Topic: Blockchain's gift of Pseudonymity and how we lost it (Read 282 times)

You are absolutely correct! But do we have a wayout? Can we really use bitcoin or any other crypto for our daily expenses like buying groceries or buying fuel for vehicle etc.? The answer is NO and that is the reason why we have no other options than to give away the pseudo-anonymity to make our bitcoins useful. Have we had the choice of using bitcoins for our daily expenses, we would have loved to retain that! We are giving this away because we don't have any options available!

There is only one way out as I see it! We need more merchants to adopt bitcoin as a payment option. When I say merchants, I do not mean Expedia or Starbucks because they are not merchants who sells daily products like groceries and domestic goods. unless and until we see merchants accepting cryptos as a payment option, we are forced to give away our identity because we have no other options than to exchange it to our local currency before we can use it.

At this point of time, adoption is very much important to see bitcoin to grow to the next level. HODL and trading is all right but the growth will only be fueled if we can use bitcoin as a currency in our daily lives. Otherwise, all will go down in drain if it continues to remain as an investor's asset.     

The original design was for transactions to remain pseudonymous from end to end, and the public records remained as such until you cash-out.  It is here that we lost the pro-privacy gift of the blockchain.

The moment you cash-out your bitcoin to a bank or an exchange or to any other means that requires a real world identity, pseudonymity is lost. Satoshi's rally for privacy goes down the drain. Your identity is uncovered. They can already trace your bitcoin wallet address and all other wallet addresses you transacted with.

The effort of pseudonymity is lost. But is there really a way out? Can we really remain pseudonymous to continue the blockchain's rally for privacy?

Thank you for the time BitcoinFX.  The video by the way was not bitcoin related, yet is one of the free ideas of thinkers & visionaries that may appall others while making other free thinkers applaud, pretty much like how bitcoin came to be.

Going back to your reply though, as much as peer-to-peer transactions within four walls may be the securest form of passing information, the necessity of internet connection is pretty much needed.

Bitcoin transactions need confirmation & distribution. I think it would impossible to do that offline. The design was for a peer network to decide that the transaction is legit and pass that information to everyone else and make sure the transaction is recorded on everyone else's ledger.

So i guess we really could not take the internet out of the equation at all.

Yes, the world may know the origin (sending wallet), the amount that was transacted and even the destination (receiving wallet).  But that's all there is to it.

Take for example the "cache & cookies disclaimer"

Breach of privacy was a problem of great concern, and great minds understood that it has to be addressed. And as many of us loved the Incognito Mode of Google Chrome, Blockchain brought us pseudonymity for crypto transactions

However, we have to go back several decades to understand the true origins of this technology and its eponymous currency.

In the 1990s, as the Internet truly emerged for the general public, a group of mathematicians, cryptographers, computer scientists, and hackers formed to advocate for the protection of privacy, particularly through the use of cryptography. The “cypherpunks“, including the creators of Wikileaks, militate for the use of encryption tools in order to avoid the growing risks of intrusion by states or private companies into the private lives of individuals.

Cypherpunks
Timothy May is one of the major contributors to the Cypherpunk mailing-list, on which he broadcast in 1992 The Crypto-anarchist Manifesto written in 1988, a founding and visionary text with a libertarian tendency, which brilliantly describes the digital revolution we are currently living.

“Cypherpunks think privacy is a good thing,” writes Tim May, “and want more privacy. They recognize that those who want privacy must afford it and not simply expect governments, corporations or other huge, faceless organizations to give them privacy out of benevolence. Cypherpunks know that people have had to create their own private lives for centuries, with murmurs, envelopes, closed doors and secret mails.

A year later, Eric Hughes, one of the members of the small group now called cypherpunk, published a crypto-anarchist manifesto, A Cypherpunk Manifesto. He, in turn, takes up the idea that privacy must be preserved from the possible drifts of the Net and that the system of anonymous exchanges must be generalized

He, therefore, calls on all cypherpunks to write encryption programs to protect themselves from illegal wiretapping by governments or companies. Privacy is necessary for an open society in the electronic age, he wrote prophetically. Privacy is no secret, however. A private matter is something that you don’t want everyone to know about, whereas a secret matter is something that no one should know about. Privacy is, therefore, the power to select those to whom the world will be revealed. The major texts of this current are all accessible on the Nakamoto Institute website.

Based on public algorithms, the most famous encryption solutions were born in the 1990s and have continued to develop and gain legitimacy. Having reached a stage of maturity, but still insufficiently adopted by the general public, these solutions can enable anyone to protect their correspondence and sign their exchanges, data or documents electronically.

One of their fundamental strengths lies in their independence from any central entity. The trust established between two people is based solely on mathematics, which makes it possible to free oneself from any trusted third party, state or private.

At the same time, the Internet has seen many innovations appear on its network, such as the web, email, and voice over IP. Available to all, these technologies are largely based on our digital uses and are all based on open technology protocols. However, while electronic payment services appeared in the 1980s with magnetic stripe and then chip bank cards, no open technology has specifically come to offer alternatives to these tools on the Internet.

