How our privacy is diminishing and why Bitcoin is not the solution
As part of PowerKee’s efforts to promote privacy among cryptocurrency users, we are launching our “Bastion of Privacy” series. The “Bastion of Privacy” series will be a weekly release that reviews the most important developments among privacy coins, market movements in the industry, and the general state of privacy.
We dedicate the inaugural release to explaining why such a series is needed. The privacy of individuals has been rapidly diminishing in the modern era. Large corporations and governments increasingly control the information flow while tracking the activity of netizens.
Such tracking of activity is more pronounced in the financial system. Governments typically have close relationships with the largest banks in their respective countries. The close relationship provides governments with the power to censor transactions and “freeze” assets at will.
Bitcoin used to be an interesting alternative to such a financial system. However, the developing ecosystem around it provides governments with close oversight of the transactions on the protocol. Over the next few years, we may observe the first successful government censorship of transactions on the Bitcoin blockchain.
The Bitcoin Split
During the week, Coinbase CEO Brian Armstrong cautioned that the US Treasury Secretary Steve Mnuchin might rush to introduce a regulation relating to self-custody cryptocurrency wallets. A self-custody wallet is one which is self-hosted and operated independently of a third-party.
The regulation would require the counterparty to transactions with a self-custody wallet to carry out KYC on the wallet owner. Such a development would echo the concerns of Bitcoin Core developer Matt Corallo that the government is forcing Bitcoin to split into “KYC Bitcoin” and “illegal Bitcoin”.
Other Bitcoin developments have also been concerning. Exchange-listed DMG Blockchain is launching a mining pool that will only append transactions to the Bitcoin blockchain which are compliant with rules set by the US Office of Foreign Assets Control (OFAC).
PayPal launching support for cryptocurrencies brings mainstream coins even further within the grasps of government. Despite the entire market rising in response to the development, the support severely weakens mainstream cryptocurrency users’ privacy.
Payment processors are also closely tied with governments. If the US government requests information on cryptocurrency users from entities like PayPal, they will have no choice but to adhere to the request.
Privacy Coins To Play Larger Role
We anticipate that privacy coins will play a larger role in the current market cycle in light of such developments. Our previous analysis highlighted the phenomenal returns of leading privacy coins since their exchange listings.
Privacy coin projects have worked relentlessly on their technology over the past market cycle. With a more robust codebase underpinning their protocols, the odds of such coins outperforming rise further. In future “Bastion of Privacy” releases, we will dedicate time to analyzing the privacy coin market.
About PowerKee
PowerKee is a cryptocurrency network that makes privacy easy. Users can transact cheaply and instantly while maintaining anonymity. The PowerKee protocol uses a mixture of zero-knowledge proofs and coin mixing to provide strong privacy assurances to its users.
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