Episode 10: Big Brother Loves Bitcoin
Who Watches the Watchers of the Blockchain?
“Alays eyes watching you and the voice enveloping you. Asleep or awake, indoors or out of doors, in the bath or bed — no escape. Nothing was your own except the few cubic centimeters in your skull.” — George Orwell, 1984
You may recognize this quote from 1984, which is a story of a man living in a totalitarian mega-state, complete with its surveillance apparatus, Big Brother, that subjugates and terrorizes its citizens using constant surveillance as a weapon. The NSA documents leaked by Snowden in 2013, and more recently, China’s credit scoring and social scoring models all bring us closer to an Orwellian future.
The rise of the internet and the movement of social life, commerce, communication, and human experience from physical space into the digital space has made it challenging for nation states to monitor a new and nearly limitless frontier (that wild west of the world wide web) and for corporations to implement existing business models.
This has led to new kinds of marketplaces that trade exclusively in human behavior, which can be characterized as a new form of capitalism dubbed “surveillance capitalism.”
This week, we’re diving deep into the rise of surveillance capitalism and its slow and steady creep into the crypto community, and what that might mean for our dreams of privacy. Get out those tin foil hats, baby!
Listen to Episode 10
Show Recap
So what do we mean when we use the phrase “surveillance capitalism?” Effectively, we are describing a new form of capitalism focused on commodifying behavioral and experiential data, which was pioneered by Google and later Facebook, and now used by nearly every technology company.
This means users lose:
- Privacy in communications
- Privacy in economic interactions and transactions, and
- Privacy in movement, both in physical and digital space
We can’t talk about this topic without talking about cypherpunks. Bitcoin was borne out of a number of different ideas, but the cypherpunk movement was a starting point for many of the ideas that comprise bitcoin’s early community.
But bitcoin is not anonymous. It is pseudonymous. The blockchain is a public ledger — meaning anyone can download it, and since the earliest days of the bitcoin community, people have built tools to de-anonymize bitcoin users and link the blockchain pseudonyms ie wallet addressed with real people and places.
There are of course tools you can use — mixers, tumblers, and other programs to obfuscate the flow of funds, but the ability for cryptocurrency users to stay private is only secondary to the ability for companies to build business models violating this privacy so they can sell data to exchanges, regulators, and enforcement agencies.
As Jill Carlson and I like to say — “there is nothing new under the sun.”
Just two weeks ago, Coinbase announced it had acquired Neutrino, a company that provided forensic analysis tools to link real people to crypto transactions. The founders previously founded a company that installed malware and surveilled political dissidents in countries like Sudan, the United Arab Emirates, and other sanctioned states.
If you want to read more about Neutrino, there are dozens of in depth pieces that cover the story (see below) and we encourage you to read and form your own opinions. Ours is detailed pretty clearly in this week’s episode (Jill and I disagree here, by the way), and subsequent discussions have introduced a broader discussion about crypto exchange data and how its used, shared, and sometimes sold.
So, in many ways, what’s happening with crypto platforms in 2019 is the opposite of the “cypherpunk manifesto.” If you want to build the Google of crypto and raise a bunch of VC money, you need a proven internet business model. At some point, whether now or later, you will face the choice that Lavabit faced in determining whether to turn over its SSL keys to the FBI. (see below in show notes)
Look at the things the crypto community is most excited about:
- Facecoin (whatever that is)
- JPM Coin (PayPal 2.0)
- Stablecoins (only redeemable with the approval of the issuer)
- ICE-owned exchanges
- Fidelity-owned custody
These things may help the price of crypto go up, or make it easier for investors to buy “crypto”, but they do little to extend the cypherpunk vision of enabling users to choose privacy. They’re actually quite the opposite.
So are we going straight to hell in a handbasket?
Not so fast. There are plenty of folks and companies in the crypto community, and in the tech community broadly, who are working hard on a different model. This isn’t just about technology, but also about education, and user tools that abstract out some of the challenges of managing privacy through clever design and great UX. The examples are too numerous to count (please add in the comments!) but a few we mention on the podcast include:
- The Brave browser, which features strong privacy
- Casa, which is working on “sovereignty as a service” via hardware, software, and services (note: I’m an investor)
- Samourai Wallet, a non-custodial software wallet that integrates with goTenna, a mesh networking device, to enable users to send transactions while offline
- Non custodial exchanges (ShapeShift is best known, now expanding to DEXs)
- The Electronic Frontier Foundation, Open Privacy Research Society, and many others
The future belongs to those who build it. And we have a big fight ahead. It’s important to educate, provide information, and create tools which allow users to choose what trade-offs they’d like to make when using these products and services.
In the words of Benjamin Franklin, “They who can give up essential liberty to obtain a little temporary safety deserve neither liberty nor safety.”
So maybe it’s time to choose what side you’re on. Sounds off in the comments, or join the conversation on Twitter!
Additional Notes
Shoshanna Zubkin’s new book “The Age of Surveillance Capitalism”
More on the Silk Road Case and Katie Haun’s comments on using public ledgers to trace criminal activity because banks wouldn’t provide data
More details on the IRS “John Doe” Summons to Coinbase and the outcome of that case
Coinbase’s controversial Neutrino acquisition and the #DeleteCoinbase movement
AND after we recorded — Coinbase removes Neutrino founders (they laugh all the way to the bank), rolls back their prior statements about having done due diligence, and keeps the rest of the team.
The history of Lavabit, the FBI’s quest to obtain its SSL key, and the precedent it set Apple’s defense against the FBI subpoena for iPhone passcodes
The EFF’s great piece “Designing Welcome Mats to Invite User Privacy” on the role of designing for consent in privacy (or data sharing)
