07/05/2021
Bitcoin was recovered by the FBI from the Colonial Pipeline ransomware cybercriminals DarkSide, sparking privacy concerns around cryptocurrencies.
Back in early May, a ransomware attack on Colonial Pipeline forced the company to pay the hackers $5,000,000 in cryptocurrencies. Earlier this month, the U.S. Department of Justice announced that the FBI had successfully recovered US$2.3 million of the ransom in Bitcoin.
Pioneering blockchain lawyer Marta Belcher — general counsel at Protocol Labs and special counsel to the Electronic Frontier Foundation, a digital privacy rights advocacy group — says many people still do not realize that Bitcoin is not anonymous — it is pseudonymous.
“You’re having a public key recorded permanently on a ledger forever. And anyone can see that,” Belcher explained in a video interview. “The authorities can see that. In some ways, it’s a shortcut for law enforcement.”
Belcher says having a genuinely decentralized device for finance is essential to privacy and civil liberties instead of something very traceable by the government.
“I like to think about this photo that I saw from the Hong Kong protests. There are these photos where there are these long lines at the subway stations because the protesters wanted to buy their train tickets using cash because they didn’t want their electronic purchases to place them at the scene of the protest,” Belcher said. “That really underscores that a cashless society is a surveillance society and the importance of certain technologies that can enable anonymous transactions.”
Nevertheless, the U.S. government and governments worldwide are applying similar levels of surveillance to cryptocurrencies as they do to the traditional financial system. The U.S. Department of Justice has named privacy coins “anonymity-enhanced cryptocurrencies” and insists that they are potentially criminal — this fends off the possibility of people making anonymous transactions through cryptocurrencies.
Belcher views the central bank digital currency movement similarly — as a type of government surveillance that could potentially threaten civil liberties. Hypothetically, when CBDCs are given to people as their only financial tool, the government can trace every action.
“People really need to understand that financial transactions are a window deep into someone’s life, deep into their politics, deep into what they’re doing, their location. And that these types of transactions are incredibly sensitive,” Belcher said. “I’m very concerned about the idea of all money being digitally administered by a government.”.
For people to feel secure about privacy in their transactions, Belcher insists that governments need to be more precise and careful when regulating the new, decentralized part of finance.
One of the essential features of cryptocurrency is writing one’s computer codes to program adaptively for different transactions. Belcher believes regulators must distinguish illegal crypto programming activities from the rest.
“It’s just so, so important that that’s not what regulators do, that they take a more nuanced approach and that when they’re talking about the things that they want to regulate,” he said. “It’s not the writing of the code, it’s other behaviors.”
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