The crypto industry royally screwed up privacy

Privacy is a complicated subject. Few would say that privacy is not important. In general, it is more interesting to talk about debatable things. So the limited arguments against privacy actually make it boring to discuss and easy to take for granted. Like Edward Snowden famous said: "Arguing that you don't care about privacy because you have nothing to hide is like arguing that you don't care about freedom of expression because you have nothing to say."

However, what if your privacy is not a priority? What if your privacy is not guaranteed? What if everything you do is under constant surveillance?

You could defend yourself.

Unfortunately, this is actually the state of the crypto industry, and there aren't enough people in the fight to defend privacy.

Transparency versus privacy

When I first read the Bitcoin (BTC) white paper in 2011, I fell in love with the vision of a peer-to-peer electronic cash system. Most societies have physical cash, legal tender, so in a digital society, what is the physical cash equivalent? Satoshi Nakamoto seemed to find an elegant answer to that question, and a multi-billion dollar market has sprung up around him. Sadly, Satoshi's original idea has fallen short in at least one area, and that's privacy.

The legal tender is private. When someone exchanges coins or bills (also known as "bills" in the US and Canada) for a good or service, that transaction is only known to the two parties involved. Identification is required if the good or service is restricted to certain age groups (beer races are not for everyone). Also, if you hand the lady a $ 10 bill at the local farmers market, she can't find how much is left in her bank account.

However, transactions on the Bitcoin blockchain are radically transparent. This means that transaction amounts, frequency, and balances are open for the public to see. The Bitcoin white paper only devotes half a page to the privacy issue with suggested workarounds that don't always work as intended, especially for second-generation account-based blockchains like Ethereum.

There are user guides on how to achieve greater privacy using Bitcoin, but they are extremely complicated and generally recommend the use of tools that can be dangerous for users. There are also some blockchain networks that have been designed with privacy as the default option, but most do not support more complex programming, such as smart contracts, which enable new use cases that involve business logic in decentralized finance (DeFi).

Related: DPN vs. VPN: the dawn of decentralized web privacy

Leaving privacy behind

Why has the blockchain community fallen short in making privacy a top priority? For one, privacy has taken a backseat to three other priorities: security, decentralization and scalability. No one will argue that these three components are not important either. But do they have to be mutually exclusive?

Another reason privacy has not been prioritized is that it is very difficult to guarantee. Historically, privacy tools, like zero-knowledge proofs, have been slow and inefficient, and making them more scalable is hard work. But, just because privacy is difficult, does that mean it shouldn't be a priority?

The last reason is probably the most concerning. There is a myth in the media that Crypto transactions are completely anonymous. Are not. This means that many people have been actively using crypto under the fallacy that their transactions are private. As blockchain network analysis tools become more sophisticated, the lack of anonymity increases. So when does privacy become important enough to make it a priority?

Related: Bitcoin can no longer be viewed as an untraceable 'criminal currency'

Privacy Finance

A friend of mine who has worked in the crypto industry full time since 2015 recently asked me, "Is WTF PriFi?" PriFi, or "Privacy Finance," is the crypto industry's admission that we really screwed it up with privacy. We screwed up so much that 12 years after the evolution of this industry, we are reaching the point where privacy is important enough to have its own hashtag.

So where do we go from here to build more privacy that protects everyday encryption users and achieves cash-equivalent digital privacy?

The first step is more education. As society becomes increasingly digital, privacy is increasingly difficult to achieve. This starts with educating the media on the differences between secrecy and privacy. The secret is not wanting somebody to know something. Privacy is not lacking the whole world to know something. The secret is a privilege. Privacy is a right.

The next step is to simplify privacy. Achieving privacy in crypto shouldn't require clumsy solutions, shady tools, or deep expertise in complex crypto. Blockchain networks, including smart contract platforms, must support optional privacy that works as easily as the click of a button.

The final step is to defend privacy. Privacy is a timely topic. The recent US Infrastructure Bill includes a clause to extend section 6050I of the tax code, which requires individual counterparties to collect personal information from each other for cash transactions over $ 10,000, and applies it to cryptocurrencies. Coin Center, a pro-crypto nonprofit research and advocacy group, is preparing to challenge the constitutionality of this shift for crypto. You can also, here.

Armed with the proper education, an intuitive user experience, and the motivation to make privacy a priority for cryptocurrencies, we can stand up for our rights without being reckless and maintain sensible privacy on our own terms.

The views, thoughts, and opinions expressed here are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.