Who will win the anonymous altcoin battle?

Since the recent explosion of Monero, it seems privacy-centric coins are all the rage right now. So I’ve been thinking a lot about anonymous coins of late…

Monero 2016 price breakout

Dash and Monero are the leading contenders with healthy communities, liquidity and market caps.

Monero has the technical advantage in privacy with CryptoNote ring signatures.

For Dash, there’s great governance, but their privacy ain’t their valuation, it’s their roadmap and ability to cohesively execute as a community. Unfortunately they’re aiming at general commerce which I believe is many years before its time.

I think Bitcoin will win on commerce if any coin is to succeed in this realm as it takes huge network effects and adoption to even get started. You need it to be big, as size leads to low volatility, a stable currency, which then allows it to be used as a store of value – people won’t spend your coin to buy stuff until they store it as value in their wallets. Passing through your anonymous altcoin creates needless friction and fees, people won’t do it.

Adoption is hard won. Bitcoin with today’s $550-$600 valuation and $9b market cap, 7 years on from inception is still 2-3 years away from this milestone, so what hope does a privacy centric altcoin have?

If I wanted to achieve privacy via an altcoin, I will need to pass through its currency (~1% fee for 2 trades in and out), so the incentive is to stay inside Bitcoin.

Further to that, privacy tech is easy to tack onto BTC as a second layer such as Mycelium’s ShufflePuff or TumbleBit (and more coming I bet).

Bitcoin is by far is leading the battle for adoption and marketcap. So I think that a probable scenario is all of the anon coins will fail to gain traction in practical terms in due time. Bitcoin will be the sleeper that wins this domain.