Are Bitcoin and cryptocurrencies still synonymous with freedom and anonymity?
News JVTech Are Bitcoin and cryptocurrencies still synonymous with freedom and anonymity?
Bitcoin’s founder Satoshi Nakamoto’s project was to develop a payment system that advocated freedom and anonymity. 14 years after its launch, does cryptocurrency still hold its core values?
Are Professionals Depriving Owners of Bitcoin and Other Cryptocurrencies?
Following recent events in the cryptocurrency ecosystem, a number of users are questioning the anonymous and libertarian nature of Bitcoin.
Recall that the first cryptocurrency, Bitcoin, was developed by Satoshi Nakamoto to be a decentralized and anonymous payment method. Thanks to its architecture built around the blockchain network, Bitcoin offers the ability to make decentralized payments, i.e. without going through a third party or trusted authority. In short, it is the computing power of machines acting as a trusted third party. With this logic, Bitcoin was originally created as an alternative to banks after the 2008 financial crisis.
Nevertheless, the collapse of crypto industry giants such as the Terra LUNA or FTX exchange platform has revealed certain flaws in the sector. Indeed, the fall of these giants has had a real impact on all users as well as other competing companies in the sector. Many customers who held or deposited cryptocurrencies on struggling exchanges ultimately lacked the freedom to withdraw them in time due to the lack of liquidity on those platforms.
In the Bitcoin ideal, everyone controls their own currency and is responsible for its transactions. So when an organization temporarily blocks the withdrawal of cryptocurrencies from its users, it clearly reflects a lack of decentralization.
Therefore, this CEX seems to be less and less faithful to the original values of Bitcoin, since they are controlled by central companies such as banks. However, it is important to remember that these cryptocurrency exchanges have greatly contributed to the mass adoption of Bitcoin and cryptocurrencies by making it more intuitive to buy, sell and hold them.
Bitcoin is becoming more and more regulated
On the flip side of the privatization of cryptocurrency services, over time some of these companies have grown so financially that they have had to comply with certain regulations. These actions by authorities and governments aim to regulate the sector to combat the abuse of cryptocurrencies, such as money laundering or illegal transactions.
Most cryptocurrency exchanges (especially CEXs, centralized exchanges) require users to fill in personal information to register. In general, it is necessary to provide an email address, a phone number, as well as information about his identity – in most cases it is verified by a KYC (identity document verification) system.
With this information, various companies can monitor and track user transactions. Although this is the very principle of the public blockchain, which is to provide a transparent record of transactions – the variable here is that the company knows the identity of the sender and sometimes the recipient. So, it is clear that this complex of measures plays on the anonymity of bitcoin and cryptocurrency transactions.
Moreover, many services have gained renewed interest to meet this growing desire for anonymity. This is the case with DEXs, which are often considered more relevant to Bitcoin values. These decentralized platforms do not rely on any central authority, transactions are carried out directly between users. Cryptocurrency mixers, which are widely used by hackers, have also seen an increase in their number of users. They allow funds to be divided and mixed for less tracking.
In conclusion, although cryptocurrencies are still considered more private than the current banking system, they are no longer synonymous with freedom and absolute anonymity. It comes from the supervision of professionals in the cryptosphere and institutions, not from Bitcoin and cryptocurrencies.