Privacy is a complex issue. Few would argue that privacy is not important. Talking about controversial things is usually more interesting. Thus, the limited arguments against privacy make the discussion a bit boring and easy to take for granted. As Edward Snowden said, “Claiming that you don’t care about confidentiality because you have nothing to hide is like saying you don’t care about freedom of speech because you have nothing to say.”
But what if your privacy isn’t a priority? What if your privacy is not guaranteed? What if everything you do is under constant surveillance?
You can reply.
Unfortunately, this is actually the state of the cryptocurrency industry, and not enough people are fighting to protect privacy.
Transparency vs Privacy
When I first read the Bitcoin (BTC) white paper in 2011, I fell in love with seeing the peer-to-peer electronic money system. Most societies have physical money – legal tender – so in a digital society, what is physical money? Satoshi Nakamoto seemed to have come up with an elegant answer to this question, and a multi-million dollar market appeared around him. Unfortunately, Satoshi’s original idea failed in at least one area, namely privacy.
Private method of payment. When someone trades coins or banknotes (also known as “banknotes” in the United States and Canada) for a good or service, only the two parties involved are aware of the transaction. Identification is required if the product or service is intended only for certain age groups (beer is not available to everyone). Plus, if you give a $10 bill to a woman at your local farmer’s market, you won’t be able to find out how much is left in your bank account.
However, transactions on the Bitcoin blockchain are radically transparent. This means that the amount, frequency and balance of the transaction are open to the public. In the Bitcoin white paper, only half of the page is about privacy with suggested solutions that don’t always work as expected, especially for second-generation account-based blocks like Ethereum.
There are user guides on how to achieve more privacy with Bitcoin, but they are very complex and usually recommend tools that can be dangerous for users. There are also many blockchain networks designed with privacy as a standard, but most of them do not support more complex programmability, such as smart contracts that allow new uses related to business logic in decentralized finance (DeFi).
Related: DPN vs. VPN: The Dawn of Decentralized Web Privacy
Why hasn’t the blockchain community made privacy a Level 1 priority? First, privacy gave way to three other priorities: security, decentralization, and scalability. No one will argue that these three components are not important either. But should they be mutually exclusive when it comes to privacy?
Another reason why confidentiality is not a priority is that it is very difficult to guarantee. Historically, privacy tools like no proof have been slow and ineffective, and making them more scalable is hard work. But just because privacy is hard, does that mean it shouldn’t be a priority?
The latter is perhaps the most disturbing. There is a myth in the media about the complete anonymity of cryptocurrency transactions. They are not. This means that many people have actively used cryptocurrency, by mistakenly believing that transactions are private. As blockchain network analysis tools become more sophisticated, the lack of anonymity increases. So when does privacy become important enough to make it a priority?
RELATED: Bitcoin Can No Longer Be Considered An Untraceable ‘Criminal Currency’
A friend of mine who has worked in the crypto industry since 2015 full time recently asked me, “Is WTF PriFi?” PriFi, or Privacy Funding, is the crypto industry’s acknowledgment that we’ve run privacy royally. We got it wrong so bad that after 12 years in the industry, we’ve only now reached the point where privacy is important enough to get our own hashtag.
So what are we going to do next to provide more privacy that protects ordinary crypto users and provides digital privacy equivalent to cash.