JVTech News Are Bitcoin and cryptos still synonymous with freedom and anonymity?
The project of the founder of Bitcoin, Satoshi Nakamoto, was to design a payment system that protects freedom and anonymity. 14 years after launch, does crypto still have its core values?
Are Professionals Depriving Bitcoin and Other Crypto Holders of Freedom?
After recent events in the crypto ecosystem, a number of users are questioning the anonymous and libertarian nature of Bitcoin.
As a reminder, Bitcoin, the first cryptocurrency, was designed by Satoshi Nakamoto to become a decentralized and anonymous means of payment. Thanks to its architecture built around a blockchain network, Bitcoin offers the possibility of making decentralized payments, that is, without going through a third party or a trusted authority. In short, it is the computing power of machines acting as a trusted third party. In this logic, Bitcoin was originally created to be an alternative to banks after the financial crisis of 2008.
However, the collapse of crypto industry giants such as Terra LUNA or the FTX exchange platform have demonstrated some flaws in the sector. Indeed, the fall of these giants had a real impact on all users, as well as on other competing companies in the sector. Many customers who stored or deposited cryptocurrencies on hard exchanges eventually did not have the freedom to withdraw them in time, due to the lack of liquidity on these platforms.
In the Bitcoin ideal, everyone is in control of their currency and takes responsibility for their transactions. Thus, when an organization temporarily blocks the withdrawal of crypto from its users, it reflects a blatant lack of decentralization.
Those CEX therefore they seem less and less faithful to the original values of Bitcoin because they are managed by a central company, like a bank. However, it is important to remember that these crypto exchanges have greatly contributed to the mass adoption of Bitcoin and cryptocurrencies by making buying, selling and storing them more intuitive.
Bitcoin increasingly regulated
Beyond the flip side of privatizing crypto services, over time some of these companies have become so big financially that they have had to abide by certain rules. These measures put in place by authorities and governments aim to regulate the sector to fight against the misuse of crypto – such as money laundering or illegal transactions for example.
Most cryptocurrency exchanges (especially CEX, centralized exchanges) require users to fill in personal information to register. It is generally necessary to provide an e-mail address, a telephone number, but also information about his identity – in most cases verified by a KYC (identity card verification) system.
With this information, various companies are able to control and track user transactions. Although this is the very principle of the public blockchain, namely to provide a record of transparent transactions – what differs here is that the company knows the identity of the sender and sometimes the recipient. Thus, it is clear that this set of measures plays into the anonymity of bitcoin and cryptocurrency transactions.
Furthermore, to respond to this growing desire for anonymity, many services have regained interest. This is the case of DEX which are often seen as more closely aligned with Bitcoin values. These decentralized platforms do not rely on any central entity, transactions are done directly between users. Widely used by hackers, cryptocurrency mixers have also seen their number of users grow. They allow the separation and commingling of funds to make them less traceable.
In conclusion, although cryptocurrencies are still considered more private than the current banking system, they are no longer synonymous with absolute freedom and anonymity. This does not come from Bitcoin and cryptos, but from the oversight of cryptosphere professionals and institutions.