Design flaws of blockchain technology — Asset Ownership
Binding assets to users.
The world as we know it was introduced to the blockchain with the popularization of Bitcoin, which was launched at the start of 2009. Much later, that moment came to be fondly remembered! An infamous fictional inventor: Satoshi Nakamoto, claimed to have made available a near-perfect peer-peer electronic cash system that is untraceable by design. Satoshi’s weapon of choice is anonymity. Considering an ideal world where anonymity is power, and power should, and will be in the hands of the people, Satoshi aimed to make Bitcoins operation decentralized. He achieved this by using an anonymous address as an account number/ account address. The address obtained from the public key must match with a private key held by the user in his cryptocurrency wallet. Handling of the asset requires the user to sign the transaction using their private key.
Is anonymity the same as privacy?
Contradictory to the claim, anonymity does not ensure that the user’s privacy is protected! In fact, these are not interdependent on the other at all. For transactions to be recognized in cryptocurrencies like Bitcoin and Ethereum, they must be acknowledged by a consensus. For this to happen, the transactions cannot be encrypted. This is particularly dangerous if there is criminal or nefarious intent, as users and their addresses are viewable to all. The idea of privacy and private information is negated when users can be in danger due to immutable transparency. Few specialized blockchains such as ZCash provide privacy by encrypting transactions.
There has been a lot of skepticism about the actual intention of Bitcoin and similar cryptocurrencies, due to the lack of accountability and the anonymous nature of the address system. “Privacy for social benefit” is not the first thing that crosses one’s mind while considering Bitcoins’ real-world applications. Since its integration into the financial system, there have been numerous problems. Bitcoin has been used to facilitate the anonymous buying and selling of weapons, drugs, and paraphernalia on the dark web, the laundering of money, and funding terrorism, and crime. Earlier this month, U.S. law enforcement officials said they were able to recover $2.3 million in bitcoin paid to a criminal cybergroup involved in the ransomware attack on Colonial Pipeline in May. The FBI said its agents were able to identify a virtual currency wallet that the hackers used to collect payments from Colonial Pipeline (Tan,2021).
The Bitcoin framework is built around anarchism. The structure is built to ensure that the identity of the user cannot be verified. This system is systemic in eliminating traces and can be used for the laundering of money without accountability. While user identification is hidden, specifics about the transaction like account balance, address, and asset transfer information are available for all to view. Legacy financial infrastructure has been designed, tried, tested, and has evolved over hundreds of years. There are instruments and policies in place to prevent the misuse and manipulation of the financial system.
Lose your key, lose your assets!
Blockchains like Bitcoin have an unfortunate and rather comedic characteristic, which some may have come to realize is quite tragic! To access the wallet, you require a private key. In case you misplace this private key, the assets that are bound to it, are irrecoverable. This is because there is no option to get access to the wallet besides the private key. There are third-party methods like Shamir’s secret Sharing (SSS), or Secure Multi-party computation (MPC). However, these options are expensive, time-consuming, and not foolproof. There is no guarantee that the assets may be recovered. Of the existing 18.5 million Bitcoin, around 20 percent, is currently worth around $140 billion. These appear to be in lost or otherwise stranded wallets, according to the cryptocurrency data firm Chainalysis. Wallet Recovery Services, a business that helps find lost digital keys, said it had received 70 requests a day from people who wanted help recovering their riches. This is a stark reminder of Bitcoin’s technological blunders, which sets it apart from normal money, and makes it risky. Bitcoin has no company to provide or store passwords. But the structure of this system did not account for just how bad people can be at remembering and securing their passwords (New York Times, 2021).
During the conception of the MetaMUI blockchain, anonymity was seen as a design flaw and therefore has been addressed in a way that binds assets to the user’s identity. All transaction that takes place on MetaMUI has identifiers that allow the asset to be linked to the user by decentralized identity technology called SSID or self-sovereign identity. No personal information is stored on the blockchain, and user identities are managed using signed certificates called verifiable credentials. This ensures high-quality privacy for the user.
MetaMUI is designed so that even if the private key is misplaced, a replacement may be generated after identity verification through official documents. Once the user passes verification, the new key is handed over and the assets can be reacquired without any delay or complications. Considering asset reacquisition, and the fact that no one apart from the user can authorize a transaction, one can assume that MetaMUI’s privacy standards are more on point with what is really required for real-world applications, and to have a working financial blockchain. A wallet stored on the user’s smartphone contains a private key, and this key does not leave the device. Information and identity theft is quite common in traditional banking and current cryptocurrency exchanges. There are industries built around protecting against and the effective handling of these mishaps. However, the MetaMUI blockchain renders these mishaps obsolete. The system uses a wholly decentralized method to manage and recover private keys.
At MetaMUI, we are always looking toward the future and are driven toward benefitting humankind. Do share your thoughts and opinions in the comments section.
About us
MetaMUI is the first identity-based blockchain that solves the trilemma of identity, privacy, and programmability. It enables legally compliant digitization of currency, identity, assets, certifications, signatures, contracts, copyrights, arts, etc.
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