Privacy-oriented stablecoins

[Abiky]

We now have collaterized and reserve-backed centralized/decentralized stablecoins. But none of them have built-in privacy features. Anyone with your address can have a look at your wallet's transaction activity linked to a specific stablecoin. Now privacy-oriented stablecoins? That would be Blockchain's next "killer" app. I mean, stablecoins using privacy techniques such as Zero-Knowledge Proofs, Mimblewimble, or even RingCT + FCMPs (Full Chain Membership Proofs). AFAIK, this hasn't been developed yet. But it would be cool to have something like this. It will serve as an alternative to cash transactions. Don't you think?

What are your thoughts on this? Will privacy-oriented stablecoins become a reality soon? Or will they be frowned-upon by mainstream governments? The US has taken a pro-crypto stance lately, so maybe they'll go easy on privacy-oriented stablecoins?

Your input would be greatly appreciated. Thank you.

[JeffBrad12]

Sounds like a recipe for a disaster.
Privacy stablecoin will be used for crime activity such as money laundering, it will not exist for so long until there's huge lawsuit where it will put the stablecoin issuer go bankrupt.
Even coin like Monero gets so many scrutinize that exchanges started delisting it afraid of getting implicated.

Now, how the stabelcoin can get 1:1 value to USD? when creating stablecoin for privacy focused thing like this, using USD reserve is definitely out of question.

[JeromeTash]

With the cryptospace which is filled up with different kinds of shitcoins, you expect that by now, they would have already created such a stablecoin. The reason they probably have not done so is that it's currently not possible.
USDT is already getting problems from regulators despite trying to be"transparent" and freezing funds at request. Now imagine what would happen to privacy-oriented stablecoins.

[nelson4lov]

~Snipped

What are your thoughts on this? Will privacy-oriented stablecoins become a reality soon? Or will they be frowned-upon by mainstream governments? The US has taken a pro-crypto stance lately, so maybe they'll go easy on privacy-oriented stablecoins?

Your input would be greatly appreciated. Thank you.

1) WHAT?

We don't even get Bitcoin mixers anymore and you'd want to think government will OK the creation and usage of privacy-oriented stablecoins? Nope. AFAIK, governments even have issues with status quo—stablecoins that aren't even private yet it's an issue for them.

The idea itself isn't that bad just that it would never fly with government. Even of they created the said stablecoin, I don't think it would be public and open to all.

[hugeblack]

I've read some ideas for such projects, but unfortunately privacy isn't the trend that drives the market, and it's difficult to ensure decentralization for such services, so there are no serious ideas.

Now, how the stabelcoin can get 1:1 value to USD? when creating stablecoin for privacy focused thing like this, using USD reserve is definitely out of question.

Algorithm, something like LUNA.

[makishart]

This is not gonna happen, even the governments have problem with monero, privacy focused stablecoin won't end well. It's obvious.

[asriloni]

What are your thoughts on this? Will privacy-oriented stablecoins become a reality soon? Or will they be frowned-upon by mainstream governments? The US has taken a pro-crypto stance lately, so maybe they'll go easy on privacy-oriented stablecoins?

You have spilled the idea about the easiest way to go to the jail.  This pretty obvious how stable token backed by fiat money, which fully regulated. This idea likes you're intentionally using fiat money to do money laundering and other criminal activities. Interpol will obviously come to the creator of stable privacy's house. 

[o48o]

Sounds like a recipe for a disaster.
Privacy stablecoin will be used for crime activity such as money laundering, it will not exist for so long until there's huge lawsuit where it will put the stablecoin issuer go bankrupt.
Even coin like Monero gets so many scrutinize that exchanges started delisting it afraid of getting implicated.

Now, how the stabelcoin can get 1:1 value to USD? when creating stablecoin for privacy focused thing like this, using USD reserve is definitely out of question.

I would use word confidential instead of blanket privacy. Meaning that we might get a stablecoin with confidential transactions via zero knowledge tech, that could comply with GDPR as well. Privacy isn't just for evading regulations, it actually might help to comply with them when done correctly.

I am skeptical how it would scale though as decent privacy takes computing power.

[Abiky]

Sounds like a recipe for a disaster.
Privacy stablecoin will be used for crime activity such as money laundering, it will not exist for so long until there's huge lawsuit where it will put the stablecoin issuer go bankrupt.
Even coin like Monero gets so many scrutinize that exchanges started delisting it afraid of getting implicated.

