The technological advancements that have come about after the realization that cryptocurrency is the future of financial transactions have indeed shaped the sector within the last few years.
Taking a look at how the industry was some eight years ago, and how it is today, many developments have triggered a change in how things were and they keep on shaping the future.
In the early days of Bitcoin, the asset was very cheap since not everyone understood that in it, there lies great potential in aiding financial transactions.
Though with time, more and more entities began adopting it and in turn driving the price and the demand for the commodity up.
Creation of New Cryptocurrencies
The increased demand and price pushed other like-minded individuals to begin creating other virtual currencies that can be used as a substitute or a complement to Bitcoin.
More so, those who saw the potential ended up investing in coins with the hope that sooner or later, the price will rise and they can sell it at a profit.
Then, soon after the capability of sending and receiving cryptocurrencies was established, the concept was moved into the dark web, where its primary role was to aid payments of various forms of illicit products.
However, before the development of other newer cryptocurrencies came into place, the whole idea was to ensure that new digital assets have better features than the older ones.
This, in turn, pushed developers to try as much as possible to ensure that their creation is better in matters of security and convenience.
Use of Virtual Currencies to Aid Crime
At first, a considerable percentage of the people who used Bitcoin to aid illegal activities thought that it was entirely impossible to trace it, but with time law enforcement agencies took keen interest since crypto was the new way of perpetrating fraud and other illegal activities.
In the end, security agencies involved in curbing various forms of online crime ended up learning and improving their tactics of how they can fight crypto-related crime.
Today, the same is the case as security agencies in different nations have joined forces and invested more so as to keep the situation under control.
The involvement of law enforcement agencies in tackling illicit activities has pushed individuals who earlier on used Bitcoin made the transition to newer currencies which are nearly impossible to trace because of their primary characteristics.
Features such as ring signatures and stealth addresses in assets such as Monero have made this virtual currency, in particular, a choice for a majority of users involved in non-cash payments.
They are known as privacy coins, and just as the name suggests, they are almost completely anonymous, and if transactions are done right, then any effort to trace them becomes close to impossible.
So the transition from older to newer cryptocurrencies is at this point at an all-time high because fraud-related activities involving the same are more rampant than ever before.
In turn, law enforcement bodies from across the globe understand what exactly is happening and have called for the regulation of the industry.
In Europe for instance, the 2018 Europol Organized Crime Threat Report highlighted that as of now, the use of privacy coins to aid anonymous payments is in some way threatening the survival of shufflers.
More Use of Privacy Coins, Less Use of Shufflers
After the realization that earlier coins were traceable, there became a need to use tumbling services to prevent third parties from tracking the movement of coins.
In the process, the rate at which tumblers were used grew tremendously, thus complicating work for law enforcement agencies involved in cryptocurrency operations.
The situation is evident in developed countries like the U.S., Japan and Australia, which are trying to come up with a way to regulate the industry.
Just a couple of months ago, the U.S. Secret Service tabled a special report to Congress detailing the challenges that security agencies have to undergo to combat cryptocurrency crime.
Making a comparison to the past few years, as much as the cryptocurrency community was using privacy coins, it was not as much as is the case now.
The rate at which untraceable digital coins are used is on an upward trajectory and today, even the unlikeliest people resorted to adopting it.
Wallets and Mixers on Tor
For increased anonymity, we have seen instances of companies creating wallets and mixers to be used on Tor.
By doing so, darknet users have an opportunity to increase their anonymity as opposed to a case where they access the service on regular browsers which lack certain security features.
In one of the latest instances, XMRWallet made it possible for Monero users to send and receive the asset via Tor, making them the very first providers of the service.
For other cryptocurrencies like Bitcoin, there are already Tor-integrated wallets and mixers, but with time, there is a possibility that the same will happen with other forms of virtual currency.
Protocol Improvement and Forks
SegWit aims to bring about efficiency in the blockchain network by removing bugs which are known as transaction malleability, rearranging the way data in the blocks is stored and enhancing the capacity of the system without interfering with how the software will operate on the previous version.
The Bitcoin blockchain has undergone some protocol advancements over the years, and among them is the SegWit implementation which took place in August 2017 some few weeks just after the Bitcoin fork happened.
The fork that led to the formation of Bitcoin Cash (BCH), which is among the cryptocurrencies used in darknet markets, brought new hope to the community since transactions would now get processed in a lesser time.
Though not widely used by a vast majority of the markets, BCH has been integrated as a mode of payment in Dream Market.
After the split that led to the creation of BCH, there have been other forks in the network in a bid to make it more efficient, especially in storage and reducing transaction times.
Cryptocurrency Adopted in Traditional Businesses
Before, it was very difficult for enterprises irrespective of their size to integrate virtual coins as a means of payment due to the public perception that Bitcoin is purely for illegal activities.
However, today, the ground is no longer the same as tech giants to small and medium enterprises are accepting Bitcoin as a means of payment.
Cryptocurrency has grown over the years from just being used to facilitate payments of illegal activities, to being used as by legitimate businesses as a mode of payment.
It is also anticipated that in the coming years, both the price and demand of various cryptocurrencies will grow exponentially because the future of financial transactions is in virtual money.
Not only that, the digital era will undergo drastic changes that will lead to the creation of more assets.
Lastly, depending on the primary characteristics of a given type of digital asset, then the adoption rate and price will differ since some fundamental factors push people into using a specific coin.