{"id":650,"date":"2019-03-19T14:31:40","date_gmt":"2019-03-19T14:31:40","guid":{"rendered":"http:\/\/www.pllel.com\/industries\/?p=650"},"modified":"2019-03-19T14:31:49","modified_gmt":"2019-03-19T14:31:49","slug":"reaching-everyone-pt-iii-why-bitcoin-matters%e2%80%8a-%e2%80%8aprivacy-freedom-and-authority","status":"publish","type":"post","link":"http:\/\/www.pllel.com\/industries\/reaching-everyone-pt-iii-why-bitcoin-matters%e2%80%8a-%e2%80%8aprivacy-freedom-and-authority\/","title":{"rendered":"Reaching Everyone, Pt III: Why Bitcoin Matters\u200a\u2014\u200aPrivacy, Freedom and Authority"},"content":{"rendered":"\n

ICYMI on In The Mesh<\/a>, read the next parts there first.<\/p><\/blockquote>\n\n\n\n

This article is the third in a four-part series by Matt \u0e3f<\/a> (@MattoshiN<\/a>) and Wassim Alsindi<\/a> (@parallelind<\/a>)\n on the use of Bitcoin and the technology stack built atop it to assist \nthose living under oppressive regimes or in conflict zones, and those \nseeking to flee them. Read the first<\/a> and second<\/a> instalments.<\/p><\/blockquote>\n\n\n\n

\"\"\/
By Kevin Durkin for In The Mesh<\/figcaption><\/figure>\n\n\n\n

Bitcoin\n is, above all, agnostic. It serves anything, and anyone, with no regard\n for who users are or what their intents might be, provided they play by\n the rules\u200a\u2014\u200arules, not ruler<\/em><\/a>s<\/em>.\n What one may see in the network, protocol and currency is a \ncontext-dependent Rorschach test: one person\u2019s rat poison is another\u2019s \nmeal ticket. While legacy financial institutions are fuelling a wave of \nsocial media deplatformings through the ever-expanding Operation Chokepoint<\/a>,\n Bitcoin rises to prominence as a tool for the marginalised, ostracised,\n oppressed and forgotten. It enables any human to develop a parallel \nmeans to transact and store wealth and, as time goes on, the ways and \nmeans of using Bitcoin grow in variety and quality. There is no doubt \nthat volatility in BTC-fiat crossrates make external measures of \ncryptocurrency value vary wildly, and obviously downside risk is not \nhelpful especially when you are putting your life on the line. On the \nother hand, when national currencies undergo hyperinflationary events \nBitcoin can be one of few accessible havens of relative stability<\/a>. As of today, stablecoins are not the answer<\/a>.<\/p>\n\n\n\n

\"\"\/<\/figure><\/div>\n\n\n\n

Freedom means everyone<\/em> can use it, regardless of your opinion on their motivations<\/a>, political leanings<\/a> or priorities<\/a>. Guerrilla and outsider organisations of all flavours and persuasions will be early adopters<\/a>\n of decentralised technologies, and there\u2019s nothing that can be done \nabout that. The precautionary principle doesn\u2019t work in permissionless \nenvirons and there is no \u2018off switch\u2019\u200a\u2014\u200aa feature, not a bug.<\/p>\n\n\n\n

Bitcoin\n heralds a new age of \u2018extreme ownership\u2019\u200a\u2014\u200aor at least, provides the \noption for individuals to truly exercise sovereignty over their wealth. \nWhen used correctly, it is both unseizable and uncensorable. In the \ndigital age, few things are more important than ensuring that wealth can\n be stored and transmitted without custodians or other third parties \nkeeping personally identifiable information, blacklisting recipients or \notherwise denying\/reversing transactions. While physical cash offers \nindividuals a degree of anonymity in their day-to-day exchanges, the \npush towards digital payments threatens this privacy by creating digital\n footprints that could be exploited for the purposes of surveillance.<\/p>\n\n\n\n

