Thank you for joining our Crypto Trader News Roundtable where our team discusses the concept of anonymity and whether it is good or bad for emerging blockchain technology and worldwide adoption of cryptocurrency.
Dennis
Let me jump in and share my initial thoughts. First of all, I think we should address the question of whether blockchain is anonymous. Although it seems to be part of the legend and lore of the industry, in my opinion, it’s really pretty much a fantasy. Once someone associates an address with you, all the “anonymity” kind of flies out the window, don’t you think?
Matthew
Indeed. Your entire history is open at that point.
Tony
Yes, but there are a lot of people that work hard to make sure no one associates an address with them. To be honest, I find this very hard to do nowadays.
Tristan
Especially after you complete KYC somewhere and link it to an address. Anonymity is lost.
Brandon
It’s a double-edged sword, because it also creates transparency, think governments spending on blockchain to prevent corruption, once you’re able to pinpoint and track a wallet. On the other token, I’m under the impression that some alternative platforms are fully anonymous. And I support that because the spirit of Bitcoin and its subsequent offspring has always come out of a position of you having absolute control over your money.
Tony
That’s a good point, Brandon. Are we focusing on Bitcoin or any currency? I know Zcash and Monero take extra steps to ensure privacy. Whether crypto should remain 100% anonymous is a different question though.
Meredith
Anonymity is very difficult as blockchain projects become adopted by mainstream businesses. But people need to understand that there is a difference between blockchain and cryptocurrency. I could technically launch a token, assign in value and launch it on a decentralized network and still remain anonymous.
Dennis
Let’s take a step back and ask ourselves some questions: 1. Is anonymity a good thing or a bad thing? 2. Is anonymity achievable in anything but a very small scale economy?
Matthew
1 – I think it’s inherently both: it’s good, but subject to abuse.
Alan
Having similar characteristics to cash with improvements is the general idea. There’s value in anonymity for all, not simply just for criminals or the nefarious types. In the age of continuous data extraction through social media, credit card transactions, etc, your whole life is present for corporations and others to see. Transparency, to a certain extent, is great but stepping into a full surveillance society is not appealing.
Tony
Completely agree with the Alan on this one
Meredith
Governments obviously want a piece of the pie. They’ll regulate it to death and justify filling their pockets and keeping the working man working. 1. I think anonymity can be good and bad, depending on the person/company and their motivation. 2. It is achievable but can never go mainstream – limiting it to a core group of geeks and devs playing with code.
Dennis
I personally think that from a pragmatic standpoint there are more cons than pros (and I know most people in the industry will hate me for this). But here’s the deal – most crypto users want anonymity for one of three reasons: 1. They believe in this far-fetched libertarian utopia that’s never going to happen 2. They don’t want to pay taxes 3. They want to do things that they shouldn’t be doing.
That being said, I definitely understand Alan’s point.
So here’s a question: What about the scammers? One of the main reasons they flourish in this industry is because of “anonymity”. They take the moolah and run for the hills.
Matthew
One of the problems that I see is that many consider the anonymity to be a draw for the criminal element, and that’s still causing trepidation of moving into the market. Until exchanges start working together and communicating in order to mitigate breach damage, and more retailers follow through with the “promise” of more widespread crypto acceptance, the sense of anonymity may continue to work against blockchain.
Tony
But think about your last two points, Dennis. “They don’t want to pay taxes”. No one does. However, we all should and must, and even want to pay, to some extent. We all hate paying taxes but, without having everyone pitch in to improve the world around us, our lives would be miserable – Assuming that governments are using taxes for the right things here. LOL As for, “They want to do things that they shouldn’t be doing…” This kind of speaks for itself.
Meredith
I don’t want to pay taxes and I hope that my moral compass keeps me within the lines of the law. That being said, if I wanted to be “anonymous” it’s easy enough to use a VPN, create a dummy email, and use generic avatars/pics. It’s harder to maintain the facade. Hopefully that doesn’t put me on a watch list (if I’m not already on one) – but I don’t care about being public with who I am. IF I was super rich, however, that might be a different answer because then I might be a target.
Brandon
The thing is, scammers are going to exist either way. Removing anonymity may curb it to a degree in some situations, but I don’t think it will stop those who are clever and determined. Think of all the “Nigerian princes” who scam people using actual bank transfers.
Matthew
Tony is still waiting on his check from that Prince.
Tristan
I agree with Meredith, I feel that it’s easy enough for anyone to retain anonymity in the blockchain space if they take the right steps, but I guess it comes down to someones moral compass and what their intentions are. Why do they want anonymity? It’s mostly going to come down to one of the three categories Dennis mentioned above every time. In the case of scammers, that is 100% right Brandon, they will always find a way.
Alan
Some would state that anonymity and fungibility is one and the same. The idea is that money that is present today (cash) should be fungible all throughout, same yesterday, same today, not with an added transaction history, something that is of interest to a majority of the world, digital payments are not as popular, even though it is maybe easier? Even in Japan, a place that accepts BTC as legal tender, cash is still king.
