain protocol (Junaeth). Additionally, we will shift focus to other non-privacy features that should add significant utility to Stealth, including oracles, side chains, and smart contracts. We will update our roadmap soon to reflect these changes.
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The Future of Privacy on the Stealth Blockchain
As mentioned above, what do we mean by a “favorable environment”? First, we believe regulatory compliance will only become more stringent, meaning that we doubt that XST will ever simultaneously incorporate blockchain privacy features while also being listed on US exchanges. In other words, we believe centralized exchanges will never offer a favorable environment for coins that offer true blockchain privacy.
Second, we believe that decentralized exchanges (DXes) will become more important. Anyone who has used Uniswap, for example, can appreciate the unparalleled trading experience offered by automated market making (AMM) protocols. AMM encourages market depth, incentivizes liquidity, and optimizes slippage, combining to create healthy trading markets. Once developers on platforms like Ethereum solve how to reduce fees so that small trades are worthwhile, centralized exchanges will need to dramatically improve their services or they will become obsolete.
Stealth plans to integrate fully into the DX universe with wrapped tokens available on all major platforms, starting with Ethereum. When this happens, and when DXes become more affordable, it will likely be possible for Stealth to simultaneously offer both privacy features and healthy markets.
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The Stealth Team
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