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Dec 14, 2022Why Privacy Coins Need Decentralized Exchanges.

And Why BasicSwap Including PIVX Is Important.

Opinions abound on what defines a good human life. But few would leave out freedom and property. These are primitive needs—animalistic. Given an opportunity, animals bolt for the cage door. Squirrels stash nuts. 
Humans strive to protect freedom and property for themselves and their extensions of self—family, friends, and community. They organize into states for better protection, from nature and from other people. States have an implied obligation to protect the freedom and property of their citizens, and the many that fail in this have gone bad.

When Satoshi Nakamoto invented Bitcoin, he saw it as protecting freedom and property.

"It’s very attractive to the libertarian viewpoint if we can explain it properly. I’m better with code than with words though." -Satoshi Nakamoto, November 14, 2008

"The root problem with conventional currency is all the trust that’s required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust." Satoshi Nakamoto, February 11, 2009

Bitcoin did what it promised. With one stroke, Satoshi took humanity from zero to one with a sovereign system for freely and securely owning and exchanging material value in the digital age. Bitcoin was—and is—magnificent.

But like all human creations it had room for improvement. One shortcoming was the visibility of the movement of funds. Yes, Bitcoin addresses were pseudonymous. But once a connection was made between an address and a person, exposure was complete, including the times and addresses for the receipts and expenditures of funds. Companies like Chainalysis were founded to profit by mining available public and private data and blockchains to identify specific information on users.

Satoshi recognized this problem before he disappeared, and hypothesized ways it could be addressed. 

"With group signatures, it is possible for something to be signed but not know who signed it." -Satoshi Nakamoto, August 13, 2010

New cryptocurrencies were created to hide the movement of funds—these are commonly called privacy coins. Today’s leading privacy coins, Monero and Zcash, came just a few years after Bitcoin. They protect users’ freedom and property by cryptographically obscuring movement and ownership, and this privacy guards against censorship and theft. 

Monero is The King. It gives privacy in every transaction, has a zealous community, many tools, and the largest user base. Zcash builds on the Bitcoin codebase, has maximally protective technology, and gives explicit optional privacy. Both of these coins are wonderful and popular in their protection of freedom and property and should be celebrated.

And there are many more privacy coins, which raises the question: how many do we need? To pick cryptocurrencies deserving our time and effort, we should reason and debate about them. But in this, we have to acknowledge that there are things we will only come to understand in hindsight. We don’t know everything right now, and privacy is so important that we have to encourage a variety of approaches. We should want many different privacy coins.

The impetus for this article is the smaller privacy coin PIVX. It advances user protection and utility through proof-of-stake consensus, special validating nodes, and protocol-level management of a treasury. These features distinguish PIVX from Monero and Zcash. And there are numerous other good small privacy coins with unique features. Absent some technological, economic, or ethical failing, all of them should be encouraged, as all have a potential role in protecting human freedom and property. Any one could be the one that saves us.

But, still, this diverse group of privacy coins, like Bitcoin before it, is incomplete. A shortcoming lies in how they are bought and sold. The privacy algorithms that hide personal data on the blockchain do not protect buyers and sellers at centralized exchanges. If you buy Monero at Kraken, for example, Kraken knows you bought it. And if Kraken knows, the secret is out.

Centralized cryptocurrency exchanges, like Kraken, are forced by some states to collect intrusive data on their customers. This is part of what are commonly called Know Your Customer (KYC) laws, which have their genesis in using money as a tool to stop traditional crime. KYC laws’ effectiveness in stopping other crime is questionable, but their applicability to take away freedom and property is not.

Giving personal information to a third party creates risk because you don’t know how it will be used. You don’t know the reliability and honesty of the individuals in that party. They may get hacked. It happens regularly. They may maliciously use the information against you, or sell it to others, as has been a recent trend. Or they may give it to a state that has strayed—legally or illegally—from  its obligation to protect your, your family’s, your friends’, and your community’s freedom and property.

The good news is that buying and selling directly between individuals tends to come with more rights and legal protection. And this brings us to a key point of this article, the benefit of Decentralized Exchanges (DEXes). A DEX gives you the ability to exchange one cryptocurrency for another without using and trusting a third party. An exchange on a DEX is between you and the other guy, and just like you should be able to trade old tools and furniture with people, you should be able to trade crypto with them.

There are two types of DEX. One type uses a third cryptocurrency to facilitate the exchange of two others. The THORChain DEX is an example. Another type uses only the cryptocurrencies being exchanged, in what are called atomic swaps. DCRDEX is an example of this. Both of these types bring the benefits of known outcomes without trusted intermediaries. The rules are clear and enforced by the protocols of the cryptocurrencies themselves, not by humans. 

DEXes bring comfort to users of privacy coins who may worry about delisting from centralized exchanges. Privacy coin delisting has happened in some countries, like South Korea. With no centralized entity, DEXes cannot easily be shut down. They exist as shareable software only—both the DEX software and the blockchain software of the cryptocurrencies  are widely used and available, and you just run it all yourself on your own computer. Software is protected speech by some states, like The United States. DEXes give you the freedom to buy private cryptocurrency when you want it.

They also protect property. With a true DEX, nobody controls your funds at any time during an exchange. Your funds may be locked and inaccessible to you for a short time, but the software is designed so that the cryptocurrency protocols themselves release those funds and offer protection from loss and theft. You don’t have to have faith in a possibly undeserving centralized exchange operator.

DEXes, then, take one more elephantine step—after cryptocurrency, after privacy coins—in the protection of freedom and property. Because of this, DEXes are especially important for privacy coins. Privacy coin users have already moved as far as possible seeking protection. They tend to care the most. Using a DEX maximizes the very benefits that brought a user to privacy coins to begin with.

This brings us to BasicSwap, a new, important DEX made by developers of the privacy coin Particl. Released in public beta only recently, December 8, 2022, BasicSwap is privacy focused. It leverages Particl’s private messaging and marketplace technologies to organize offers and bids on the DEX. BasicSwap includes Monero, The King, as one of the tokens you can trade. 

The technology behind BasicSwap is atomic swaps. Each core cryptocurrency trade uses just the two cryptocurrencies involved. Not all pairs of coins on the platform are directly swappable, but any supported coin can be exchanged for any other with at most two atomic swaps.

BasicSwap includes support for PIVX, and the PIVX community has tested this new feature, including exchanging Monero for PIVX, a first for a DEX. PIVX’s inclusion is important for PIVX because it gives an uncensorable acquisition method. With it, if you can get Monero (or Bitcoin, Litecoin, or Particl), you can get PIVX. 

But not just the PIVX community benefits. BasicSwap’s inclusion of PIVX is important for everyone because PIVX is a key member of that esteemed group of privacy coins protecting freedom and property. Anything that strengthens one member of this group strengthens the whole group, and the whole group is pivotal in finding the best way forward for cryptocurrency, which has to be helping humanity. The developers of BasicSwap are some of our heroes.

We all deserve to be able to protect our freedom and property. It’s our birthright. Privacy coins, and DEXes give us a way to protect ourselves, our families, our friends, and our communities, around the globe. We should support these efforts wholeheartedly by using privacy coins like PIVX and using DEXes like BasicSwap. Stay on this path for a better future.


Warning: Cryptocurrencies—including all those mentioned in this article—have volatile pricing. Cryptocurrency and DEX software can have design and implementation flaws and fail. Governments can institute harmful laws. Be careful. Don’t risk more than you can stand to lose.


Community Writer, Technical Advisor

Marketing, Writer