The evolution of bitcoin privacy: the good, bad, and exaggerated

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An ideological debate is underway in the world of Bitcoin. From the cypherpunk movement which birthed the anonymous cryptocurrency to present time, with Goldman Sachs endorsing blockchain tech, Putin’s mining operation, and the Whoppercoin – some argue that the message of privacy may have gotten lost. As they say, one internet year is equal to 7 calendar years, but is the evolutionary path Bitcoin is taking really for the best?

Is Bitcoin actually private?
A recent report has revealed that the Internal Revenue Service of the United States has been tracking Bitcoin transactions as early as 2015 using the same software designed by startup Chainalysis, which in June suggested that it has located the missing 650,000 Bitcoin of the Mt. Gox scandal.
While this may come as a shocking revelation to some, many have seen this coming. Advocates of privacy have long since denounced exchanges, wallets, and debit cards which collect personal data.
As the popularity of the cryptocurrency soars, however, many users simply don’t care. The argument can be made that without some level of identity tied to a user’s transactions, the cryptocurrency will never truly go mainstream. Not to mention, fiat currencies are still viewed as the “profit” to be made from wheeling and dealing in the crypto-world.
Bitcoin, anonymity and crime
Perhaps the most common anti-anonymity rhetoric perpetuated, especially by governments, is the idea that cryptocurrencies will be used for crime. Namely, the go-to card of nearly every politician, terrorism.
Crime, notably involving sex-work and the drug trade, has been a target for law enforcement officials since the discovery of Silk Road. But this has been a focal point of counter-arguments which suggest that providing an internet platform and community actually empowers users of these services and takes the power away from the truly dangerous aspects of these exchanges. In the United States, over 50 percent of the population believes that marijuana should be legal, namely for this reason.
Harm reduction through anonymity
The deep web has long since been a libertarian haven. “Cruelty free” drugs were a point of pride among users. Providing intoxicants to buyers without the influence of cartels, gangs, or face to face interaction with potentially dangerous dealers was often regarded as the answer to the War on Drugs. The idea is that, in taking away the middle man and paying through a secure and anonymous medium, harm was reduced.
Harm reduction is an important principal within the sex-work industry, as well. Removing the “pimp” from the equation is seen as a move to prevent trafficking and exploitation within the industry.
Independent escorts often rely on the website Backpage.com. While the practice of accepting Bitcoin is nothing new for many escorts, as of July 1st, Visa and Mastercard severed their ties with the adult website. Moving forward, Bitcoin’s role will likely be solidified within the industry.
Safety is a primary concern for escorts, but the same can be said for anonymity. Backpage may have accepted Visa and Mastercard, but it was arguably a toxic practice as both the escort and the John’s information was revealed in what is, or could be perceived as, an illicit transaction. With Bitcoin, not only were the individuals involved protected from this, neither were required to carry cash.
Harm reduction is the goal for both advocates and nay-sayers in the cryptocurrency debate. Of course, there are opposing views in areas which become more gray every day, but what about terrorism?
Purported links between bitcoin and terrorism?
Here, there is no gray area. Using violence and terror to promote a political or ideological philosophy is wrong and should be dealt with as such.
This is perhaps the biggest argument, at least on the surface, against the cryptocurrency revolution. Politicians have made numerous claims suggesting that Bitcoin is funding terrorism.
But these claims may be largely unjustified.
A recent report from the Royal United Services Institute (RUSI) has suggested that there is little link between the two and the claims that bitcoin is funding terrorism are greatly exaggerated.
David Carlisle, a consultant for the RUSI noted: “Treating cryptocurrencies as an exceptional threat creates the misleading impression that more conventional financial products are not already equally, or more, vulnerable to terrorist exploitation,” adding that “countries should take a sensible approach.”
With increasing regulation, such as KYC and AML, in place, the idea of using Bitcoin for illicit activity is fading quickly. Bitcoin may not be as private as it once was, but there are still ways to remain anonymous if you so choose.
Due diligence is required if one wishes to remain anonymous. A full understanding of how transactions are processed, the information that you are providing, and the tools possessed by others is necessary.
A common misconception by the powers that be is that privacy as a philosophy is threatening. But the same tools that are being used to grant this privacy can actually be used to create greater accountability and change the way things are governed.

Featured image by Jon Tyson on Unsplash
The post The evolution of bitcoin privacy: the good, bad, and exaggerated appeared first on Crypto Insider – Bitcoin and Blockchain News.

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