Monero, the privacy-centered cryptocurrency that long languished far from the top ten, recently experienced a significant price spike, growing tenfold over the course of just a few months. Much of this can be traced to dark market integrations like Sigaint and Alphabay, and the recent Bitfinex hack might be partially responsible as well, as the option to turn stolen funds into something less traceable is attractive.
However, while this astronomical boost to Monero has proved very positive short-term, there may exist a long-term liability from its embrace of dark markets. In time, becoming a “dark coin” may result in the creation of a growth ceiling.
The Majority Of Consumers Prefer Convenience Over Privacy
For better or for worse, the average consumer cares little about privacy. With the simple lure or a free coupon, a raffle, or even just being asked at a grocery store, most will divulge their private information without a struggle. Because of this, the lure of untraceability is not particularly appealing to most. What is appealing, however, is the ability to send money anywhere at anytime to anyone instantly and for very low fees. Being able to pay when you forget your wallet and card (or have bank issues), easily splitting a large and complicated tab at a restaurant, tipping a friend gas money for a ride exactly and without having to go to an ATM… those are examples that can get people excited about cryptocurrency.
Monero’s primary offering, via a private blockchain and ring signatures, is total privacy. As a modern and functional cryptocurrency, XMR does offer fast transactions, a decentralized model, and low fees compared to the banking world, but where it really shines is in the ability to completely obfuscate transactions. For the average consumer, however, this advantage is practically meaningless, as is the ability to buy illicit goods.
Monero Pigeonholed Itself As Darknet Money
The main thrust behind Monero’s marketing push was a singular goal: to be the world’s most private and anonymous currency. This single-minded approach has paid off, resulting in several significant dark market integrations, allowing the currency to rise to the top rankings of the cryptocurrency charts, within striking distance of Bitcoin itself.
However, this success comes with a liability. By appealing exclusively to a sense of financial privacy, consumers who just want to carry out business as usual are left without a compelling reason to jump on board. As Bitcoin becomes more mainstream and develops the infrastructure necessary to appeal to the masses and their economic needs, it will leave the “dirty money” label behind, with Monero its successor. Before, when cryptocurrency had but one champion, it was easy to dismiss Bitcoin’s unsavory uses as an understandable side-effect of creating a powerful new technology. When the cryptocurrency field becomes more developed, however, any currency appealing to illicit markets must own that label entirely.
Dark markets may soon become too “hot” for most
At this current stage in the wild new world of decentralized internet, dark markets have remained relatively untouched by government. Whether this is because law enforcement is waiting back to see how dark markets develop, or because they simply have no clue how to approach the problem at this point in time, is irrelevant; sooner or later they will begin to take much more serious action when that happens.
Yes, there will always be a core group of users perusing the dark markets, and they will continue to find Monero valuable to their dealings. However, this group will undoubtedly become more focused and limited as pressure from authorities increases. Regular folks, meanwhile, will see no use for a hyper-private currency, and will likely eschew using something with such a strong reputation for use as dark money. Monero, drawing its success from its aggressive courtship of the dark web, will end up married to its limitations in the end.