Crypto’s Big Brother.
In this week’s edition of Overbit News, we’d like to take a little bit of a different approach. Rather than focusing on a news story and drawing our own conclusions, we’d like to point out an explicit theme in the cryptocurrency world and find stories to support it. The theme of this week’s edition is rather simple: global surveillance.
Ever since Bitcoin’s inception, one of the most hard-fought discussions have been around privacy. On the one hand, people viewed Bitcoin’s open, verifiable ledger as a core feature; they believed transparency was essential to building a new & fair monetary system. On the other hand, a ton of people were wary of this openness. Without privacy, everyone was essentially fair game to surveil (at the minimum) for criminals and governments alike. Though the space has welcomed so-called ‘privacy coins’ in the last several years, it’s clear a massive amount of cryptocurrency activity is still done on a publicly-accessible blockchain.
Because of this fact, a vast majority of the cryptocurrency world is still under the control of the traditional finance system. While this is certainly good for some cases (money-laundering, fraud prevention, etc.), it’s safe to say that this fact does not come without severe downsides. Millions of people flocked to cryptocurrency to get out from under their government’s monetary and economic thumb. And now, today, we see the fallout.
Looking to Nigeria, we can see that cryptocurrency trading is drawing heavy scrutiny. Nigeria’s Securities and Exchange Commission recently announced it would begin to regulate trade for digital currencies, in order to protect investors and provide transparency. “The general objective of regulation is not to hinder technology or stifle innovation, but to create standards that encourage ethical practices,” the Abuja-based regulator said Monday in an emailed statement.
It will be interesting to see how these regulations play out, as they are essentially just applying the already-existing securities regulations to cryptocurrency markets. In the past few years, Nigeria has been amongst the top adopters of cryptocurrency in the recent years, in large part because of its massive population and the lack of a well-defined regulatory system for cryptocurrency. Several figures have come forward in support of these measures, echoing the sentiment that these regulations will only protect investors and not stifle innovation. It’s important to remember this is something much easier said than done; balancing bureaucracy and innovation is no small feat.
This leads us to our closeout story of governmental privacy policies. As we’re learning more and more, the blockchain isn’t a great place to handle privacy. The biggest benefit of the blockchain (the public ledger) could also be its biggest downfall. With highly advanced AI and Machine Learning technology, sophisticated technologies allow governments, regulators, and even casual “snoopers” to identify, locate, and track down whose Blockchain wallet is whose.
The fact is: in today’s current forms, privacy on the blockchain is nearly impossible. While there are some means of acquiring privacy coins in a non-traceable way, it stands to reason that for 99.9% of people, your cryptocurrency transactions can be surveilled by anyone with enough power or technology (or both). With that being said, some are looking to alternative ways of maintaining their freedom of privacy in cryptocurrency.
In a recent story by CoinTelegraph, we are (unironically) seeing people start to make the case that the government and legislation itself are the only ways to actually increase privacy. As we’ve seen with the EU’s GDPR privacy policy, some people are hoping the EU will step up again to protect blockchain anonymity, limiting companies’ ability to “snoop” on transactions. This is an ironic twist, that what was once a fight against the governments, has turned into looking for the government to save them from data “snoops”. In the ten years of cryptocurrency, though, nothing is too surprising. We’ve seen full-blown open markets without any regulation, and just as quickly we saw a fully corporate and government-backed asset in the form of Facebook’s Libra. Either way, it’s important always to remember that the trifecta of government, blockchain and privacy is bound to be a significant component of the future of cryptocurrency.
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