Privacy Coin Analysis — A Perfect Storm for Privacy Cryptocurrencies
TLDR
- Actions by governments and large corporations are creating a pressing need for cryptocurrencies with strong privacy assurances.
- The need for privacy coins is further strengthened by Bitcoin becoming increasingly integrated with the mainstream financial system.
- Leading privacy coins that have traded throughout the previous market cycle have observed price appreciation of 4,803% to 130,906% since listing.
- PowerKee is an emerging privacy coin network that is launching a decentralized peer-to-peer exchange which will enable users to anonymously convert between fiat currencies and privacy coins.
- PowerKee will be listing with a market cap of $85,000. An over 200x return can be expected if PowerKee follows in the path of its predecessors.
The recent actions of governments and large corporations have created a pressing need for privacy tools and cryptocurrencies. Data from Google search traffic highlights that interest in privacy tools is hitting record highs.
Such data is unsurprising given that governments are attempting to access encrypted communications platforms while also seeking to have complete oversight of our financial transactions. These conditions are likely to exacerbate and are creating an environment which gives extreme upside potential to privacy-focused cryptocurrencies.
PowerKee is an emerging cryptocurrency that prioritizes the privacy of its users. We explore the market potential of PowerKee’s native KEE token by assessing the performance of current privacy coins.
We also explore why recent actions from governments and large corporations are creating a perfect storm for privacy coins. Finally, we detail the unique value proposition of PowerKee and consider some of the downside risks associated with investing in emerging coins.
- Historical Price Performance of Privacy Cryptocurrencies
Monero, Dash, and PIVX are veteran cryptocurrencies with all launching their respective networks long before the price increases of 2017 that brought mainstream attention to the market. Monero and Dash both launched in 2014 while PIVX launched in February 2016.
Each has been a venerable privacy coin with the historic price performance of each demonstrating their immense value to cryptocurrency users. We analyse the progression of each since their launches and exchange listings.
At the time of writing, Monero is the most valuable cryptocurrency by market cap with a valuation of roughly $2.18 billion. The network was launched in April 2014 as a fork of the Bytecoin network which was widely considered to be unfairly launched.
USD price data for Monero extends back to May 2014 when the coin was listed on the Poloniex exchange. The listing of Monero closely coincides with the turning point of the first cryptocurrency market cycle when the market cap of all cryptocurrencies declined ~76% peak-to-trough.
Despite listing in harsh market conditions, Monero strongly recovered in the following years. Those who purchased Monero within two years following listing experienced extraordinary returns on their invested capital.
(Source: Tradingview.com)
Despite a retracement of 80% in the listing year and a retracement of over 86% in 2018, the price of Monero has appreciated by 5,417% since its initial listing in 2014. At the end of 2017, Monero price had grown by almost 15,000% since its listing
Dash has recorded even more impressive return figures. At the time of writing, Dash has a market cap of ~$808 million. The Dash network launched in January 2014 and the privacy coin listed on Poloniex in February 2014.
The coin listed several months before the apex of the first market cycle. This resulted in huge appreciation immediately being observed in the coin.
(Source: Tradingview.com)
At the end of 2017, Dash had recorded a phenomenal 1,670,387% return since listing. It has since weathered a 96% decline over two years but the price remains 130,906% higher than when it listed.
Monero and Dash are the biggest and second-biggest privacy-focused cryptocurrency networks respectively. Many privacy coins with lower market caps have also shown strong staying power in the cryptocurrency market and have recorded significant price appreciation.
PIVX is a privacy coin which currently has a market cap of $19 million. Launched in February 2016, the coin was listed to the Bittrex exchange the following month.
(Source: Tradingview.com)
By the end of 2017, PIVX had recorded a 178,610% appreciation since listing. Despite a severe decline in price over 2018 and 2019, the coin currently maintains a 4,803% increase compared to its listing price.
The analysis of the historical performance of these privacy coins suggests there is tremendous upside potential for new privacy coins. Despite weathering harsh market conditions in recent years, the analyzed privacy coins have provided early investors with extremely lucrative returns.
These coins have performed particularly well in bullish market conditions and have demonstrated strong staying during broader market declines. This phenomenon has applied to both larger-cap and small-cap privacy coins alike.
With recent market conditions becoming increasingly bullish, we will likely observe privacy coins returning to recording significant upside movements. Moreover, macroeconomic and geopolitical developments may be shaping a perfect storm for privacy coins.
Over the past year, netizens have experienced excessive obtrusions to their privacy. Censorship, corporate and government access to data, and authoritarian policies have all spiked. In the following section, we analyse why this is likely to spur even greater demand for privacy coins in the coming market cycle.