How\n an individual \u2018experiences\u2019 Bitcoin is entirely up to them. On one end \nof the spectrum are those who have no need for true \npossession\u200a\u2014\u200aconsider speculators that rely on custodial exchanges or \nwallets. On the other are power users seeking granular control for \nmaximising their privacy and financial self-sovereignty\u200a\u2014\u200afunctions like\n coin control, UTXO mixing or operating a fully validating node. \nEvidently, the further towards this end of the spectrum they tend, the \nmore the value proposition of Bitcoin becomes apparent.<\/p>\n\n\n\n

The\n appeal of Bitcoin today is undoubtedly rooted in the ease of its \ntrust-minimised, rapid and global transfer, paired with the \nchange-resistance and (algorithmically enforced) scarcity that precious \nmetals have historically exhibited. Where faith in centrally-issued fiat\n currencies requires that participants entrust governments with \nmaintaining monetary legitimacy and purchasing power, faith in a \ncryptocurrency network\u2019s continued healthy function merely requires that\n participants act in their own self-interest\u200a\u2014\u200aconsensus is driven by \nactive nodes. Indeed, you\u2019ll have a hard time garnering support for an \nupgrade that would endanger the wealth of others such as inflating the \nmoney supply or sacrificing security for convenience<\/a>.\n However, no system is infallible, and it\u2019s foolhardy to overlook some \npotentially dangerous attack vectors executable in various manners. \nEverything from eclipse attacks<\/a>\u200a\u2014\u200awhich geographically or otherwise target individual or grouped subsets of nodes so as to obscure and alter their view of the canonical<\/em> blockchain\u200a\u2014\u200ato state-sponsored 51% attacks and mass deanonymisation efforts<\/a> which could vastly undermine the security and credibility of the network.<\/p>\n\n\n\n

Fungibility\n and privacy are linked concepts\u200a\u2014\u200aan asset\u2019s fungibility preserves the \nprivacy of the individual holding it. Assets such as gold and fiat cash \nare considered highly fungible, as it\u2019s near impossible to distinguish \nbetween units of the same type. Conversely, something like a rare \npainting would be non-fungible, on account of its uniqueness. \nFunctionally\u200a\u2014\u200afor the most part\u200a\u2014\u200aBitcoin appears to be fungible: the \nvast majority of merchants will indiscriminately accept payments \nregardless of the provenance of coins.<\/p>\n\n\n\n

Upon\n closer examination however, the situation is less rosy. As the protocol\n relies on a public ledger to keep track of the movement of funds, this \nprovides a rich source of information for the intrepid data miner \nlooking to perform analyses and potentially deanonymise users. \u201cBlockchain analytics<\/a>\u201d\n companies (and their governmental clientele) have been known to track \nthe propagation of UTXOs through the network that have passed through a \ngiven address or that have interacted with \u2018blacklisted\u2019 entities.<\/p>\n\n\n\n

\"\"\/
[Source: https:\/\/twitter.com\/tillneu\/status\/1095996386238218242\/photo\/1;<\/a> re-design by Kevin Durkin for In The Mesh]<\/figcaption><\/figure><\/div>\n\n\n\n

There\u2019s an entire class of coins which offer varying degrees of privacy<\/a> within their protocols and address a niche that Bitcoin inherently lacks. In life-and-death situations<\/a>,\n linking a BTC transaction or an address to a real world identity can \nhave grave consequences in locations where authorities are hostile. On \nthe other hand, if Bitcoin was as private as Monero or Zcash, then its \nmonetary soundness would be dependent on cryptographic assumptions holding true<\/a>. An example of such a situation is the recently disclosed vulnerability<\/a>\n in Zcash which arose from cryptographic errors which\u200a\u2014\u200aalthough complex\n to exploit\u200a\u2014\u200awould have allowed an adversary to surreptitiously inflate\n the supply in the secret \u201cshielded pool\u201d.<\/p>\n\n\n\n

