Is Anonymity a Cornerstone Concept in Blockchain Tech?

The Black Sheep of The Blockchain Ideological Handbook

Illustration by me

In the first few years after Bitcoin’s creation, an idea was presented in both conventional and social media that the network allowed for anonymous transactions. This was a belief held by some Bitcoin users, as well as those who were simply curious about the technology. The idea was propelled by its use in illicit circles, namely those who frequented Silk Road, an infamous black market network, back in October 2013.

However, this idea collapsed dramatically when law enforcement agencies were able to use Bitcoin addresses and transactions to locate individuals involved in these illicit activities. It was a clear signal that Bitcoin was not, in fact, anonymous, but rather pseudonymous. And since then, Bitcoin, and most other cryptocurrencies, have not been perceived as such.

The reaction to this depended on people’s understanding of how Bitcoin worked. Anyone who read the Bitcoin whitepaper likely knew that such a thing was a possibility. However, users who gained their insights almost exclusively from the media, or who were passive in their involvement with the ecosystem, may have been blown away by the revelation that transactions can be monitored and pinned to certain individuals.

Since law enforcement’s successful blocking of Silk Road, it has been rare to come across anybody who claims that the crypto industry implies anonymity. It effectively cut the concept out of major discussions. To some extent, this is a good thing, as it would be misleading to suggest otherwise. Not only this, but most permissionless blockchains actually utilize public ledgers, which seems to be a concept that is against the notion of anonymity.

From that point onwards, anonymity became excluded from blockchain discourse, being viewed more as a concept that was accidentally connected to the field by the media, rather than one that truly belonged there. You could even argue that the abandoning of anonymity-discourse helped to provide legitimacy to the industry, leading to giants like Coinbase and Circle gaining prominence in centralized financial spaces such as the traditional stock exchange. It was almost as if the killing of this discourse back in 2013 helped it…