2. A Perfect Storm for Privacy Coins
(Source: Google Trends)
The need to protect privacy has become much more pressing in recent years. The above United States search for “privacy tools” shows that search volume is anticipated to hit a record high.
It is no surprise that this spike corresponds with proposed policies that would impede on our privacy. EU and US law enforcement authorities are putting forward proposals that would allow them to access encrypted communications platforms like Whatsapp and Telegram.
Governments and large corporations are increasingly controlling the information flow. They can censor at will while being able to impede citizen’s privacy.
Bitcoin once offered an alternative to the mainstream financial system which was entirely controlled by big banks and government. However, it’s becoming increasingly subject to the control of governments.
Bitcoin being integrated with payment processors like PayPal has made it even easier for governments to view how Bitcoin users are moving funds. Moreover, exchanges like BitMEX that didn’t have strict KYC laws for US-based customers are being charged by US authorities.
Bitcoin mining pools are even launching which are going to apply US regulations to their block selection. Exchange-listed DMG is launching a mining pool which will only append blocks that comply with rules set forth by the US Government’s Office of Foreign Assets Control.
Companies like Chainalysis specialize in analyzing blockchain data to uncover the identity of users. The current macroeconomic and geopolitical environment is extremely challenging for cryptocurrency users who wish to maintain their privacy.
Privacy coins offer one of the few alternatives that provide cryptocurrency users with an easy method to protect their basic human rights. As the crackdown measures of governments intensify, privacy coins are uniquely positioned to outperform in current market conditions.
3. PowerKee Overview
PowerKee provides a cryptocurrency which allows users to transact cheaply and instantly while ensuring their privacy. The PowerKee team is also addressing one of the biggest challenges facing privacy coin users.
Converting between privacy coins and fiat has historically been a hindrance to privacy coin users maintaining their anonymity. To address this challenge, PowerKee is developing a decentralized peer-to-peer exchange that will exclusively facilitate such transactions.
Such an exchange will considerably enhance the value of using existing and emerging privacy coins. Privacy coin users will have the ability to maintain their anonymity while transitioning to and from fiat currency.
Apart from the DEX, PowerKee has the attributes of an extremely secure and usable privacy coin. Underpinned by the Sapling Protocol, the KEE token has sophisticated technology protecting the privacy of its users.
Transactions in the PowerKee protocol can be sent almost instantly at near-zero fees. The protocol is secured by proof-of-stake consensus with masternode operators earning rewards for validating transactions.
The KEE token will list with a market capitalization of $85,000. If the coin follows the path of some of its successful privacy coin predecessors, this gives phenomenal upside potential to early investors.
If PowerKee can appreciate in market capitalization to the value of a privacy coin like PIVX, early adopters will observe an over 200x return on their capital. Emerging privacy coins like PowerKee offer an asymmetric investment opportunity to cryptocurrency users.
4. Risks and Disclaimer
Privacy coins have performed strongly in past market conditions and we firmly believe that current market conditions will provide even greater upside potential for this cryptocurrency market subsector. Nonetheless, it is worth highlighting some of the potential downsides and risks.
While privacy coins have performed extremely well in the past, such performance does not guarantee future price appreciation. Market conditions and dynamics are constantly changing. While there are often commonalities among market cycles, they are never identical and markets are also subject to paradigm shifts where dynamics entirely change.
The privacy coins reviewed in section 1 are only a sample of the entire population of privacy coins. This sample of privacy coins have gathered particularly strong advocates and are a subject of extreme interest among privacy coin enthusiasts.
However, this also implies that the market performance of these coins may be better than alternative privacy coins in many cases. Moreover, the reader should be aware of survivorship bias as there are many privacy coins which failed and holders of such coins would have lost the capital invested.
Finally, the privacy assurances of a privacy coin are only as strong as the behaviour of the owner. If the owner participates in social media discussion relating to their coin or uses the coin on centralized exchanges, they may expose their identity.
5. Conclusion
While not every privacy coin that launches will survive, those that do have huge upside potential. Some of the leading privacy coins that weathered the harsh market conditions of recent years have provided their early adopters with returns ranging from 4,803% to 130,906% since listing.
A new wave of privacy coins will emerge in the current macroeconomic and geopolitical conditions which create a strong demand for their technology. Those that provide unique features like fiat on and off-ramps will be even more susceptible to price growth.
PowerKee is an emerging privacy network that has particularly strong upside potential. If PowerKee follows the path of it’s low to mid-cap predecessors, early adopters stand to observe a greater than 200x return on their capital invested.
