eToro and The TIE issued their quarterly in-depth recap of crypto

Investors are putting a premium on privacy-focused digital assets according to the latest crypto report from eToro and The Tie. The report named digital tokens Zcash (ZEC) and Monero (XMR) that outperformed bitcoin during 2019. They continue to do so in Q1 of 2020. (Coin Telegraph) Meanwhile, Litecoin (LTC) is playing catch-up by introducing its own new privacy features.

Privacy-focused digital assets such as Litecoin doing well

During the first quarter of 2020, Zcash (ZEC), Monero (XMR) and Litecoin (LTC) outperformed bitcoin (BTC) by 26.97%, 4.61%, and 8.97% respectively.

However, a cryptocurrency such as bitcoin already has inbuilt transaction anonymity. Then why are investors looking for more privacy features?

TIE Co-Founder and CEO Joshua Frank clarified as following to Coin Telegraph:

“As governments move to assert more control over individuals’ movement and data in the wake of COVID-19, I think we will continue to see a pattern of people looking for ways to maintain privacy and anonymity. That has spilled into the digital asset space, as we are seeing a surge in demand for privacy coins such as Zcash, Monero, and Litecoin, which has a new focus on privacy. All three assets outperformed Bitcoin in Q1.”

BTC disappoints investors

Could it be that bitcoin has disillusioned investors?

Note that BTC had a precipitous fall on March 12.

Further, according to the report, “investor sentiment between Bitcoin and the S&P 500 has generally been closer,” over the last 12 months. However, one of bitcoin’s advantages is its non-correlation with traditional markets.

Analysts explain away the correlated selling of bitcoin and equities as the result of a black swan event. The resulting sell-off spared almost no asset.

Since March 2020, however, bitcoin is no more significantly correlated with gold rather than with the S&P 500.

“Even though Bitcoin experienced one of its largest sell-offs in history on March 12th, the asset was resilient, bouncing back significantly from lows,” observes Frank.

Currently, bitcoin is trading over 85% higher from the lows traded in March.

Post coronavirus, if and when normal conditions return, “investors will be looking for alternatives to equities and bonds and cryptocurrency will be a direction that they look at,” adds Frank.

Macroeconomic uncertainty will, therefore, work in favor of cryptoassets. And privacy features will add to their attraction.

Litecoin privacy feature

In January, development began on Litecoin’s implementation of Mimblewimble extension blocks, a feature that will bring confidentiality to the crypto.

“Fungibility is the only property of sound money that is missing from Bitcoin & Litecoin. Now that the scaling debate is behind us, the next battleground will be on fungibility and privacy,” Litecoin creator Charlie Lee had tweeted on January 28, 2019. “I am now focused on making Litecoin more fungible by adding Confidential Transactions.”

Developer David Burkett was assigned the responsibility for implementing the feature.

In December, the Litecoin Foundation announced a crowdfunding campaign. It was meant to provide David Burkett with enough funds to support a year’s worth of work on the project.

Privacy: Bitcoin may still be the gorilla in the room

Dan Held, Director of Business Development at Kraken, thinks that bitcoin is private enough considering its representation in dark market volume.

“Privacy coins are also called application coins. Monero and Zcash are meant of privacy, but if their features are valued and widely used, we would see that in on-chain data. But when we look at dark markets, Bitcoin still represents 85% of dark market volume, which is incredible because Bitcoin is not nearly as private as them.”

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