Initiatives for monetary systems and autonomous payments have not been lacking since the 2000s, with almost successful proposals such as B-money or Bit Gold. Designed by Nick Szabo in 1998, Bit Gold is a decentralized digital money initiative that operates extremely close to Bitcoin, but has not managed to solve the classic problem of double spending perfectly (Nick Szabo remains one of the most listened to figures in the Bitcoin community and is often even presented as the real Nakamoto).

Did satoshi really rally for privacy though? I genuinely don't know. I always thought that the focus was on decentralization.

I'd say the way out is mixers because you can cut or at least shorten your trail with them, but the moment you transact with another person (or most of the time anyway), you cede some level of privacy.

The moment you cash-out your bitcoin to a bank or an exchange or to any other means that requires a real world identity, pseudonymity is lost. Satoshi's rally for privacy goes down the drain. Your identity is uncovered. They can already trace your bitcoin wallet address and all other wallet addresses you transacted with.

I do hope it is not lost as you expressed Red-Apple.

Adoption is really a big of a word right now for the cryptocurrency world, and more so for bitcoin as it remains to be the most popular and well spent crypto globally.

The way i see it, there is a massive need of merchants adopting to bitcoin payments. Perhaps from there, we would start to gain back the gift of pseudonymity in its full potential.

The original design was for transactions to remain pseudonymous from end to end, and the public records remained as such until you cash-out.  It is here that we lost the pro-privacy gift of the blockchain.

The moment you cash-out your bitcoin to a bank or an exchange or to any other means that requires a real world identity, pseudonymity is lost. Satoshi's rally for privacy goes down the drain. Your identity is uncovered. They can already trace your bitcoin wallet address and all other wallet addresses you transacted with.

The effort of pseudonymity is lost. But is there really a way out? Can we really remain pseudonymous to continue the blockchain's rally for privacy?

I guess you are right Herbert, perhaps this is a way of the bitcoin economy to adapt to the needs of the time.

It is just saddening, there was so much privacy protection that bitcoin was premiered for yet it seems we are ending up back to the traditional surveillance that financial & government entities could conduct on us.

Additionally, as you stated, it seems decentralization had to be compromised too as a respond to better regulations and freedom to move from digital to fiat currency with less restrictions from governing authorities.

And that's twice the sadness for bitcoin advocates i guess.

Indeed. We can all envisage situations where speed and security actually take preference over privacy and anonymity. As seen in the Changing threats to privacy video I shared above, the key is user choice.

However, Person-to-Person transactions within four walls will always be more private than using the internet.

Consider this, do you actually even need the internet (active) to transact with Bitcoin?

- https://youtu.be/hwohadcUv4A

what we need is adoption.

right now as you said you cash-out your bitcoin to a bank or an exchange, in short back to fiat. and most people don't even consider bitcoin more than an investment. but as i said we need more adoption, so that we can see more places accept bitcoin as payment.
for instance if i want to buy a car today, i can not find any dealership that accepts bitcoin. they all want fiat so i have to cash out my bitcoin.

so you can't say it is lost in my opinion. what is happening is that we are not using bitcoin to its full potential.

it is not lost just because people are trading bitcoin. it is still there for whomever wants to use it, it is just that more people are currently interested in bitcoin as a way of making money because of its price rise than people who are interested in bitcoin as a currency to benefit from its decentralization and the privacy that it offers.

and i don't think it is a bad thing. in a way it is the combination of two worlds: the decentralized world of bitcoin with the centralized world of fiat. and since we still need to dump our fiat to get bitcoin, we need that pseudo-centralization.

they WERE pro-privacy.. but that was pre-2013

also. if you look at stats pages of LN. it reveals who, how many nodes. how much value those nodes hold and if smart you can keep checking those nodes and when the values change you can log that. and then see the nodes they are connected to and log where the funds went to.

EG
A[20:10]B[30:15]C
C can find out what B has with A. because B can only send 10 to A
if A moved10 to be...
A[10:20]B[30:15]C
C can then see that B can move 20 to A so C knows that A just paid B 10

channels actually announce how much they hold and can channel. to allow people to choose who they should choose as a channel partner.. so its not private at all

i found it funny how LN was proposed as a tool to be more private. and yet i can find out mor about a user of LN than i can find out by a mainnet bitcoin user

again privacy is being eroded. especially when LN is moving to a factory/watchtower model which will then require AML KYC and having them watchtowers/factories register as 'custodians' to then require KYCing their channeled users

if only back in 2013 we didnt not rally/lobby for rgulation of businesses (they police and KYC users) but instead rally/lobbied for consumer protction (users police and KYC businesses)

The goal is that eventually people buy goods with BTC.

The gift is still there, it is up to users to accept this gift or prefer less privacy for their own usability preferences.  Even for the fiat/bank gateway one can still use mixers, new private key etc. It was\is always about the freedom of choice for the user and not about mandatory anonymity of the system.

how much value those nodes hold and if smart you can keep checking those nodes and when the values change you can log that. and then see the nodes they are connected to and log where the funds went to.

i found it funny how LN was proposed as a tool to be more private. and yet i can find out mor about a user of LN than i can find out by a mainnet bitcoin user