{"id":140473,"date":"2020-12-23T20:31:55","date_gmt":"2020-12-23T17:31:55","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/users-vs-governments-the-infinity-war-for-blockchain-privacy-may-be-over\/"},"modified":"2020-12-23T20:31:55","modified_gmt":"2020-12-23T17:31:55","slug":"users-vs-governments-the-infinity-war-for-blockchain-privacy-may-be-over","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/users-vs-governments-the-infinity-war-for-blockchain-privacy-may-be-over\/","title":{"rendered":"# Users vs. governments: The &#8216;infinity war&#8217; for blockchain privacy may be over"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_84 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a27809d636a3\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a27809d636a3\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/users-vs-governments-the-infinity-war-for-blockchain-privacy-may-be-over\/#Countering_terrorism_and_money_laundering\" >Countering terrorism and money laundering<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/users-vs-governments-the-infinity-war-for-blockchain-privacy-may-be-over\/#Privacy_matters\" >Privacy matters<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/buradabiliyorum.com\/en\/users-vs-governments-the-infinity-war-for-blockchain-privacy-may-be-over\/#Cryptocurrency_surveillance\" >Cryptocurrency surveillance<\/a><\/li><\/ul><\/nav><\/div>\n<p>&#8220;<strong># Users vs. governments: The &#8216;infinity war&#8217; for blockchain privacy may be over <\/strong>&#8221;<br \/>\n<img decoding=\"async\" src=\"https:\/\/images.cointelegraph.com\/images\/840_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS91cGxvYWRzLzIwMjAtMTIvMWM5NGE1ZTAtNWI4Mi00MTE4LWE0M2QtNTEwNmM5ZTBjZjNjLmpwZw==.jpg\" \/><\/p>\n<div class=\"post-content\" data-v-5a136f3a>The unique power of blockchain and cryptocurrency can also be considered their weakness. Crypto users gain unparalleled privacy for financial transactions through a decentralized transactional system. Governments, however, demand transparency in financial transactions for legal concerns. This creates a paradox. People are less inclined to use financial instruments if, in doing so, they expose their money to the world. Conversely, there are a number of regulations requiring financial institutions to counteract terrorism and money laundering \u2014 serious concerns for many governments.<\/p>\n<p>The crux of the issue is that most public blockchains require a consensus of all participants to validate transactions. How can both sides \u2014 individual users and governments \u2014 achieve their conflicting objectives when they\u2019re diametrically opposed?<\/p>\n<p>A potential solution to this problem involves balancing the privacy concerns of users with the centralized oversight necessary for governments to ensure that regulations like Anti-Money Laundering, Know Your Customer and Combating the Financing of Terrorism are observed. Implementing measures for confidential transactions alongside those for governmental surveillance strikes a delicate balance in which cryptocurrency assets remain discreet yet subject to the laws governing finance around the world.<\/p>\n<p><strong><em>Related: <\/em><\/strong><strong><em>Comparing money laundering with cryptocurrencies and fiat<\/em><\/strong><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Countering_terrorism_and_money_laundering\"><\/span>Countering terrorism and money laundering<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>The government\u2019s need to monitor cryptocurrency transactions for counterterrorism and AML purposes is critical for public safety, especially since these two areas are interrelated. Money laundering can be used to fund terrorist activities, which \u2014 like everything else \u2014 require funding, even if it doesn\u2019t involve money laundering. Surveying the money flow between parties on popular cryptocurrencies like Bitcoin (BTC), Ether (ETH) and others can provide invaluable information for preventing these crimes. Regulatory bodies need insight into which parties are paying whom and why, at the very least.<\/p>\n<p>However, cryptocurrency\u2019s very nature makes it easy to mask these and other transactions. Bitcoin may be traceable with modern tools, but some transactions are completely untraceable with other cryptocurrencies. These legitimate concerns partly explain the formation of organizations like the Financial Action Task Force, which exists to counteract money laundering and terrorist financing, and whose efforts would greatly benefit from improved visibility into cryptocurrency transactions.<\/p>\n<p><strong><em>Related: <\/em><\/strong><strong><em>A minister\u2019s look at what regulators expect from the industry<\/em><\/strong><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Privacy_matters\"><\/span>Privacy matters<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>The <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/general\/\" data-internallinksmanager029f6b8e52c=\"3\" title=\"General\" target=\"_blank\" rel=\"noopener\">general<\/a> public\u2019s privacy <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.forbes.com\/sites\/ktorpey\/2019\/10\/17\/major-bitcoin-miner-warns-the-cryptocurrency-needs-better-privacy\/#75eb97c35260\">issues<\/a> about using cryptocurrencies are, in many ways, opposed to the visibility the government requires for AML and terrorism efforts. People simply want to keep their business as discreet with cryptocurrencies as it is with conventional currency transactions. However, the transaction validation features of public blockchains can potentially expose this information, invading users\u2019 financial privacy.