Transparency is one of the most noteworthy features of blockchain-based cryptographic resources. This attention to transparency reaches Satoshi Nakamoto, who described his creation as a history of public and permanent property. Such audacious differences, when compared to traditional financial systems, make the owner's privacy an important issue that needs to be discussed, especially so that new coin investors understand their options and what they are.
No expectation of privacy
When we talk about modern life, we expect almost no expectation of privacy, not from governments, NGOs or corporations. This means that we must take the privacy issues in our hands, being proactive and looking for solutions that preserve our privacy rights. This is exactly what Satoshi Nakamoto has enabled through the creation of blockchain technologies, the same ones we continue to use and innovate with today.
Online privacy is particularly difficult to achieve today, with online financial privacy even more unattainable. Nakamoto's original blockchain project, which used cryptography to provide that privacy by routing data streams through the use of anonymous public keys, helped develop systems that protected the interests of organizations in the past. One of the most obvious examples of this is the way the Wikileaks organization was able to continue fundraising even after governments took steps to prevent them from making donations in legal currencies.
In the beginning, this anonymity designed seemed to be a great way to preserve financial privacy for those who wanted to use blockchain-based currencies like bitcoins. Unfortunately, there is also a single neo – yes, there is anonymity, but there is also transparency. Anyone with technical knowledge to do so can easily access transaction information for every Bitcoin transfer that has ever been made. This knowledge, when they fall into the wrong hands, can be exploited to your disadvantage.
Not as anonymous as you could hope for
Unfortunately, it is not so difficult to connect individuals to specific Bitcoin transactions. Blockchain data can be analyzed and interpreted to reveal personal information – the kind of information that could have disastrous results if disclosed to the wrong people. In the modern world, where methods for exploiting bitcoin addresses can eliminate anonymity from users, it's time to start thinking that these addresses can be compromised at any time.
In fact, there are some very serious consequences thanks to this lack of privacy. Financial terrorist attacks such as robberies and even kidnappings have become increasingly common in Eastern Europe and Russia, with an exemplary case like the 300 Bitcoin robbery from the cryptocurrency maker Prism, who was beaten and drugged during the trial.
Therefore, it is more than obvious for blockchain communities to develop more than one privacy and anonymity solution in order to provide better protection for crypt users. It also acts in a simple way as the use of a block of IP addresses such as Tor or Dandelion can prevent the address of a user's wallet from being connected to its IP address. However, more needs to be done to prioritize privacy for cryptocurrency users.
What about coins for privacy?
Many have suggested the use of private currencies to solve these problems. This raises even more problems, however, with private currencies that often lead to accusations of facilitating illegal activities. Let's not forget the omnipresent claims that cryptocurrencies are used in money laundering, not to mention how Silk Road and Bitcoin have both become familiar names. No matter how exaggerated or attenuated the connections between encrypted and illegal activities – it is firmly inserted into public awareness at this point.
Private currencies have even been targeted by some governments. The Japan Financial Security Agency has made illegal use of any cryptographic assets that have provided the anonymity of their users, for example. While the decision was made to repress those who use these privacy coins for nefarious purposes, the move will likely simply bring these types of coins underground into places where there will be no possible supervision.
It is true that governments can not directly regulate digital currencies. However, they can still make it harder for citizens of their countries to use them. Anti-money laundering and know-your-customer laws, which require users' personal information to be recorded and regulated, deprive everyone's financial privacy, both from bad actors and from cryptographic honest users.
Your right to privacy extends to the cryptosphere
We have the right to financial privacy. We have an expectation of traditional financial institutions to preserve that privacy, and there is nothing to say that this right to privacy does not extend to the cryptosphere. It is a sad but necessary affirmation to be done today, but it must be done: in many places all over the world, even in places where previously they were strictly protected, our civil rights have been inflamed, and losing our right to privacy can have many negative implications – to understand the occurrence of easier discrimination.
Imagine living in a world where blockchain transactions are analyzed regularly to find out the history of personal purchases for sensitive things like contraception or chronic disease therapy. Authoritarian regimes can easily use this information for their own purposes; just think of the new system of "social credit" implemented in China, where individuals can be denied the opportunity to travel freely on the basis of non-compliance with the arbitrary social standards imposed by the government.
Governments and financial control
Your government can take control of your financial resources without your consent. This extends beyond the fiat currency – cryptocurrencies can be seized when they have been linked to illegal activities. And governments can – and have – done this in the past, regardless of whether they are justified in doing so.
Governments exercise financial control all the time. An example of this is the way in which the government of Cyprus, in 2013, took up to one tenth of the funds in each private bank account in the country following austerity measures. UK banks have been asked to freeze the specific accounts of those who are suspected of being in the country illegally in order to flush them out – or force them to leave. This level of power is, when it is reached up to this point, completely deselected.
This is where financial privacy comes into play and why it is so important. True financial privacy offers ways to resist the oppression of this nature. Improving privacy for cryptocurrency resources – and preventing its traceability – will go far in protecting our civil rights and preventing financial control without restrictions by the government.