Despite the transparent nature of Bitcoin\u2019s ledger, it can be used privately<\/a>.\n Whilst the protocol doesn\u2019t incorporate strong guarantees itself at \npresent, this is set to change with the implementation of improvements \nsuch as Confidential Transactions, MAST<\/a>, Taproot<\/a> and Schnorr signatures<\/a>. Externally coordinated obfuscation techniques are in use today, most commonly CoinJoin implementations such as JoinMarket and ZeroLink<\/a>.\n These allow users to pool and jointly transact multiple inputs so that a\n degree of plausible deniability is assured, as observers cannot map \noutputs to specific inputs.<\/p>\n\n\n\n

Recent development of more sophisticated CoinJoin transaction types such as Pay-to-Endpoint<\/a> (also known as PayJoin\/Stowaway) and Ricochet<\/a>,\n have proven the shortcomings of chain analytics capabilities as they \nare understood today. One cautionary note is that although we have many \nseparate techniques for improving Bitcoin transaction privacy, \ninteractions between these elements are not necessarily widely \nunderstood. As a result, there are non-zero probabilities of critical \ninformation leakage or failure of certain processes and users should not\n assume that all tools have been tested thoroughly in combination. For \nexample sending mixed UTXOs from a CoinJoin wallet into a Lightning node\n may lead to deanonymisation given that Lightning node IDs are public.<\/p>\n\n\n\n

Since\n the Bitcoin protocol has displayed such admirable resilience and uptime\n in the past 10 years, authorities at the local, regional, national or \nglobal scales can only try to apply pressure to the \u201csoft\u201d interfaces \nbetween the network and the wider world such as exchanges, merchants, \nminers, hardware and software vendors. Inconsistent laws arising from \ngovernments\u2019 knee-jerk reactions towards Bitcoin are an ongoing reality.<\/p>\n\n\n\n

Ensuring regulators are in possession of independent tools<\/a> and information sources<\/a>\n will minimise misunderstandings leading to arbitrary bans, \nrestrictions, licenses, fines, jail or seizure. Even upstream \ninfrastructure such as ISPs, domain registrars<\/a>\n and payment intermediaries are coming under increasing pressure. One \naspect of particular concern is the conflation of Bitcoin with tokens, \nICOs or other blockchain projects raising funds via regulatory \narbitrage. China now apparently requires the registration of cryptocurrency nodes<\/a>\n with authorities. Where persons or businesses operating cryptocurrency \nenterprises are kept under close watch by corrupt officials, they are at\n risk of extortion<\/a> or kidnap<\/a>.<\/p>\n\n\n\n

Another\n front on which there is work to be done is on the fungibility of \nbitcoin UTXOs themselves. As mentioned above, there is a growing \nindustrial niche providing analytical services to governments and \nbusinesses submitting to state compliance procedures. Though they may \noversell their capabilities to clients, it is known that exchanges \nsupply information to them. One attempt to deanonymise identifiers on a \nnetwork such as Bitcoin has involved attempting to use metadata such as browser fingerprinting, language preferences, node and web client IP addresses<\/a>\n for location and to link these to particular addresses or UTXOs. Even a\n small part of the user graph being deanonymised has wider potential \nimplications, due to the public nature of the ledger as discussed above.\n Know-Your-Customer and Anti-Money Laundering laws (KYC\/AML) \ncollectively constitute the greatest privacy risk to individuals using \nBitcoin today.<\/p>\n\n\n\n

Dusting<\/a>\n is also a potential chain analysis technique which takes advantage of \npoor coin selection in wallets by sending tainted UTXOs to target \naddresses and tracking their propagation. This vector primarily targets \nmerchants (exchanges and other economic nodes) as individual users can \neasily circumvent such attacks by marking dust UXTOs as unspendable. The\n mechanism of transaction itself is also important to recognise in light\n of the recent OFAC sanction of addresses linked to Iranian nationals<\/a>. How is any entity going to stop people interacting with sanctioned addresses in a push system<\/a>?<\/p>\n\n\n\n

For\n the most part, many of the existing issues will become less of an issue\n over time as the Bitcoin network and the ecosystems built around it \nmature. The reduction of hashpower aggregation in certain regions such \nas the West of China makes it increasingly difficult for a malicious \n(private or state-sanctioned) actor to commandeer dangerous amounts, \nmore skin in the game<\/em> from \ncryptocurrency businesses contributing to a state\u2019s GDP and tax coffers \nmakes the budgetary penalty for nations greater should they consider \noutright bans on cryptocurrencies or adversarial mining<\/a> and advances in cryptography hardens Bitcoin\u2019s privacy preserving potential.<\/p>\n\n\n\n

