The development team behind the “privacy coin” Monero has taken exception to a Reuters report profiling the coin and highlighting its use by criminals.
“For a story that ‘examines the features and characteristics of some of the alternatives to Bitcoin that have grabbed the attention of developers, investors and regulators,’ (the Reuters article) arguably overemphasized the criminal use of Monero and under presented the features and characteristics that make Monero great and popular,” Monero Outreach writes.
Key among those features and characteristics is how Monero is designed to mimic the features of cash in a, “…financial system that makes free societies possible,” the team says.
“In today’s legacy financial system we enjoy a lot of privacy (you don’t see the accounts of anyone you transact with). This privacy is only broken by law enforcement upon suspicions of illicit activity. But, day to day, you and I can transact and it would not imply visibility into one another’s bank account balances and activity.”
Monero Outreach also takes exception to the frequent use of the term “privacy coin” in the media and common parlance.
“Privacy coin” is regularly used to describe Monero and other cryptocurrencies like ZCash designed to obscure identifying data about senders, receivers and amounts sent:
“Monero is not a ‘privacy coin’, it is a ‘fungible coin’ that is simply trying to replicate the mutual privacy we have with one another in our legacy financial system…”
Notably, the Monero Outreach team even goes so far as to call out Bitcoin’s transparency as regressive:
“Bitcoin is fully transparent. Any teenager with an internet connection can know more about you — if you are a Bitcoin user — than law enforcement today if you are a fiat user…Bitcoin and similar transparent coins represent a huge step back from what open society has given us, and Monero was created as a response.”
Monero Outreach also asks the media to profile a feature of the coin called “view keys,” which the team claims can allow NGOs, for example, to permit audits of Monero donations received:
“A view key is associated with an address and allows anyone holding it the ability to audit the address without being able to spend the funds. For instance, an NGO can publish its view key alongside its donation address, and the entire world can audit the donations received. It allows businesses and individuals to comply with certain regulations, those that require visibility.”
Monero Outreach also argues that government agencies neither need, nor are entitled to, complete access to an individual’s financial data, but really only need access to credible records when specific circumstances call for it:
“Again, (views keys) is a feature that mimics what we have today with cash and the fiat financial system. The IRS does not need to have continuous visibility into your accounts to do its job (you would probably find that worrying), but if they contact you and ask you to show or prove something, with Monero you can. This mechanism is baked into the Monero code…”
And while Monero enthusiasts have made an effort to mitigate criminal use of their coins, blockchain forensics firm Elliptic has alleged that Monero is nonetheless becoming increasingly favoured by criminals put off by Bitcoin’s traceability.
Elliptic’s Chief Data Officer, Tom Robinson, told Reuters that while Bitcoin continues to dominate on Dark Net markets, Monero is now being accepted on 3 of the Top 5 illicit markets on the Internet’s underground.
Mitchell Krawiec-Thayer, a San Francisco-based blockchain developer who is part of Monero Research Labs also told Reuters that Monero’s dedication to “ASIC-resistance” (protocol features that keep Monero-mining accessible to small operators and that prevent domination by mining monopolies) also makes it attractive to criminal “cryptojackers.”
“Cryptojacking” is a phenomenon whereby hackers use malware to take control of unsuspecting individuals’ and company’s computer systems and then use these systems to “mine” (competitively produce) cryptocurrencies.
Monero’s anti-monopoly features also make it the preferred coin for cryptojacking via infection of multiple small machines or networks.
Cryptojacking malware “zombifies” affected computers and can run them down while facing them to guzzle volumes of electricity. Monero-mining proceeds are sent directly to hackers.
That Monero has become the cryptojackers’ cryptocurrency of choice cannot be denied.
“(ASIC-resistance) lowers the barrier of entry to everyone,” Krawiec-Thayer told Reuters. “The downside is that criminals have started using that. Stealing other people’s resources, putting strain on their equipment – it’s a straight-up threat.”
Monero Outreach also places part of the blame for a rash of Monero-based “cryptojacking” on the companies making operating systems vulnerable to commandeering by “botnet hack,” a type of malware-infection hack that allows attackers to take control of large swathes of infected computers and wield them in other attacks (such as DDoS attacks) or for cryptojacking:
“…the article mentions ‘cryptojacking’, while neglecting to discuss the issue of botnets in general and how they are a problem with computer operating systems. Monero cannot control the security of operating systems, which would be primarily responsible for eliminating botnets.”
Crypto advocates often claim that cash remains the preferred medium of criminal enterprises. Similarly, Monero Outreach claims Monero is a neutral tool:
“We cannot prevent immoral people from using good technology for bad things, just as hammer manufacturers cannot prevent criminals from using hammers as weapons.”
Most agree, however, that Bitcoins and Monero have surpassed the utility of cash when it comes to ransom payments, however, as unlike with cash or hammers, cryptocurrencies mean criminals don’t have to be present at the scene of a crime.
Perpetrators in a prominent case of kidnapping in Norway, for instance, demanded a ransom of Monero, and Bitcoins have been demanded in numerous other kidnappings across the globe.
Cryptocurrencies are also demanded in numerous ransomware attacks on municipal and private infrastructure such as the one that has been crippling 21 municipal agencies in Baltimore for the past two weeks.
Because cryptocurrencies have done away with the need for cash-drops in kidnapping cases and other crimes, they are proving a veritable boon for criminals, and cryptojackings and exchange hacks appear to be being used to bank state-sponsored hack nests in Russia, Iran, and North Korea.
Reuters writes that regulators are “aware” of privacy coins but that few have yet to address them in legislation.
A spokesperson for Britain’s finance ministry reportedly said it will “soon” initiate directives compelling crypto-related companies to make sure they are accommodating anti-money laundering regulation.
Meanwhile, Monero has set up a threat response team where victims of cryptojacking can get help, and advocates continue to pursue the coin’s aims.
“It doesn’t selectively encourage crime, it encourages commerce,” Vancouver-based Monero core-developer Francisco Cabanas told Reuters on Skype. “In that respect, it’s no different to cash.”