What's up?

Hello people, today we are going to talk about an issue that is a very important part of the cryptoworld and the cryptocurrencies : privacy. A large amount of people interested in this subject have of course turned to cryptocurrencies, hoping it would be secure, anonymous or private. But are the main currencies actually private and anonymous? Can there be too much privacy?

First things first, let's define privacy :

A state in which one is not observed or disturbed by other people

the state of being away from other people’s sight or interest

Now we can see that private doesn't mean anonymous, I can be away from other's sight or not observed without a need to hide or do anything to be private, it can be obtained through active effort but can also be a passive state. E.g : I'm alone in the forest, is by definition, private.

So, what is being anonymous :

not named or identified

Not named or not made public

Here again, I can be unnamed or unidentified in the broader acceptance of the term, just because someone doesn't know who I am.

What are we looking for?

We are looking for active privacy and anonymity. Which fits perfectly the crypto-world goals since the world "crypto" comes from ancient Greek and means : secret or hidden. In a world where identification is everywhere : identity card, passport, bank account, property papers,... Some decided that is was too much or unefficient and came to create cryptoccurencies. The first known one and most proeminent being the Bitcoin. Even though there has been some attempt to create such currencies before Bitcoin.

But be careful, Bitcoin doesn't address the issue of privacy directly, actually, it adresses the efficiency issue. In a world where money is historically controlled by governments and large financial instutions, there used to always be a middle-man in every transaction. It's commonly accepted that transaction-fees are the most efficient way to deal with transactions in general BUT financial institutions had a bunch of other problems : huge and bureaucratic managment, a centralized record of customer's informations and the lack of oversight or understanding from the public. All of these steps required to pay too or implied that the customer didn't have a say in how it worked. So, Bitcoin addressed a lot of those issues by creating a decentralized & open source system. This was made possible thanks to a technology called blockchain which I won't explain here because it is not the point of this article (see here for explanations). Just know that it allows form peer-to-peer transactions and that it's trying to get rid of the middle-man, in the process.

Ok, where's the privacy?

Bitcoin was for a long time mistaken for "private" or anonymous and quite often bashed as being used for illegal activites because it didn't work in the traditional way of banking. You can't have bitcoins in your hands, it's doesn't have a printable, tangible bill paper or coin. This might seem funny but it's a cause for a lot of mental barriers in a world where, even with e-banking and electronic transactions, our mental representations of money is a piece of paper. All the transactions, the history of all the transactions if you will, does exist and is part of the technology used in Bitcoin. It's simply not centralized under a common admnistration or company but inside something called a ledger, a witness of all the past transactions.

These factors are understandably confusing when you've never been exposed to them before and we'll give the benefit of the doubt to the ones bashing it without being aware of its functionning.

When you consider that when you're starting to buy bitcoins, you'll have to buy them with dollars or euros or yuans and that the transactions are stored in the ledger and that many places still don't accept bitcoins for payment so you'll have to turn them back into a more common currency ; you'll understand how Bitcoin isn't the actual "totally anonymous" currency which is often depicted in the general medias. You can see more here.

You didn't answer the question, where's the privacy?!

Some other currencies try or are trying to bring as much privacy and anonymity to the transactions as they can.

Monero for example is using a different way of dealing with transactions like explained here and here.

Dash is using Darksend which is explained here.

Zcash which is still in alpha (=not ready at all) wants to use a a zero-knowledge proof.

These are all extremely interesting because they value privacy and anonymity a lot. Maybe you've never heard of them and it's alright, Zcash isn't ready yet ; the others are facing a difficult competition with a tremendous amount of other currencies and there are probably a lot of them I missed in the process.

I won't talk about Ether(eum) today since they aren't explicitly focusing on privacy but aim to be more of a day to day currency.

Is privacy good or bad?

Well in my opinion privacy isn't inherently good or bad, it's a tool that you can use for intelligent or nefarious purposes depending on who wields it. But there is an important point that needs to be addressed. The way you design the tool, especially when it will have to deal with large amount of money, must be taken into account. Governements and institutions have been spying on us as Edward Snowden or Wikileaks have shown, they are also hiding a lot of important informations from their citizens or customers or other humans in general (e.g : Panama Papers). It is normal and sound to want privacy in return and it is good that we are given a way to live how we want and more in control and informed than we were before.

Many will call a gun, a tool. Say it serves a purpose of protection for example. But do not forget the way a gun is designed is to shoot at people in an active way. It is not a shield, not a way to hide or shy away from a confrontation. It is designed primarly to hurt or kill and make sure that you're safe, if we follow that line of reflexion. It's a complex argument and I'll try to give my take on it.

I think considering the design of the privacy elements of a cryptocurrency or anything related to privacy really, must be the primary concern. Some privacy or anonymity protocol are so aggressive or obscure that they will be used to commit crimes sell&buy illegal drugs, abuse the system in general and mostly profit to criminals. In a perfect world, we wouldn't have to worry about a tool that serves anonymity but we are not living in a perfect world so I think we have to ask ourselves the proper questions and intervene when a privacy tool will be used to carry bad deeds. Not because privacy is bad but because the tool providing privacy is designed in a certain way that will make it aggressively private. I'm certain that many tools in the making aren't being made maliciously and a lot of good people have seen their perfectly neutral inventions turned into a weapon or deliberately misused. I'm not going after anyone in this article, just giving my opinion and food for thoughts.

I guess what I am saying is : build a shield, not a sword.

It is normal and healthy to want privacy but we must be accountable for what we create and a bit of ethics doesn't hurt anybody. I'm really advocating for a world where we are given more privacy and anonymity options and possibilites but it's capital to have a reflexion about how we want this world's privacy to work and be implemented in our lives. It is an extremely significant feature of the society we are and will live in so I'm asking you now to tell me what you think and how you see our future.

Thanks a lot for your attention and thoughts,

Stay Curious!

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