Monero, traded as ticker XMR, seems to be the only cryptocurrency able to escape the solid downtrend lately and the approaching hard fork is not the only cause. While it is a definite motivator, there are at least four additional main reasons. The first is obviously the new trend in sanctions.
1. The sanctions
First, the west has essentially sanctioned anyone they could get their hands on with suspected ties to Russian oligarchs, including their uncles and children. This year’s US Treasury SDN list is already over 1800 pages long as of April 2022. The entirety of last year only filled 247 pages.
It’s impossible to overestimate the role of economic sanctions on the growing demand for anonymous funds like Monero. People need a private finance option for moving funds. But what most media outlets seem unable to fathom is that there is no evidence to show that Monero’s adoption is primarily ‘unlawful.’ There is evidence of unlawful Monero use, of course, just as there is evidence of money laundering and terrorist financing using cash, the US Dollar and Bitcoin. Unlike these currencies, however, Monero breadcrumbs are virtually impossible to follow.
Monero isn’t the only common private cryptocurrency but it’s the only one that is private by default, such that no user action is required for transactions to be anonymous. Sender wallet addresses are nowhere to be found on the ledger. Recipient addresses are also private, as are the amounts transacted and wallet balances.
Default anonymity is important because if, in contrast, a transaction requires opting into privacy, most users will default to the transparent option. (This continues to be proven true with Zcash transactions. Zcash is advertised as also being a privacy coin, but as of 2020 only approximately 1% of its transactions were private.) When most transactions are public, a private transaction will stand out and quite possibly attract scrutiny, which is contrary to the basic defining function of a privacy coin. The goal is to make transactions unremarkable by having them blend in with every other transaction on the ledger. This happens with Monero.
2. People miss their right to own things
Foreigners aren’t the only ones being affected by government sanctions. The need for private funding alternatives was not as urgent before western governments started targeting its own citizens with AML and terrorism-related sanctions in unprecedented ways. Recent events are requiring law-abiding citizens to seek refuge in the private financial space currently dominated by Monero.
Government intervention in democratic nations is becoming increasingly common. Earlier this year Canadian PM Justin Trudeau granted sweeping powers to the federal government, police and banks to freeze bank accounts without the need for a court order. The PM invoked the ‘Emergencies Act’ to end protests against pandemic-related mandates, referring to protesters and a Jewish MP as Nazi supporters. Unsurprisingly, the emergency powers brought with them a few unforeseen consequences, including privacy violations.
“The plain language catches anyone sending money to support the public assembly at Parliament Hill and sweeps so broadly that it might catch even the Quickie cashier who sells a demonstrator a can of propane. They would both be ‘designated persons’ whose accounts should be frozen.” (University of Ottawa law professor Paul Daly)
Canada is also looking to broaden its anti-money-laundering and terrorist financing laws to cast a wider net. Hence Canadians might be feeling compelled to own funds that are safe from government interference—just in case those executive orders function as they are designed to function, which entails overreaching first and correcting later (when possible).
It is important to note that acknowledging the fragility of our access to funds is not the same as claiming that governments are intentionally violating our rights every time they do so. Sometimes authoritarian actions can originate from a plan that simply has not been thought through in any depth by those in charge. Indeed philosophical discussions about true intentions and the competency of our leaders are interesting, but in the meantime, there might be bills to pay and that requires unfrozen funds. Your phone service provider might not accept XMR as a payment option yet, but in owning Monero, you have access to a tradeable currency.
And if there’s a safer path to retirement, lots of people are going to choose that option.
In the United States, those who remember life before the Patriot Act might also remember that the act “was regarded as an extremely radical piece of legislation, a very fundamental departure from how we always understood what the government could and couldn’t do when spying on us.” (Glenn Greenwald on DemocracyNow, June 2015) Such acts are now renewed as easily as a business license.
Americans might also be feeling compelled to own funds that are safe from government interference. The same will apply to all citizens of the world. But 9/11 is not a recent event. What has changed in terms of Monero adoption in western societies?
3. People miss that warm and fuzzy feeling
For anyone who has been conscious for the last 10 years, the one claim that needs no argument here is that the most widely-used media platforms are disappearing content that strays from popular narrative. From the censorship campaign against criticism of NATO’s Ukraine policy to unexplained outright deletion of academic content—to the extradition of Australian journalist Julian Assange to the United States for exposing western war crimes—the people are justifiably becoming increasingly afraid of their own governments.
For as long as we can remember, a major western criticism of Russian and Chinese governments has been their use of censorship to keep their populations docile. Censorship has been a nasty concept for democratic societies at least since WWII, after which the world was forced to take a hard look at propaganda ministries. So while the west continues to nominally disavow censorship, misinformation and propaganda, the new perplexing trend is that we continue to criticize authoritarian regimes by becoming more like them.
As The Washington Post acknowledged when reporting Big Tech’s “unprecedented” banning of RT, Sputnik and other Russian sources of news: “In the first four days of Russia’s invasion of Ukraine, viewership of more than a dozen Russian state-backed propaganda channels on YouTube spiked to unusually high levels.” (CPNN)
Westerners no longer feel warm and fuzzy about their freedoms.
Nor do westerners blindly trust the financial system any longer. Tougher economic times are inspiring the average person to seek innovative ways to invest their money—not for profit but for survival.
Inflation soared over the past year at its fastest pace in more than 40 years, with costs for food, gasoline, housing and other necessities squeezing American consumers and wiping out the pay raises that many people have received. (PBS; see also “Bloomberg Tells Poors To Eat Beans & Sell Their Car To Save Money”)
Private finance will come in handy in the current political and economic climate.
The most hated currency
Given Monero’s defining privacy features, it is by far the most hated currency in the world–hated by governments, that is. This is easily deducible from the widespread delisting of the currency, temporary disabling of withdrawals, IRS funding of projects aimed at ‘cracking’ Monero, false news reports, removal of Monero-related apps from Playstore and so on.
Perhaps the most concerning item for many XMR users is the possibility of widespread or global delisting of Monero. The fact that Monero is currently compliant with AML and other regulations in many countries is comforting for as long as it remains true. If a government can legalize spying on its own citizens, it can surely forbid a privacy coin.
If a Monero ban were to happen in your own country, atomic swaps would ensure that you are not left holding a cryptocurrency that can’t be withdrawn, but reduced accessibility for less experienced users will clearly affect adoption and price, at least in the short term. That said, effects on demand and value could go either way and attempts at suppressing Monero seem to be failing.
Monero has been one of the best kept secrets out there for the longest time. It wouldn’t be a shock to learn that many hodlers are hodling for the long haul, irrespective of its trade value in fiat currency. Government unpredictability and asset fragility is really hitting home and no one really knows those sudden regulatory outbursts can really jeopardize a person’s financial freedom (a euphemism for survival).
Economic and political uncertainty has become a reality and it would be surprising if this weren’t driving people to adopt Monero. It’s fair to assume the privacy coin will likely become the new security blanket for those still holding on to hopes of retiring someday.
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