I stumbled across a really interesting article from March 2015 discussing the benefits of using crypto-currencies as privacy protectors online. More specifically, the article is about using Bitcoin as a privacy tool. It is from Pete Van Valkenburg and is titled “Bitcoin: Our Best Tool for Privacy and Identity on the Internet“.
I encourage you all to read the full document, it’s a pdf online and is only 17 pages. But if you want a quick synopsis, here’s my take on some of it.
Bitcoin as a Privacy Tool
Bitcoin, and all the other crypto-currencies, are incredibly proficient privacy-enhancement tools. It’s a really interesting development in technology, primarily because it is so new. It’s something that the average citizen does not know how it works. Something that is “foreign” to many who first read up on it.
But it’s also an advancement like we haven’t seen before: a decentralized currency. Sure, the exchanges aren’t, but many individuals are working to find ways to circumvent those problems, anyway. And for the more technical users, there are already numerous options.
Bitcoin provides a change in the power landscape of currency. Previously, it was held primarily by a central power. A government, or in the US—The Fed.
Likewise, with this central power came a lot of modern pains. Cash could usually not be traced, but in some instances it still can find its way back a lot of hands (if the Secret Service desires it).
Credit cards and banking cards are a whole different beast. They can trace back everything.
Consider this from the article:
Privacy is fundamental to free speech, diversity, creativity, and democratic self governance. Intuitively, we modify our behavior whenever we know or fear that we are being observed. We abstain from some activities in which we’d otherwise engage or conform to modes of acting we’d otherwise eschew. Simply put, when we are observed, we become culturally and intellectually homogenized; we go mainstream. This phenomena has been intuited by scholars and writers for centuries.
More recently – chilling effects have been observed empirically. Chilling effects are by no means benign or marginal. We lose more than a vibrant counterculture when a lack of privacy causes citizens to avoid associations or transactions that are not mainstream. Homogenization means less technological innovation, less scientific discovery, and fewer diverse voices in politics.
The Problem Goes Deeper
When you consider that banks and credit cards use a “pull” system (IE: Your data gets transmitted through numerous parties when you swipe your card, it is “pulled” from the systems to ensure a transaction) it puts your information at risk.
As evidenced by the banks and credit hackings (in the article they reference JP Morgan), a lot of very important data regarding people’s personal lives can be lost relatively easily.
And if this is done, it causes many individuals to change their normal attitudes or behaviors. To change their spending habits, who they purchase from, who they donate to. “We go mainstream”.
Bitcoin can get past these issues that centralized currency cannot.
I’m not saying Bitcoin should overtake the regular currency, but it is something that we should give significant weight toward being an important piece of technology looking toward the future. I’m hoping more similar alternatives will arise as well, so Bitcoin does not have a solo monopoly.
Check out the article yourself. Here is the abstract:
Financial privacy is an umbrella term for both data security and privacy. We can think of security as the ability to hide information from all comers and privacy, following Nissenbaum’s concept of contextual integrity, as the ability to shape how we selectively reveal information and how it is used after revelation.
Poor security and poor privacy have costs: identity theft, merchant compliance costs, chilling effects on speech and cloaking costs from user self-help. Cryptocurrencies, such as Bitcoin, can be used to improve security and grant users more granular control over when and how they choose to identify themselves.
We outline these potential benefits and describe how they can be achieved without hamstringing the investigatory powers of law enforcement or the goals of financial regulators.