Online cryptocurrency exchange Poloniex announced that it would no longer be servicing New Hampshire residents, revealing an infrastructural issue with Monero, which trades heavily on the exchange.
In a notice posted on the site and sent to certain customers, the exchange announced that it would cease operations in New Hampshire as a result of regulatory changes, forcing all customers to close their accounts:
“Due to changes in New Hampshire’s regulatory statute as it applies to cryptocurrency, Poloniex will temporarily suspend New Hampshire account creation until further notice. For existing New Hampshire customers, you will receive an email with instructions on how to suspend your account.”
The Shutdown Highlights Weaknesses In The Infrastructure Around Monero
This recent turn of events showcases a key element lacking in the current infrastructure surrounding Monero: a diverse or decentralized market. Currently, beyond 96% of all XMR trading goes through Poloniex, with very few reliable peer-to-peer options available (two new sites are making headway into peer-to-peer cash trading, but are as of yet still in their infancy). This means that a single exchange going down, ceasing XMR trading, or closing accounts in an area can have drastic short-term effects on the currency, ranging from disrupting all trading in an area to causing a broad price crash.
Currently, Bitcoin reigns supreme in diverse acquisition avenues. From traditional exchanges to local meetups to peer-to-peer exchanges like LocalBitcoins and Wall of Coins, options for both acquiring and offloading Bitcoin abound. The ability to “shut down” Bitcoin by targeting a few businesses, then, is much more unlikely, as the currency has already developed a robust infrastructure without a single point of failure. Few other currencies have anything approaching this level of market diversity, but many of the more established cryptos are not so heavily reliant on a single exchange.
New Hampshire’s Anarchist Activists Are Exactly The Type Who Need A Reliable Private Currency
The US state of New Hampshire, where Poloniex cancelled trading, is home to the Free State Project, a group of over 2,000 political activists (with a promised migration of 18,000 more over the next several years) seeking liberty from a domineering government. A certain portion of those are anarchists seeking complete liberation from government control, and as such have compelling reasons to avoid using a traceable currency, making them a prime group for reliance on Monero. However, said activists just lost the overwhelmingly largest source for acquiring XMR. In an urgent situation, this development can make the currency, otherwise a solid choice, unviable.
Monero provides several distinct technological advantages over other cryptocurrencies, and shows promise as a private means of exchange in an age with increasing government surveillance and attention towards Bitcoin. The infrastructure surrounding that currency, however, needs more development before it can cash in on that promise.