3 Reasons Crypto Needs Privacy
Blockchain: The Future of Connectivity
In 2012, a senate report disclosed the fact that international banking giant HSBC was involved in laundering money for terrorists and drug cartels. Billions of dollars were laundered over a period of seven years, much of that occurring before the Satoshi Nakamoto white paper had been published.
And yet, some might say that private crypto transactions are only for criminals. Really?
As the HSBC case illustrates, criminals don’t need privacy. All they need is a high-profile partner willing to look the other way.
So, who does need private transactions?
You and I do. If we want to be free, safe, and secure, that is.
Privacy in Cryptocurrency and Blockchain
Cryptocurrencies like Bitcoin are not really anonymous - they are pseudonymous. While your name may not be tied to every address you ever send BTC to and from, every transaction is recorded in the blockchain for everyone to see. All I need to do in order to tie you to a certain transaction is to verify that one of the public keys in question is associated with a wallet in your possession.
San Francisco Blockchain Week 2018 hosted an important fireside chat about this very issue entitled “The Privacy Hype.” The talk can be seen here:
Alternative cryptocurrencies have devised ways to obscure the details of transactions by default. This is a much-needed feature that protects individual rights and allows cryptocurrency to achieve its full potential as an empowering decentralized technology.
Here are three reasons crypto needs privacy.
Crypto Needs Privacy for Protection Against Censorship
The march toward online censorship has taken dramatic strides over the last several years. Often times, this includes stonewalling the financial activities of an individual or organization. Thankfully, cryptocurrency provides for the possibility of preventing such draconian measures.
In a paper published earlier this year, Jerry Britto explains why we need private transactions. He likens private cryptocurrency to cash in that both are untraceable. Without cash, society takes a sharp turn toward totalitarianism, he argues:
“In a world without cash (a bearer and peer-to-peer form of money) all transactions must be necessarily intermediated by financial institutions. Intermediated transactions are by their nature subject to surveillance and control. If third-party financial institutions must be part of all transactions, then they will be privy to the intimate details of everyone’s financial life. They can also choose to disallow certain transactions and potentially even certain persons from transacting.”
If all of us used a currency that allowed for private transactions (like Monero), however, this would not be the case at all. By protecting privacy, currencies like Monero protect individual sovereignty.
2) Private Transactions Support Individual Sovereignty
While a surveillance state empowers large organizations and powerful financial institutions, private transactions empower individuals.
An article authored by Abhimanyu Krishnanon of InvestinBlockchain.com describes the issue quite well:
Privacy coins are one of the most hotly debated issues in the cryptocurrency market. Unlike many other coins, they rile up all of the powers in charge, from tech monopolies to governments to banks, thanks to their potential to pull the rug out from underneath them and invert the flow of power.
But this is not the primary reason that crypto needs privacy. Rather, it’s a potential side effect. The real reason, as you may have noted by now, is all about power to the people.
3) Private Transactions Put Power in the Hands of the People
As government whistleblower and privacy pioneer Edward Snowden has intimated when speaking of other privacy-centric coins, privacy and security go hand-in-hand.
Being private means you can rest easy knowing that no one will be scrutinizing your financial activities.
If you’re a political activist living in a nation controlled by an oppressive government, you don’t have to fear your activities being slow-rolled by regulatory authorities. If you’re an independent journalist, you don’t have to worry about having your freedom restricted through financial channels. And if you just want to have full control of your own financial actions, you’re covered there as well, of course.
How do we conduct private transactions? Simple - use a currency that prevents user transactions from being identifiable.
Monero Enables Private Transactions
Monero (XMR) is the original privacy coin and was introduced in April 2014. Monero uses three privacy technologies to hide information about transactions:
Ring confidential transactions (RingCT)
These technologies hide the sender, amount of coin being sent, and receiver, respectively. Transactions on the Monero blockchain can’t be linked to any specific user because all the details of the transactions are obfuscated by default.
Monero is based on the CryptoNote protocol and has a dynamic block size, dynamic fees, and is ASIC-resistant. These features and more make it stand out from the pack of privacy coins.
You can learn more about the specifics of Monero on the official Monero website.