MobileCoin - The Search for Private Money
Signal's partner of choice ($MOB) is now down ~99%... is it a buy?
The accelerating lack of privacy in the digital domain is very real. Ever smaller transactions need to be reported. Ever stricter monitoring under the banners of “KYC” and “AML”. A gradual phasing out of cash from economies around the globe…
Financial privacy is disappearing.
Unfortunately, blockchains in their current form will only exacerbate the problem. A fully-transparent, immutable, public ledger recording every transaction ad infinitum does not strike me as a win for privacy advocates. The combination of immutable ledgers, massive data sets, and sophisticated machine learning algorithms is better characterized as an Orwellian cocktail. Most major crypto heists have ended up solved eventually… the on-chain trail simply never goes cold.
Fortunately, the cat and mouse game between cryptography and big data analytics continues.
Today, blockchain forensics companies like Chainalysis can combine with law enforcement to pair many suspicious crypto addresses to a state-sanctioned I.D. in meatspace. However, the “shadowy super coders” of tomorrow are dabbling with “zero-knowledge proofs” and other cutting-edge cryptography which promise to preserve greater privacy for both on-chain transactions and provide more sovereignty around specific data points shared with counter-parties.
One important project focused on increasing both convenience and privacy in digital transactions is MobileCoin. $MOB got on my radar in early 2021 due to rumors of an integration with privacy-focused messaging app Signal. For the boomers out there, Signal is basically like Whatsapp or Telegram for millennials and gen Z who care about privacy. When kicking off a new privacy-focused cryptocurrency, an integration with the leading privacy-focused messaging app with 100 million users is nothing to laugh at.
The market agreed.
On news of the partnership with Signal, the price of $MOB jumped from ~US$6 to a high of ~US$72 in about a week in the spring of 2021. Unfortunately, its decent was almost as rapid as $MOB failed to gain traction with the large installed user base.
So here we are, in the summer of 2022, with $MOB languishing at ~US$1.00: a stunning ~99% decline from all-time-highs, heading into the doldrums of another crypto winter.
So, we must ask: Is now a good time to begin accumulating $MOB?
On, the one hand, the current network value of ~US$255m is not negligible for what today amounts to virtually no traction. On the other, the potential is massive. A next-generation payment network with state-of-the-art privacy features, conveniently located within your favorite messaging app alongside your ~100m closest friends. Tencent or Paypal would start to look like possible comps, which would get investors salivating.
Views are mixed.
In this report, our very own Vince Torrell dives into the Mysteries of MobileCoin and outlines the challenges the team will need to overcome to inspire adoption. Click below to view the report:
Editors note: As you will see, Vince gives a fair critique of the project, but comes out on the fence: trying to balance the project’s massive potential and strong technical offering with some of the design choices fostering centralization which he views as the primary culprit holding back mass adoption. If the team can “solve these issues,” then it could “moon”.
My own high-level critique is less sanguine and less technical. My concerns (from afar as I have not dived in nearly as much as Vince) are two-fold:
Regulation - Signal is an app. The only reason $MOB would see adoption is because the button is RIGHT THERE in your favorite messaging app. The value prop is privacy + CONVENIENCE. Unfortunately, the mobile app would be subject to censorship by the app-store gatekeepers who would likely be leaned on by regulators in the event of major traction to shut off an “unlicensed” payment provider in their jurisdiction. The prospects of a desktop-only wallet are materially less exciting.
Price Stability - People want to pay for goods and services in a currency which roughly stays constant vs. a basket of goods (9.1% inflation prints aside!!). The fact that $MOB is a speculative, free-floating currency may promote censorship resistance relative to currencies pegged to fiat, but the volatility hinders adoption as a payments network. This is the same reason I never bought the bitcoin as a payments network thesis. Store of value: yes. Payment network: no. No one wants to get paid in currency which could be down 80% tomorrow vs. a basket of goods which makes it very difficult to kick-start the network adoption flywheel.
In short, despite the 99% plunge and the very real tech, I’m skeptical. However, I have been wrong plenty of times before and Vince is smarter than me. The only way to judge for yourself is to check out the report :)
Report: The Mysteries of MobileCoin
Thanks for reading Digital Reflections! Subscribe for free to receive new posts and support my work.