The crypto industry royally screwed up privacy

Privacy is a complex topic. Privacy is an important topic. It is generally more fun to discuss things that are controversial. The few arguments against privacy make it difficult to talk about and easier to accept as a given. Edward Snowden once said, “Arguing you don’t care about privacy simply because you have no to hide is like arguing you don’t care for free speech because there is nothing to say.”

But what if privacy is not important? But what if your privacy cannot be guaranteed? What if all your activities are under constant surveillance?

You might fight back.

This is unfortunately the current state of cryptocurrency, and it’s not clear how many people are fighting for privacy.

Transparency vs. Privacy

The white paper on Bitcoin (BTC), which was published in 2011, was the first time I read it. I fell in love instantly with its vision of a peer to peer electronic cash system. The majority of societies have legal tender, which is physical cash. So, what’s the digital equivalent to physical cash? Satoshi Nakamoto seems to have found an elegant solution to this question and has created a multi-trillion-dollar market around it. Satoshi’s original idea is flawed in at least one aspect: privacy.

Legal tender is confidential. The transaction between two people is private when they exchange coins or banknotes for a service or good. If the goods or services are restricted to certain age groups, identification is required. Beer runs are not for everyone. If you give a $10 bill to a lady at the farmer’s market, she won’t be able to check your bank account.

Transactions on the Bitcoin blockchain, however, are transparent. The public can see transaction amounts, balances, and frequency. The Bitcoin whitepaper only devotes half a page to privacy, with suggestions for workarounds that may not always work as expected, especially for second-generation account-based blockchains like Ethereum.

Although there are many user guides that explain how to increase privacy with Bitcoin, they can be very complicated and recommend tools that could prove dangerous for users. Although there are a few blockchain networks designed with privacy in mind, most don’t support complex programmability like smart contracts. These allow for new uses of decentralized finance (DeFi) logic.

Similar: DPN vs. VPN – The dawn of decentralized privacy

Privacy is not yours

What is the reason why privacy has not been a priority for the blockchain community? Privacy has been put on the back burner in favor of three other priorities, security, decentralization, and scalability. These three components are equally important, but nobody will argue against them. However, do these components have to be mutually exclusive in order to protect privacy?

Privacy is also difficult to ensure. This is another reason privacy hasn’t been prioritised. Privacy tools like zero-knowledge proofs, which are slow and inefficient historically, have not been scalable. Privacy is not a priority just because it’s difficult.

This is the most worrying reason. The media propagates the myth that crypto transactions are anonymous. They are not. Many people believe that crypto transactions are secure and private, which is why they have been using it. The lack of anonymity is increasing as blockchain network analysis tools get more sophisticated. When does privacy become so important that it is a priority?

Related: Bitcoin cannot be considered an untraceable “crime coin” anymore

Privacy Finance

A friend of mine, who has been working in the crypto sector full-time since 2015, recently asked me “WTF is PrivateFi?” The term “Privacy Finance” is the admission by the crypto industry that it’s utterly failed to protect privacy. We made so many mistakes that 12 years later, the industry is just getting to the point when privacy is worth having its own hashtag.

What can we do to increase privacy and protect everyday crypto users?

More education is the first step. Privacy is becoming more difficult to attain as society becomes more digital. It starts by educating the media about the difference between privacy and secrecy. Secrecy means not wanting anyone to find out something. Privacy does not mean that you want the entire world to know what you are talking about. Secretariat is a privilege. Privacy is a human right.

Next, make privacy easier. Cryptography privacy should not require complicated cryptography expertise or clunky workarounds. Optional privacy should be possible on all blockchain networks, smart contract platforms included.

Protecting privacy is the final step. Privacy is an urgent issue. A clause in the U.S. infrastructure bill extends section 6050I, which requires individual counterparties collect personal information for cash transactions exceeding $10,000. It also applies this to cryptocurrencies. Coin Center, a procrypto research and advocacy group, is planning to challenge the constitutionality this crypto change. Here’s how you can do it.

We can protect our rights and keep our privacy sensible if we have the right education and an intuitive user experience.

These views, thoughts, and opinions are solely the author’s and do not necessarily reflect the views or opinions of Cointelegraph.
Warren Paul Anderson is Vice President of Product at Discreet Labs. He is currently developing Findora, a public Blockchain with programmable privacy. Previously, Warren was the product manager at Ripple for 4.5+ years. He worked on the XRP Ledger and Interledger protocols, the RippleX platform, and RippleNet’s On-Demand liquidity enterprise product. Warren founded Hedgy in 2014 prior to Ripple. This was the first DeFi platform for derivatives using programmable and escrowed smart contract on the Bitcoin blockchain.

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Eileen Wilson

Eileen Wilson –Technology and Energy My Name is Eileen Wilson with more than 5 years of experience in the Stock market industry, I am energetic about Technology news, started my career as an author then, later climbing my way up towards success into senior positions. I can consider myself as the backbone behind the success and growth of topmagazinewire.com with a dream to expand the reach out of the industry on a global scale. I am also a contributor and an editor of the Technology and Energy category. I experienced a critical analysis of companies and extracted the most noteworthy information for our vibrant investor network.

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