The crypto industry royally screwed up privacy


Confidentiality is a complicated subject. Few would say that privacy is not important. It is usually more interesting to talk about questionable things. So the limited arguments against privacy make the discussion somewhat boring and easy to take for granted. As Edward Snowden put it, “Saying that you don’t care about privacy because you have nothing to hide is like saying you don’t care about free speech because you have nothing to say.

However, what if your privacy is not a priority? What if your privacy is not guaranteed? What if everything you do is under constant surveillance?

You could fight.

Sadly, this is actually the state of the cryptocurrency industry, and not enough people are fighting for privacy.

Transparency versus confidentiality

When I first read the Bitcoin (BTC) white paper in 2011, I fell in love with the vision of a peer-to-peer electronic payment system. Most companies have cash – legal tender – so in a digital society what’s the physical cash equivalent? Satoshi Nakamoto seemed to provide an elegant answer to this question, and a multi-trillion dollar market has emerged around her. Unfortunately, Satoshi’s original idea failed in at least one area, and that is confidentiality.

Legal tender is private. When a person exchanges coins or banknotes (aka “notes” in the United States and Canada) for a good or service, that transaction is known only to both parties involved. Identification is required if the good or service is restricted to certain age groups (beer races are not for everyone). Also, if you hand a $ 10 bill to the lady at the local farmer’s market, she won’t be able to verify how much you have left in your bank account.

However, transactions on the Bitcoin blockchain are radically transparent. This means that the amounts, frequency and balances of transactions are all publicly available. The Bitcoin whitepaper only devotes half a page to the topic of privacy with suggested workarounds that don’t always work as expected, especially for second-generation account-based blockchains like Ethereum.

There are user guides on how to get more privacy using Bitcoin, but they are extremely complicated and generally recommend using tools that can be dangerous for users. There are also a few blockchain networks that have been designed with privacy by default, but most do not support more complex programmability such as smart contracts, which allow new use cases involving business logic in decentralized finance. (Challenge).

Related: DPN vs VPN: the dawn of decentralized web privacy

Give up privacy

Why has the blockchain community failed to make privacy a top priority? For a, privacy has given way to three other priorities: security, decentralization and scalability. No one will dispute that these three components are not important either. But should they be mutually exclusive for privacy?

Another reason why confidentiality was not privileged is that it’s very difficult to guarantee. Historically, privacy tools like zero-knowledge evidence have been slow and inefficient, and making them more scalable is hard work. But, just because privacy is difficult, does that mean it shouldn’t be a priority?

The last reason is probably the most worrying. There is a myth in the media that crypto transactions are completely anonymous. They are not. This means that many people actively use crypto on the pretext that their 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 ‘crime coin’

Privacy funding

A friend of mine who has been working full time in the crypto industry since 2015 recently asked me, “WTF is PriFi? PriFi, or “Privacy Finance,” is the crypto industry’s admission that we royally messed up privacy. We’ve screwed up so much that, 12 years after this industry began to evolve, we’re just getting to the point where privacy is important enough to have your own hashtag.

So where do we go from here to create more privacy that protects everyday crypto users and achieves the digital privacy equivalent of money?

The first step is more education. As society becomes more and more digital, privacy becomes harder and harder to achieve. It starts with educating the media about the differences between secrecy and privacy. The secret is not lacking anybody know something. There is no lack of privacy the whole world know something. Secrecy is a privilege. Privacy is a right.

The next step is to simplify confidentiality. Achieving privacy in cryptography shouldn’t require awkward workarounds, shady tools, or deep expertise in complex cryptography. Blockchain networks, including smart contract platforms, are expected to support optional privacy that works as easily as the click of a button.

The last step is defend privacy. Confidentiality is a topical issue. The recent U.S. infrastructure bill includes an extension clause to section 6050I of the tax code, which requires individual counterparties to collect personal information about each other for cash transactions over $ 10,000 , and applies it to cryptocurrencies. Coin Center, a pro-crypto nonprofit advocacy and research group, is preparing to challenge the constitutionality of this change for crypto. You can also, here.

Armed with the right education, an intuitive user experience, and a motivation to make privacy a priority for crypto, we can defend our rights without being reckless and maintain reasonable privacy on our own terms.

The views, thoughts and opinions expressed here are solely those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Warren Paul Anderson is vice president of products at Discreet Labs, which develops Findora, a public blockchain with programmable privacy. Previously, Warren led product at Ripple for 4.5 years, working on the XRP Ledger, Interledger, and PayString protocols; the RippleX platform; and RippleNet’s On-Demand Liquidity corporate product. Prior to Ripple, in 2014, Warren co-founded Hedgy, one of the first DeFi platforms for derivatives using programmable smart contracts and escrow on the Bitcoin blockchain.