<\/p>\n<p><strong><em>Related: <\/em><\/strong><strong><em>Blockchain can provide the right to privacy that everyone deserves<\/em><\/strong><\/p>\n<p>The first element of a solution providing consumer privacy in tandem with governmental oversight is to redress this issue. There are confidential transaction features \u2014 some of which are used by cryptocurrencies Monero (XMR) or Zcash (ZEC) \u2014 that obfuscate the amount and participants of a transaction while still validating it for a blockchain. These cryptocurrencies provide measures to prevent people from knowing the origin, the destination and the amount of a specific transaction. These <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/download-scripts-themes-apps\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"Download Scripts &amp; Themes &amp; Apps\" target=\"_blank\" rel=\"noopener\">app<\/a>roaches assuage many of the privacy concerns of cryptocurrency holders.<\/p>\n<p><strong><em>Related: <\/em><\/strong><strong><em>Dash claims \u2018inaccurate categorization\u2019 as ShapeShift delists privacy coins<\/em><\/strong><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Cryptocurrency_surveillance\"><\/span>Cryptocurrency surveillance<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>By pairing these privacy methods with the following ideas for cryptocurrency surveillance, governments can monitor activity for counter-terrorism and AML purposes. Say, for example, there is a cryptocurrency backed by an organization consisting of a finite number of banks. The first thing users would have to do is onboard with those institutions \u2014 much as they would with any other \u2014 which provides an initial layer of insight into cryptocurrency behavior while supporting mandates like KYC. Then, after users issue transactions to others enrolled in this organization, they would be obligated to disclose the details to one of the banking members for proof. This obligation can be enforced on the transactor by the use of cryptography so that the validators can ascertain that the disclosure has been correctly made.<\/p>\n<p><strong><em>Related: <\/em><\/strong><strong><em>The data economy is a dystopian nightmare<\/em><\/strong><\/p>\n<p>Such an approach would enable the government to collectively ask each bank the particulars of a transaction so it can monitor the money flow. The government would therefore have central oversight courtesy of the individual financial institutions\u2019 input. With this paradigm, the banks validate transactions, the government collects all the data for central analysis and surveillance, and consumer privacy is upheld among financial organizations and cryptocurrency users. There are additional cryptographic approaches that, when <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.gartner.com\/smarterwithgartner\/the-reality-of-blockchain\/\">coupled<\/a> with blockchain\u2019s cryptographic underpinnings, can support this model for both privacy and regulatory adherence.<\/p>\n<p><strong><em>Related: <\/em><\/strong><strong><em>You should care about decentralized identity in the wake of COVID-19<\/em><\/strong><\/p>\n<p>Cryptocurrency usage is rapidly evolving. It\u2019s unacceptable for financial institutions to tell national or international regulators that they don\u2019t know whether transactions are legitimate. It\u2019s equally unacceptable to expose the financial prowess of legitimate users to everyone on a blockchain.\u00a0<\/p>\n<p class=\"post-content__disclaimer\"><em>The views, thoughts and opinions expressed here are the author\u2019s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.<\/em><\/p>\n<div>\n<div style=\"background: rgb(239, 239, 239); border: 1px solid rgb(204, 204, 204); padding: 10px;\"><strong>Debasish Ray Chawdhuri<\/strong> is the senior principal engineer at Talentica. Debasish is an IIT Delhi alumnus and a researcher who has worked closely with founders of high-growth startups and enabled the adoption of emerging technologies like Blockchain. He has published several research papers on privacy, cryptocurrency, smart contracts and cryptography on prominent platforms like IEEE and Springer. He also authored a renowned book on data structure and algorithms.<\/div>\n<\/div>\n<p><template data-name=\"subscription_form\" data-type=\"law_decoded\"><\/template><\/div>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong>\n<\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">News<\/a> articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/general\/\" target=\"_blank\" rel=\"noopener\">General category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"https:\/\/cointelegraph.com\/news\/users-vs-governments-the-infinity-war-for-blockchain-privacy-may-be-over\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8220;# Users vs. governments: The &#8216;infinity war&#8217; for blockchain privacy may be over &#8221; The unique power of blockchain and cryptocurrency can also be considered their weakness. Crypto users gain unparalleled privacy for financial transactions through a decentralized transactional system. Governments, however, demand transparency in financial transactions for legal concerns. This creates a paradox. People&#8230;<\/p>\n","protected":false},"author":1,"featured_media":140474,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/s3.cointelegraph.com\/uploads\/2020-12\/1c94a5e0-5b82-4118-a43d-5106c9e0cf3c.jpg","fifu_image_alt":"","footnotes":""},"categories":[1],"tags":[15047,74859,74862,74894,74863,79096,75141,70934,4965],"class_list":["post-140473","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-privacy","tag-aml","tag-bitcoin","tag-blockchain","tag-cryptocurrencies","tag-fatf","tag-kyc","tag-regulation","tag-technology"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/140473","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=140473"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/140473\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/140474"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=140473"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=140473"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=140473"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}