Now, how the stabelcoin can get 1:1 value to USD? when creating stablecoin for privacy focused thing like this, using USD reserve is definitely out of question.

You think? Not everyone makes use of privacy for illicit activities. Some people use it legimately to hide their sensitive financial information from prying eyes (mainly third-parties). I understand Monero is a privacy coin that has been under heavy scrutiny by mainstream governments lately. But this is to be expected, especially when the "deep state" doesn't want people to obtain true privacy and freedom. It has always been about power/control over the masses.

With privacy-oriented solutions like the SECRET Network and even Starknet's ZK-Rollup, launching a privacy-oriented stablecoin should be a no-brainer. Assuming developers remain anonymous, ofc. If they have publicly-known identities, then it will be easy for the government to enforce legal action. AFAIK, privacy is a human right. Whenever you use privacy for good or wrong, that's up to you (double-edged sword). Who knows what will happen in the future?

[bullbandit9]

Sounds like a recipe for a disaster.
Privacy stablecoin will be used for crime activity such as money laundering, it will not exist for so long until there's huge lawsuit where it will put the stablecoin issuer go bankrupt.
Even coin like Monero gets so many scrutinize that exchanges started delisting it afraid of getting implicated.

Now, how the stabelcoin can get 1:1 value to USD? when creating stablecoin for privacy focused thing like this, using USD reserve is definitely out of question.

The most used instrument of crime and money laundering is the USD. It has no confidential transactions, it has no privacy, it has nothing. How is this an argument again this?  Privacy is not a crime. Outlaw all guns and encrypted communications while you are at it, because they are used for crime activity too.

You think? Not everyone makes use of privacy for illicit activities.

This is a non argument, a ridiculous repetition by people who do not do critical thinking. We might as well outlaw food because criminals use it to get energy that they need to conduct illicit activities. That said, I don't think that there is a chance of this happening. Further, it poses a risk of a fake peg in case there is a bug in the CT technology and someone mints a lot of the stablecoin silently.

[FinneysTrueVision]

Tether on the Liquid Network already uses confidential transactions. There are also Ethereum layer 2 chains like Aztec Network with zk privacy that are launching soon, and I assume stablecoins are going to be widely adopted for decentralized finance.

Until now, nobody has really cared that Tether can be used privately on Liquid because very few people use this sidechain and most of them transact in L-BTC. If a privacy chain gets enough adoption, governments will start to take notice and they will likely try to discourage their usage.

[bullbandit9]

Tether on the Liquid Network already uses confidential transactions. There are also Ethereum layer 2 chains like Aztec Network with zk privacy that are launching soon, and I assume stablecoins are going to be widely adopted for decentralized finance.

Until now, nobody has really cared that Tether can be used privately on Liquid because very few people use this sidechain and most of them transact in L-BTC. If a privacy chain gets enough adoption, governments will start to take notice and they will likely try to discourage their usage.

The question is how many people even know that Tether can be used privately on Liquid? I didn't even know about this. I also wonder how easy it is to set up a wallet and connect to Liquid, I was more under the impression that it was a private chain than a publicly advertised one. Also, if the liquidity is not good enough I think you can still be monitored on the entry and exit points into the sidechain. For it to provide very good privacy, you need to either have high liquidity or volume of transactions or you need to stay in the sidechain for a long time and distribute your exit transactions.

[Abiky]

This is a non argument, a ridiculous repetition by people who do not do critical thinking. We might as well outlaw food because criminals use it to get energy that they need to conduct illicit activities. That said, I don't think that there is a chance of this happening. Further, it poses a risk of a fake peg in case there is a bug in the CT technology and someone mints a lot of the stablecoin silently.

I can only think of privacy-oriented stablecoins being backed by algorithms, instead of real USD reserves (algorithmic stablecoins). Regulators aren't going to like the idea, unless privacy stablecoin issuers comply with the rule of law. But then, the stablecoin won't be truly-decentralized nor private anymore.

Like you've mentioned, there's the risk of algorithmic stablecoins losing their peg. Remember what happened with Terra/LUNA's TerraUSD? It went all the way downhill in an instant. The same can happen with an unregulated, algorithmic privacy stablecoin. Not sure if a collaterized version (backed by decentralized crypto assets) would be any better. At least, the idea is there. Making it a reality is another story. One can dream, right?