Monero (XMR), the most anonymous crypto in the ecosystem, is regularly threatened with delisting by several exchange platforms. Without calling into question the existence of the project, more and more of exchanges centralized authorities view cryptocurrency as undesirable. However, it is an important component of the privacy transactions, and more broadly digital freedoms today under attack from all sides. Its decline could mark the end of the original ideas of cypherpunks and bitcoin.
Monero, a crypto that encrypts
Launched in 2014, Monero (XMR) is often considered the most anonymous cryptocurrency on the market. Thanks to its bitcoin-inspired code, it provides a transaction solution that is extremely difficult to trace. Accused of fueling traffic on the Internet and the dark web, XMR aims to imitate the properties of cash, like bitcoin. However, Monero adds complex mechanisms that make its blockchain almost impossible to decipher, unlike bitcoin which relies on a transparent ledger. It is these unique characteristics from cypherpunks work that fuel the distrust on the part of institutions.
Quizzes to complete to use Monero
Last year, Binance announced that it was excluding Monero from its offering… before reversing its decision shortly after. But recently, the platform decided to once again strengthen the monitoring of several anonymous cryptosincluding the emblematic XMR but also Zcash, second privacy corner the most popular behind Monero. Concretely, Binance has established a watch list for certain digital tokens, currently around a dozen. Binance customers holding Monero will therefore have to pass a test in the form of a quiz to ensure that they know the “risks” associated with this asset.
“To obtain access to tokens marked with the Monitoring Tag or Seed Tag, users will need to pass the corresponding tests every 90 days. […] Keep in mind that these tokens may no longer meet our listing criteria and be removed from the platform. »
Message from Binance to its customers, January 4, 2024
Monero, always undesirable
However, the ban on Monero by Binance would not prevent users from continuing their transactions on other marketplaces, or even directly peer-to-peer. It is this method which also guarantees perfect anonymity, such as real electronic cash. The exclusion of crypto from exchanges centralized (also called CEX) should therefore not have any undue influence. On Reddit, some members of the community are even happy with this decision. Indeed, the presence of XMR on CEX is mainly of interest to speculators, rather than real users. “Monero is the only community hoping for a withdrawal from Binance”quips a user.
At first glance, Monero seems difficult to attack. Based on the same mechanism of proof-of-work than bitcoin, of which it is a fork (a copy of the code), it has never experienced a major flaw. Decentralized and open-source, its protocol has resisted for more than 10 years security threats which weighs on the blockchain.
Rather than directly attacking the protocol code, a progressive exclusion from marketplaces therefore stands out as a better solution to fight against Monero. Of course, connoisseurs can always exchange it without an intermediary, but this requires a good knowledge of blockchain tools. We remember that the penalization of film downloading pushed viewers to turn to more user-friendly legal streaming platforms, such as Netflix. With Monero it’s a bit the same thing: without disappearing, access to this transaction tool could become more and more complex, and in short, marginal.
Indirect attacks on the protocol
Constrained by state regulations, more and more platforms are choosing to no longer offer anonymous cryptos for purchase. By making access to this payment solution more complicated, there could well be, in the long term, less and less exchanges. Because before you can use XMR, you still need to be able to obtain it for euros or dollars. However, centralized platforms like Binance or Coinbase are today those which offer the simplest, or even the cheapest, solutions. In recent years, the number of Monero transactions however, remains stable, as does its hashrate (the computing power of the network). Proof that the network remains alive and well used, even outside of centralized giants.
More worryingly, Binance and other platforms are accused of using fractional reserves : a form of market manipulation which consists of overestimating the number of tokens held. The objective? Keep the price of XMR falling in order to accumulate it at a low price, and thus gain more and more power over the protocol. Indeed, the best way to control a currency (digital or not) is either to control its issuance or to own a large part of its stock. It is on this second point that institutions can act.
The last bastion of on-chain privacy
The potential ban on Monero (XMR) comes amid concern over the emergence of central bank digital currencies, CBDCs (MNBC in French). The digital euro could indeed allow states (democratic or not) to easily trace each euro transaction. Paradoxically, the digital euro project gives some publicity to XMR, which is of interest to more and more people around the world in the face of potential threats to privacy from institutions. As such, Amnesty International recalls the importance of having access to tools to protect oneself from mass surveillance. The fact remains that if Monero does not disappear completely, it could become a simple relic of a time when privacy on-chain was still possible.
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