According to Chainalysis, the revenue its taking in has tripled in recent months thanks to many public sectors looking to track blockchain and cryptocurrency activity.
Chainalysis Has Seen Its Horizons Grow
In particular, the company is working with the Internal Revenue Service (IRS) to track a privacy-focused cryptocurrency known as Monero, which has been the object of much controversy over the years.
Monero, for example, is often involved in crypto jacking operations, in which a hacker obtains access to a person’s computer or digital device. From there, they begin mining cryptocurrency without the person’s knowledge or permission. Given that it’s a quasi-anonymous cryptocurrency, many of these hackers consider Monero their main object of affection. However, the initial computer owner doesn’t get anything except massive energy bills each month, while the hacker makes tons mining the asset.
Privacy-focused coins have caught the attention of the IRS and several other government agencies, and Chainalysis is looking to assist in any way it can. Michael Gronager – the chief executive of the blockchain analysis firm – explained that he thinks privacy-focused currencies will not last, and that people should abandon them now while they still can. He states:
I’m excited about the growth that we’re seeing in the public sector. There’s a lot of optimism over how the public sector is going to help the private sector grow. Government is a big growth part of what we’re doing and will be over the next couple of years. Every time we earn contracts on the government side, we help the private side grow as well.
Of course, the idea of government monitoring of crypto activity is something of a two-sided coin (pardon the pun). On the one hand, there must be some sort of regulation in the mix if cryptocurrency is ever to reach mainstream or legitimate territory. There have been too many hacks in the past, and bitcoin is still widely associated with criminal activity, and this needs to stop if the public is ever to take crypto seriously in the future.
At the same time, cryptocurrency is not designed to be centralized, though it would be if the government ever did get involved. Instead, crypto is designed to put the people in charge of their own financial futures. People deserve to have control over how their money operates, and the government could wind up getting in the way of this.
No Future for Privacy Coins?
Discussing the IRS’ focus on Monero, Gronager commented:
Privacy coins are a rather interesting technology. If you look at their use cases, which includes the likes of crime syndicates, you need liquidity and adoption and you need a lot of people to use it. That works for bitcoin as it has liquidity. Monero and Zcash are niche purposes that can’t be used for criminal activity at scale.