Cryptocurrency was supposed to be about privacy. It’s right there in the prefix “crypto” (meaning “hidden” or “secret”), a nickname the technology shares with cryptography, the discipline that spawned it.
“We have to trust [banks] with our privacy, trust them not to let identity thieves drain our accounts,” Bitcoin creator Satoshi Nakamoto wrote in 2009, explaining the impetus to create a new, peer-to-peer monetary system.
Yet 13 years later, while BTC and its various knockoffs and descendants have become a $2 trillion asset class, privacy remains hard to come by, either for cryptocurrency users or everyday people.
Corporations and governments continue to collect mountains of personal data, often without the subjects’ knowledge or consent. This sensitive information is often guarded poorly (one word: Equifax) and/or abused (two words: Wells Fargo).
Far from fulfilling the dreams of the cypherpunk movement that inspired Satoshi, cryptocurrency has arguably created a new panopticon on top of the old one. To buy or sell digital assets, most consumers have to identify themselves to regulated online exchanges, which sometimes ask for more information, such as selfies and biometrics, than traditional banks. While public blockchains obscure users’ real-world identities, an industry of on-chain sleuths has sprung up to connect the dots, aiding law enforcement but undermining the pseudonymity Satoshi’s design relied on.
But all is not lost.
From Bitcoin’s Taproot upgrade to alternative privacy coins to innovations like mixers and zero-knowledge proofs, various communities are working to restore crypto’s original, namesake promise – even as international regulators demand the collection and sharing of ever-more data.
Coinciding with international Data Privacy Week, CoinDesk’s Privacy Week series is a collection of articles that explore this battleground from a range of perspectives – technological, regulatory and cultural.
We survey the state of play for digital and financial privacy in 2022, in crypto and beyond, and where it might be headed in the years and decades to come. It’s the fourth “theme week” from Layer 2, CoinDesk’s magazine of ideas; check out our previous collections, Policy Week, Future of Money Week and Culture Week.
We hope you enjoy the mix of features, opinion and research. Let us know what you think and what we missed.