Dennis
But is that really true any longer? I hardly ever carry cash anymore. We use plastic for everything.
Matthew
Agreed Dennis, I rarely have cash on me anymore.
Tristan
I never carry cash. If a store doesn’t allow me to pay by card I will go elsewhere.
Brandon
I don’t carry cash but I still use plastic. I never use cryptocurrency unless it’s for international transfers, but that’s just me.
Dennis
Well, think of this – anonymity is a two-way street. When you go into a store and pay by credit card, you know that it’s the store who’s charging you. However, with crypto that isn’t necessarily the case. Isn’t it a good thing to be able to trust that merchants are who they say they are?
Matthew
Very good point, Dennis. When I was new to crypto, I lost more than a couple of bucks from BTC vendors that took the money and ran.
Alan
Ok. That’s an interesting question Dennis, because you’ve got a variety of transactions that happened on Silk Road with their rating system, many transactions that occur on Bitcoin Talk and Reddit, and other anon platforms.
Tony
Well what are you lot trying to buy?
Matthew
No comment.
Tony
Ha ha. I would feel pretty comfortable paying with crypto to major retailers or at physical stores.
Brandon
Depends on which merchants you’re talking about. That probably wouldn’t happen with a reputable merchant, but if you’re trying to buy mushrooms on telegram I guess that’s a different story.
Tony
Yes exactly, that’s what I was thinking. LOL
Dennis
Maybe he was trying to make a risotto?
Tristan
Ha ha!
Dennis
But seriously, despite their many flaws organizations like PayPal and banks do serve a purpose. They’ll step in and shut down fraudulent processors – if/when they’re caught.
Tristan
And there isn’t anyone to do that with crypto, once you send your funds, it’s done. No turning back in most cases.
Dennis
I think they only really work on a small scale despite the mathematical theories.
Alan
Agreed on PayPal and banks. I’ve used the might of financial institutions in a few transactions to stay protected.
Brandon
But at the end of the day, I have to side with Alan; We live in a society where everything we do is being recorded, and algorithms look at that data to make all kinds of predictions on what we buy and how we act. A lot of people aren’t comfortable with that and prefer cryptocurrency just because it means their spending habits aren’t tracked as much. And this isn’t a new concept; think about how many old people prefer to pay cash for everything because of this very reason.
Dennis
Which brings me to thinking about blockchain projects like BlocPal that incorporate KYC into the very structure of the blockchain. The actual transactions are anonymous from a public standpoint, but each wallet is associated to a verified KYC. What do you think?
Alan
Dennis, that’s the ideal, transactions similar to cash but a bit better.
Tristan
Definitely the way forward, Dennis; retaining some form of anonymity but still with the safety net of KYC-backed transactions.
Alan
Well, I’ll have to think about that a bit more.
Meredith
Here’s the what if in that situation, Dennis. What if the government is sniffing around for taxable monies and decides it’s going after BlocPal for their records? Then everyone who uses the wallet is at risk. Thoughts on that?
Alan
BlocPal will do charge backs and reversals?
Meredith
I don’t believe BlocPal does charge backs or reversals.
Dennis
But can’t they subpoena that information anyway? Just because it’s on a blockchain doesn’t mean that the law doesn’t apply. I know there are some in-built protections, but I’m not sure exactly how they work. The transparency of transactions being on the blockchain should be a barrier to corruption, not a facilitator.
Brandon
To add to what Meredith said: There’s a segment of cryptocurrency that markets to the unbankable. What if you live in an unstable or developing country that happens to have a high level of corruption? Would you want your money going to taxes that benefit only the elite?
Meredith
Great point, Brandon.
Dennis
By that definition the U.S. is a developing country, no?
Brandon
That’s entirely subjective, but economically, no
Dennis
Ha ha.
Alan
Make America great again.
Tony
Great comments guys, I’m learning a lot today. Let’s wrap it up with one final question, and you’ll need to take a side here: Is anonymity a good thing for the long-term future of blockchain? Yes or no?
Dennis
No, it’s a fantasy at best.
Matthew
No, the illusion hurts more than it’s helping.
Alan
Yes. One key lesson in this conversation is, anonymity done right, matters.
Tristan
No, I think long term it may hold us back.
Brandon
Yes. There’s definitely a segment who buy into Roger Ver’s libertarian fantasy, but I still value the privacy element in a practical way.
Alan
Whew. One comrade.
Meredith
If I have to pick a side, I say YES. Here’s the thing that I like about cryptocurrency and the anonymity of decentralized networks – there is a collective WE involved, so picking out an individual would be like finding a needle in a haystack. As an individual, I personally don’t mind being public, but I want my crypto assets to be anonymous and I will work with people of the same mindset in niche kinds of projects. If we want to be anonymous, those underground projects will always be around. If we want to mainstream it, we’re stuck with AML/KYC protocols.
Alan
I’d agree for the most part. The industry will find a balance.
Dennis
Thanks guys/gal that was fun!
CTN Roundtable: Anonymity – Good or Bad?
