- Chainalysis CEO Michael Gronager has said that privacy coins such as Monero and Zcash have a limited use case in the future
- Gronager says that they won’t see widespread use and will remain “niche”
- Chainalysis is a pioneer in blockchain analytics and recently won a contract from the IRS to “break” Monero
Chainalysis CEO Michael Gronager has said that privacy coins such as Monero and Zcash only serve “crime syndicates” and as such do not have a future. Speaking to Forbes online, Gronager, whose company has recently been awarded a contract to try and ‘crack’ the Monero blockchain, said that privacy coins were an “interesting technology” but they weren’t something that authorities “should be concerned about.”
Chainalysis’ Client List Continue to Grow
Privacy coins have come under the microscope more and more recently as the regulatory pressure on cryptocurrencies has increased. Privacy coins like Monero and Zcash are designed to cloak certain elements of the transaction, putting them at odds with regulators who are trying to make the cryptocurrency industry more transparent.
Chainalysis has played a big part in this revolution, creating and refining its Reactor software and processes that allows authorities to trace blockchain transactions on all manner of tokens. This has unsurprisingly made them the enemy of many a cryptocurrency user, but seeing as their revenue year-on-year has doubled for its 2020 third quarter they won’t particularly care.
Gronager puts this growth down to “increased demand for investigative blockchain technology from public sector agencies”, most recently when the IRS awarded Chainalysis a $625,000 contract to help “break” the Monero blockchain.
Privacy Coins Only Used by “Crime Syndicates”
Gronager says that privacy coins are only used by “the likes of crime syndicates” and that their scaling issues will mean they won’t trouble authorities:
…you need liquidity and adoption and you need a lot of people to use it. That works for bitcoin as it has liquidity. Monero and zcash are niche purposes that can’t be used for criminal activity at scale. There will be privacy coins and there will be privacy features but they’re niche products. Long term it’s not something we should be very concerned about.
Perhaps unsurprisingly, Gronager predicts a brighter future for blockchain analysis companies like Chainalysis, saying that as the cryptocurrency space grows so will their scope of use in keeping the space safe from bad actors.