News JVTech Are Bitcoin and crypto still synonymous with freedom and anonymity?
The project of Bitcoin’s founder, Satoshi Nakamoto, was to design a payment system that advocates freedom and anonymity. 14 years after its inception, does crypto still carry its key values?
Are Professionals Depriving Bitcoin and Other Crypto Holders of Freedom?
Following recent events in the crypto ecosystem, a number of users are questioning Bitcoin’s anonymous and libertarian nature.
As a reminder, Bitcoin, the first cryptocurrency, was designed by Satoshi Nakamoto to be a decentralized and anonymous means of payment. Thanks to its architecture built around a blockchain network, Bitcoin allows for decentralized payments, that is, without going through a third party or a trusted authority. In short, it is the machines’ computing power that acts as a trusted third party. In this logic, Bitcoin was originally created to be an alternative to banks after the 2008 financial crisis.
Nevertheless, the collapse of crypto industry giants such as Terra LUNA or the FTX exchange platform has shown certain flaws in the sector. In fact, 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 held or deposited cryptos on struggling exchanges ultimately did not have the freedom to withdraw them in time due to a lack of liquidity on these platforms.
In Bitcoin’s ideal, everyone is in control of their currency and takes responsibility for their transactions. When an organization temporarily blocks the withdrawal of crypto from its users, this reflects an obvious lack of decentralization.
These CEX therefore seem less and less faithful to Bitcoin’s original values because they are controlled by central companies, 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 is becoming more and more regulated
In addition to the downside of the privatization of crypto services, some of these companies have become so financially large over time that they have had to adhere to certain regulations. These measures put in place by authorities and governments aim to regulate the sector to combat abuse of cryptos – such as money laundering or illegal transactions for example.
Most cryptocurrency exchanges (especially CEXs, 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 – most of the time verified by a KYC (verification of identity documents) system.
With this information, the 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 changes here is that the company knows the identity of the sender and sometimes the receiver. Thus, it is clear that this set of measures plays on the anonymity of bitcoin and cryptocurrency transactions.
In addition, to meet this growing desire for anonymity, many services have regained interest. This is the case with DEXs, which are often considered more aligned with Bitcoin values. These decentralized platforms do not depend on any central entity, transactions are done directly between users. Popularized by hackers, cryptocurrency mixers have also seen their number of users grow. They allow funds to be split and mixed to make them less traceable.
In conclusion, although cryptocurrencies are still considered more private than the current banking system, they are no longer really synonymous with freedom and absolute anonymity. This does not come from Bitcoin and cryptos, but from the oversight of cryptosphere professionals and institutions.