CRYPTO ADOPTION WILL BE SLOW IF PRIVACY ISN’T IMPROVED UPON

When we talk about blockchain technology, we’re quick to talk about democratisation, freedom from the shackles of oppressive powers in government, and the likes. Rarely do we talk about the security issues with decentralised finance. Rarely do we talk about the lack of privacy with users on blockchain. It is as though we’d rather talk about the positives that dwell on the negatives. For example, crypto enthusiasts are against taxes on crypto trading because it takes away the freedom of government from crypto. 

 

And they do have every right to be wary of government interference. 

We’ve seen first-hand the instability in the current financial system. The boatload of corruption and inconsistency in these spaces. We know how power has been cornered to one side of the social divide, the rich and wealthy. The fear for many who reject any form of government involvement with crypto is that they, the government, will spoil the crypto space with their tainted hands. Not like the cryptocurrency space is without its faults. 

 

The recent Terra Luna crash (although they are back as Terra 2.0), shows that the crypto space isn’t without its faults. But at least everyday people are the ones in charge, not the government. 

 

BUT GOVERNMENT REGULATIONS ARE CREEPING IN

While the distrust for government regulations wanes, we’re experiencing more federal governments getting actively involved with digital assets. From the United Kingdom pursuing digital currencies equivalent for fiat currencies, to Germany implementing tax laws, to El Salvador making bitcoin a legal tender, more governments around the world are opening to the power of the blockchain. 

But questions on privacy on the blockchain still exist. 

Are traders and investors safe on the blockchain?

How much privacy is enough privacy?

If privacy is the right of every trader and investor, shouldn’t they get more privacy?

With btc explorer in place, can investors and traders truly say they’re anonymous on the blockchain? 

 

These questions – and more – plague the bitcoin industry. 

 

But legislation such as the General Data Protection Regulation, which is being implemented in the banking sector in the European Union has found its way to cryptocurrency. More regulations are being developed, first to protect investors and traders from hackers and scam cryptocurrency projects, and second to impinge on nefarious activities that might be carried out with blockchains. 

 

WHY IS PRIVACY IMPORTANT?

 

Blockchain’s transparency has been touted to be one of the perks of the technology. Accounts can be traced, and the details of that account open to the public, the enthusiasts say, but the reality on ground, with increasing adoption and improvement in technology makes this perk a reason to worry. 

 

Yes, it is great that blockchains are transparent, but what about hackers? This level of transparency opens the door to hackers. All they need to do is have a wallet address, and they can steal millions of dollars from unsuspecting crypto investors. 

 

Distributed ledger works like this:

A man, let’s call him Kelvin, sends cryptocurrency from his wallet to another’s address. The details of this blockchain transaction are now open for the public to see. The person’s wallet is now connected with Kelvin’s. If the person has a data breach at his/her end, Kevin’s wallet can be hacked, and his digital assets taken from him. 

 

Many people in the crypto space often say that pseudonymity is equivalent to privacy. 

But nothing can be further from the truth. 

 

WHAT DOES PRIVACY EVEN MEAN?

 

The definition of privacy can be somewhat ambiguous for some, but the crux of privacy is that a person is the only one that has access to personal information and assets. The person has the right to either share pieces of this information with others. 

 

In crypto-lingo, privacy is when wallet owners don’t have the details of the wallet out in the open; when wallets can’t be traced, and a person’s wealth is exposed. Privacy is also when dangerous people don’t have access to government’s money. 

 

RECENT EVENTS THAT HAVE EXPOSED THE NEED FOR MORE PRIVACY

Vibe shift is a new generational term that describes a shift from the norm, a movement towards new forms of energy, a paradigm shift. There is a vibe shift in the cryptocurrency space, one that, if not understood, will leave many wandering in the land of the lost. 

 

The war in Ukraine has been an eye-opener to many on the immediate importance of privacy on the blockchain. 

 

Immediately the war in Ukraine started, the president of Ukraine pleaded for support from the world. Given the disaster in the country, traditional banks were shut, and international financial activities in Ukraine put on hold. But with cryptocurrencies ‘beyond borders’ qualities, Ukraine was able to get help from people. 

 

In the same vein, others clamoured that cryptocurrency should be banned in Russia. These calls weren’t adhered to because such bans defeated the goal of cryptocurrency, democratised financial institutions. 

 

FOR MORE ADOPTION, PRIVACY ISSUES MUST BE TACKLED

 

No matter how good a technology is, if people aren’t accepting of it, its brilliant features fall flat on its face. 

 

For crypto to gain wider adoption, especially among big companies and governments worldwide, privacy data must be protected. 

 

Big companies will find it hard to use cryptocurrency for financial transactions because their data is open for all to see.

 

Their users’ identity isn’t protected, their data is open, and can be compromised; these issues stop institutions from fully getting involved with cryptocurrency. 

 

BUT PRIVACY WILL MEAN LAWS, AND LAWS ARE BAD, RIGHT?

 

The erroneous belief that the government placing laws on digital assets are harmful to space is far from the truth. 

 

First, on-chain privacy doesn’t harm anyone, instead it protects people’s data and increases the level of trust people have in blockchain technology. 

 

Second, increasing the level of privacy on blockchains doesn’t mean regulators have full rein of distributed ledgers.  

 

Not at all. 

 

Privacy, and some regulations, will increase adoption of crypto.

 

People don’t invest in what they don’t trust. And many people trust the government. 

 

So, if laws, which help to protect investors and traders privacy on the blockchain, are implemented, more people will be willing to part with their fiat currencies and invest in blockchain-backed projects.