This is our 3rd blog from the Financed Unchained series! In this series, we explore the world of private finance : from issues in the current market to real-world applications. For those who missed the first 2 blogs, jump to “The Overview” or “How SolBank works”.
SolBank is not the first cryptocurrency privacy project out there. Pioneers like Monero, Zcash, Komodo, Dash, and dApps like Tornado Cash have paved the way for SolBank and we’re fully aware that we’re building on the shoulders of giants. For that, we thank you all.
However, the crypto world is maturing and separate privacy blockchains seem to fall out of the picture. Privacy coins have a major flaw: Privacy features are inseparable from their native blockchain tokens and that is where SolBank stands out.
The need is real. The time is right to shine for solutions allowing users to transact non-privacy coins freely, such as SPL tokens.
Where we are, now
Privacy has always been a key factor in the world of finance.
While traditional bank accounts require clients to go through lengthy KYC procedures required to implement the best possible AML methods, it comes at a high cost for the average consumer. Unbanked and underbanked populations are a big problem that affects an estimated 1.7 billion people globally, equating to roughly 31% of the world’s adult population.
The silver lining is that these numbers are slowly improving and that’s in part thanks to Bitcoin. While KYC is not required to join and interact with the Bitcoin network itself, it still represents a major barrier of entry for those looking to enter crypto and many also believe that financial privacy should be a universal right.
Contrary to popular belief, Bitcoin transactions are not anonymous. Bitcoin is pseudonymous by nature, and blockchain forensics companies like Chainalysis and others have shown time and time again that it is possible to track transactions and link addresses to the individuals and entities that own them.
Blockchain forensics allows individuals and cryptocurrency exchanges to track, and even sometimes recover, stolen funds from hackers. This has been known for quite some time and has led to the creation of privacy-focused cryptocurrencies like Monero and Zcash that provide true privacy.
Privacy Coins : The downfall
If it hasn’t become clear already how important privacy is in the world of finance, it will become undeniable evident in the years to come. With the inevitable rollout of Central Bank Digital Currencies (CBDC), we may be evolving towards a cashless future where every transaction is under government surveillance. Cryptocurrencies, and decentralized technologies as a whole, may play a big part in avoiding a dystopian future for humanity.
Financial privacy will become an increasingly rare and expensive commodity, but it remains unclear if that need for privacy will be fulfilled by the current privacy coins, also known as anonymity-enhanced cryptocurrencies.
The last few months have been rough for the major privacy coins Monero, Zcash, and Dash. Centralized crypto exchanges have deemed these coins too risky, and a trend to delist them has been ongoing.
Major exchanges such as Bithumb, Shapeshift, and Bittrex no longer list these coins, and the tendency is for other exchanges to follow suit. Claiming that anonymity-enhanced cryptocurrencies are closely related to illicit activities such as drug trafficking, money laundering, and ransomware attacks, cryptocurrencies exchanges in countries such as Australia, the Netherlands, and Japan are folding under the regulatory pressure of banking institutions.
If we factor all of this, it will come as no surprise why privacy coins are underperforming price-wise when compared to other cryptocurrencies.
The end of an era ?
Most certainly not. Solutions are now being deployed which allow privacy functionalities to be added to any cryptocurrency. One of these solutions is the SolBank wallet, for the Solana ecosystem.
This new project allows anyone to conceal any transactions, trades, and keep the origins and size of your wealth secret. This is done by hiding financial data by mixing transfers in a decentralized way within a pool of funds owned by Blank. This method concedes greater privacy levels with each subsequent transfer. Using smart contracts, audited by third-party experts, Blank offers transparency and reliability in its anonymity services.
The Blank project also has its own token but it is not a privacy cryptocurrency. This token is periodically used for fees and periodically burned to reduce supply and increase buy pressure, similar to the known BNB token.
Does DeFi need KYC ?
There is no right or wrong answer, as it all comes down to a matter of opinion. The DeFi industry is mostly unregulated at this point in time, but as the market continues to mature and growing regulatory pressure from centralized authorities is to be expected. Solutions are already being developed, such as the case of analytics firm ConsenSys and the launch of the new compliance service to trace transactions of Ethereum tokens within the DeFi market.
Implementing KYC will help prevent money laundering and possibly minimize risks, but it will come at the cost of loss of privacy, decentralization, and fewer individuals being able to enter the space.
Previous episodes from the Finance Unchained series
SolBank is the most private, non-custodial Solana browser extension wallet.
SolBank allows the user to easily interact with privacy smart contracts on Solana to hide the amounts and the origins of cryptocurrency held, in a decentralized, non-custodial, and frictionless manner.
SolBank solves the problem of privacy in crypto transactions. Each time you want to make a withdrawal, SolBank will create a new wallet address for you with the amount of crypto that you requested. This address originates from the smart contract where everyone’s funds are pooled. All of this is achieved using cryptographic proofs to ensure that the user cannot be linked with the original depositing address.
With crypto transactions increasing, on-chain transaction privacy is being highly discussed to keep you safe from exposing yourself. SolBank has developed a system that adds the ultimate protective layer to your crypto transactions while facilitating every function that other wallets offer.
Anyone can easily install SolBank and start reaping the privacy benefits in no time at all. Besides the smart contract functionality, SolBank wallet offers a higher level of privacy due to Tor integration.
Unchain finance with SolBank.
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