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Bitcoin anonymity advocates ignore a darker truth

Buried in the rhetoric of any security conversation is a dark truth. Be it about hacking, fraud, international terrorism or any “bad guys” related subject, security is usually presented as, “Here’s a problem, so what’s the solution?” In this particular case, the potential for cryptocurrencies to be misused has led to proposals that they should be better controlled. 

While it might appear quite a leap to go from questions about the anonymity risks of bitcoin to the deepest recesses of our collective psyche, bear with me. First, let’s be clear —  Bitcoin was never designed to be anonymous. “Bitcoin is probably the most transparent payment network in the world,” explains Bitcoin.org.

To explain briefly, each Bitcoin transaction contains a ‘hash’, a 25-byte address directly traceable to its instigator. It has to be, otherwise it wouldn’t be provably correct. For those wanting to cover their virtual tracks, the general advice is to create a new address every time. While this can prevent a series of transactions being linked to a single source, it’s still public. 

Once independently verified, each transaction is then stored in what is, to all intents and purposes, a globally, publicly accessible database — the Blockchain. While it might take some digging, if we all used Bitcoin, it would be like having access to each other’s account details. 

So what precisely do the authorities mean when they say they want to make it ‘less’ anonymous? The issue is whether transactions can go under the radar, as says a recent EU report on the topic: “Highly versatile criminals are quick to switch to new channels if existing ones become too risky.” So, just as water finds its way through rock, so does criminality seek the easiest route. 

Equally, so we probably have laws already in place to deal with it. For example, Bitcoin ’tumbling’ services (essentially virtual coin-for-coin currency exchanges) could potentially be used for money laundering or fraud. Both of which are already illegal.

Don’t get me wrong, I understand the concerns, given that cryptocurrencies are themselves evolving. Bitcoin is one of many potential cryptocurrencies, and indeed, the Blockchain model is a model among many. While the idea of an untraceable transaction does not yet exist, it remains technologically possible.

The dark truth, however, is that humans have an equal propensity for good and evil, an eternal battle which has been fought throughout our histories, across our stories and indeed, within our daily lives. We are all corruptible, should sufficient opportunity come our way, or circumstance drive our behaviour.

Trying to suppress this reality plays to the dark side, inadvertently creating more problems. We can see it in the ongoing encryption debate, which pitches civil liberties and personal privacy against the institutional desire to keep bad things from happening. And in the case of Bitcoin, attempts to control a transparent currency mechanism will drive less transparency, not more. 

Thinking more broadly, currency itself is already under the cosh. While it has served a useful purpose as a mechanism to simplify trading for everything between goats and timber, there’s no philosophical reason why near-frictionless data transfers shouldn’t enable us to dispense with such intermediate steps. Of course, practicalities make this harder, but again, criminality seeks the easiest route. 

Bitcoin and its alternatives may create challenges but will come to be seen as the latest development in the eternal game of cat-and-mouse. If the authorities want to protect their citizens against the sometimes downright nasty vagaries of human behaviour, they need to think way beyond what will become a mere blip in our technologically augmented evolution.

 

Additional research by Ben Collins

 

Related reading:

VideoShot: the many names of Satoshi Nakamoto

Are we overdue a bitcoin unicorn?

The rise, fall and rise again of CNET founder Halsey minor

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Jon Collins

Jon Collins is an analyst and principal advisor at Inter Orbis. He has over 25 years in experience of the tech sector, having worked as an IT manager, software consultant, project manager and training manager among other roles. Jon’s published work covers security, governance, project management but also includes books on music, including works on Rush, Mike Oldfield and Marillion. See More

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