Online Privacy and the Crypto World: The Data Currency
Let’s dive into the good and the bad of the world of blockchain and cryptocurrencies innovative financial approach, to understand its impact on our private information.
Cryptocurrencies have made headlines lately due to the rise and fall (and rise and fall) of leading blockchain currencies like Bitcoin. But among headlines and Elon Musk tweets, one story that caught our eye was the Colonial Pipeline ransomware recovery by the FBI that managed to track and regain possession of over $2.3 million paid in Bitcoin. <hl>This solved crime raised eyebrows and immanent questions about cryptocurrency and data privacy, here's why:<hl>
The dark side of Bitcoin
The reason this story is particularly fascinating is that it reveals little known truth about what was once considered a safe, private, and anonymous transaction. The cryptocurrency community praises blockchain’s ability to go under the radar, and we can clearly see that this isn’t always the case. Cryptocurrencies can be traced back to users, which makes us wonder what else we might not realize regarding the technology’s approach to privacy.
One of blockchain’s main selling points is that it is decentralized and confidential. Unfortunately, this also means that it is being used for very disturbing transactions, such as ransomware attacks and other dark activities. Many of the marketplaces labeled illegal by authorities are fueled by cryptocurrency, and estimations believe that Bitcoin dark web transactions surpassed $1 billion in 2019.
Regulating crypto privacy
Another element to consider is the notion of cryptocurrency privacy regulation. A decentralized coin is often snubbed by authorities and central financial organizations that refuse to recognize it and offer any form of legitimacy. This makes it difficult for some coins to rise and become mainstream currencies and creates a privacy obstacle along the way. We don’t recognize that we cannot regulate, and despite advanced privacy laws like GDPR and CCPA, it’s hard to determine if blockchain activity can be fully regulated.
Generally speaking, since GDPR forbids capturing personal data that cannot be deleted or amended, we can say that private information shouldn’t be stored on the blockchain in order to be compliant with this law. This isn’t a simple requirement since cryptocurrency transactions must be validated by offering such payer information.
There are technical ways to bypass this obstacle, but they’re far from perfect. For example, Bitcoin is “pseudonymous,” meaning that users give a specific address to identify the transaction. While it is recommended that users pick a new address for each transaction, those who fail to do so can easily be tracked using common data points. Still, crypto payments may be more private and secure than other online options, as we’ll see later on.
If cryptocurrency wants to break the barrier that’s preventing it from becoming mainstream, it may need to jump through the hoops of data privacy and be telling enough to be validated without losing its decentralized nature or storing private user information against the law.
The bright side of crypto privacy
It’s not all bad. Cryptocurrency can also keep our data safe and protect users’ privacy. The same way hackers and other criminals embrace cryptocurrency to commit acts we disapprove of, the average and honest Joe can use this technology simply to stay safe. The technology that protects dark web users from being revealed can make it harder for them to attack users. This quality has been discussed for several years now, and The Pentagon already named blockchain a “Cybersecurity Shield“ back in 2017.
In a way, crypto may be the data privacy solution we’re all looking for. Where legislation is lacking, lagging, and local, technologies like blockchain can overcome time and space limitations to offer solid protection. The more common blockchain technology use becomes, the more protected online activity may get, thanks to crypto’s ability to keep private data safe. We should keep in mind that the race between hackers and protectors is never over, and we can expect hackers to continue to operate in this field, but blockchain still offers a new set of tools to fight the good fight.
Another advantage is the enhanced understanding of privacy brought by cryptocurrencies. Internet users who learn about blockchain are exposed to ideas regarding privacy in general, and so the rise of these coins adds to the public lively debate around data privacy.
Cryptocurrencies help educate internet users worldwide regarding the level of security they should demand from any online service they use. Blockchain early adopters may be more inclined to be proactive about using digital tools to take ownership of their data. The crypto generation may very well be the one that leads the next data privacy revolution, armed with a deeper understanding of privacy standards and the technologies that enable them.