If there’s one thing we can all agree on, it’s that bitcoin and the crypto industry probably need to up the ante on their privacy protocols. While blockchain is typically more secure than other forms of digital finance technology, we are often hearing stories about exchange hacks and malicious actors that seek to get their fingers on digital funds that just don’t belong to them.
Bitcoin Privacy Needs to Be Upped
Kevin Pan, the CEO of Poolin (one of the top three bitcoin mining pools in the space), alleges that privacy should be bitcoin’s biggest concern at this time. He also says that the government’s approach to crypto regulation and transactions could potentially lead to further problems down the line granted people aren’t careful. He explains:
The real problem with bitcoin may be privacy. There is no other big question if the privacy issue is solved. What is more troublesome now is if government or law enforcement departments begin to create a blacklist of transaction addresses, it will make certain transactions unable to be packaged. In fact, these can be done, but if there is privacy, you can’t know who the address belongs to, and you can’t determine how much the amount is, and there is no way to control the currency system, so for me, bitcoin is basically no problem if the issue of privacy can be solved.
According to Pan, government bodies could potentially weave their way into the crypto space so deeply that they will tell bitcoin miners which transactions to accept and which ones to block. If this becomes the case, bitcoin will be a centralized unit of currency, and those performing the transactions will have a lot less say in what they receive or how they send money.
In addition, if enough miners decide to reject a user’s transactions, that person’s funds could potentially be frozen indefinitely. This, in many ways, is a form of what he calls “network censorship.” Bitcoin is arguably the most vulnerable as it is the world’s largest cryptocurrency by market cap and covers the most ground in terms of regular transactions.
What Can Be Done?
Pan was quick to point out that as of late, most privacy issues prevalent in the crypto space pertain only to bitcoin, and several other cryptocurrencies are not vulnerable to the same issues. He comments that Monero and Grin, for example, are quasi-anonymous units of currency, and that eventually, he thinks these properties could meander into the bitcoin space. Until then, however, the world’s number one digital currency is at serious risk.
As it stands, the industry is not a total loss. Pan explains that tools like Tap Root are likely to make massive improvements to bitcoin’s privacy, while wallets like Wasabi enable higher degrees of privacy for users.