Initially, cryptocurrency positions were anonymous means of exchange, free from the control of centralized authorities. While a handful of enthusiasts were experimenting with digital coins, the name was processed. Digital assets were perceived as a completely harmless fad.

Even with the transparency of the pendant, the idea of locating the owners of the wallets turned out to be almost impossible. Some experts said that government representatives represent even more controlled spaces than virtual banking; there were no representatives.

However, cryptocurrencies have won the minds, hearts and wallets of millions of users. By historical standards, this happened quickly. The ability to trade the BTC/ETH crypto pair was implemented almost immediately after the launch of the Ethereum air conditioner. With the growing popularity of digital assets, even a pseudo-anonymous crystal in a number of countries began to be considered a threat to national security, and not without reason.

However, the process of de-anonymizing users has been significantly simplified. This is facilitated by an increase in the number of users and their activity, improvement of the technical and methodological basis for analyzing large volumes of data, as well as government interest in this issue.

The amount of clear evidence of the possibility of de-anonymization is gradually growing. In 2021, hackers successfully attacked Colonial Pipeline computer systems. As a result of the attack, they were paralyzed; the attackers needed to buy 75 BTC from the community. However, the FBI was able to track and recover more than 63 BTC.

Former prosecutor Katherine Hone claims the success of the operation was ensured with the help of cryptocurrencies. If the attackers had used the traditional financial system, it would have taken much longer. Household transparency, she believes, is a key indicator of why authorities are accepting of Bitcoin.

Do privacy coins really threaten global security?

The question of how secure privacy coins are remains a cautious debate. At the peak of the development of the cryptocurrency market, its capitalization slightly exceeded $3 trillion, and the main share came from bitcoins. At the same time, the daily turnover of Monero is less than 0.5% of the daily turnover of BTC. This figure is too small to consider privacy coins as the main financial tool of the criminal world. For example, global drug trafficking is estimated to be worth approximately $870 billion, and the bulk of money flows continue to pass through international financial systems.

Some developers of anonymous coins put forward another argument: the level of confidentiality of transactions can be adjusted, and few achieve complete hiding of information.

At the moment, the scale of competition between confidential cryptocurrencies appears to be greatly exaggerated. However, we should not discount the growing speed in different regions of the world. Mentions of meetings within the framework of recent events and the intensification of the activities of terrorist organizations cannot but alarm the intelligence services.

The future holds privacy coins

Private cryptocurrencies are in energy situations. Although centralized cryptocurrency exchanges have become wary of confidential coins, a couple of delistings have not yet been observed. Buying Dash, Monero or ZEС is no more difficult than convert ETH/XTZ. But still, the attitude of regulators towards them in the foreseeable future is more likely to become tougher than vice versa. In some countries their use is already prohibited by law.

While demand for private coins remains low, perhaps regulators will address more pressing issues. However, a sharp increase in the popularity of anonymous cryptocurrencies is hypothetically possible, which could be combined with their cruel joke. If they are struck by light and deemed threatening by the government, they will be the focus of the attention of the relevant authorities.

The continued use of anonymous coins in this scenario may be difficult. The risks and possible consequences of investing in private coins remain unpredictable. If you are considering investing in such coins, be careful and stay tuned as there are risks that you may be subject to restrictions on the use of your coins in the future.