In\n the final part of this series the myriad tools, techniques and \nstrategies to transact using Bitcoin in contexts where personal privacy \nand freedom are under threat will be explored.<\/p>\n\n\n\n

Thanks to Yuval Kogman, Alex Gladstein, Richard Myers, Elaine Ou and Adam Gibson for helpful feedback.<\/em><\/p>\n\n\n\n

\n\n\n\n

Wassim\n Alsindi directs research at independent laboratory Parallel Industries,\n analysing cryptocurrency networks from data-driven and human \nperspectives. Find him at www.pllel.com<\/a> and @parallelind<\/a> on Twitter.<\/p><\/blockquote>\n\n\n\n

Matt\n B is a writer and content strategist in the cryptocurrency space with a\n particular interest in Bitcoin and privacy technology. He can be \nreached at itsmattbit.ch<\/a> and @MattoshiN<\/a> on Twitter.<\/p><\/blockquote>\n\n\n\n

Images by Kevin Durkin for In The Mesh\ufeff<\/a><\/p><\/blockquote>\n","protected":false},"excerpt":{"rendered":"

ICYMI on In The Mesh, read the next parts there first. This article is the third in a four-part series by Matt \u0e3f (@MattoshiN) and Wassim Alsindi (@parallelind) on the use of Bitcoin and the technology stack built atop it to assist those living under oppressive regimes or in conflict zones, and those seeking to … Continue reading Reaching Everyone, Pt III: Why Bitcoin Matters\u200a\u2014\u200aPrivacy, Freedom and Authority<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[1],"tags":[17,14],"class_list":["post-650","post","type-post","status-publish","format-standard","hentry","category-uncategorized","tag-articles","tag-reachingeveryone","without-featured-image"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/p9ARiU-au","jetpack_likes_enabled":true,"jetpack-related-posts":[{"id":444,"url":"http:\/\/www.pllel.com\/industries\/reaching-everyone-pt-i-the-need-for-sound-money-outside-of-the-wealthiest-territories-f9a27e1f6488\/","url_meta":{"origin":650,"position":0},"title":"Reaching Everyone, Pt. I: The Need For Sound Money Outside of the Wealthiest Territories","author":"pllel","date":"22\/01\/2019","format":false,"excerpt":"Reaching Everyone, Pt. I: The Need For Sound Money Outside of the Wealthiest Territories ICYMI on In The Mesh, read the next parts there first. This article is the first in a four-part series by\u00a0Matt \u0e3f\u00a0(MattoshiN) and\u00a0Wassim Alsindi\u00a0(@parallelind) on the use of Bitcoin and the technology stack built atop it\u2026","rel":"","context":"In \"Articles\"","block_context":{"text":"Articles","link":"http:\/\/www.pllel.com\/industries\/tag\/articles\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":87,"url":"http:\/\/www.pllel.com\/industries\/project-update-reaching-everyone\/","url_meta":{"origin":650,"position":1},"title":"Project Update: Reaching Everyone","author":"pllel","date":"07\/07\/2018","format":false,"excerpt":"Next actions: More script & tool PoCs, UX\/UI and HW research. Reaching Everyone Article Series (co-authors Matt B & Wassim Alsindi) Part 1: The Need for Sound Money Outside the Wealthiest Territories. Read at In The Mesh \/ Hacker Noon Part 2: Resilience, Censorship-resistance and the Bitcoin Blockchain. Read at\u2026","rel":"","context":"In \"Hacks and Hardware\"","block_context":{"text":"Hacks and Hardware","link":"http:\/\/www.pllel.com\/industries\/tag\/hackshardware\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":505,"url":"http:\/\/www.pllel.com\/industries\/article-reaching-everyone-pt-ii-resilience-censorship-resistance-and-the-bitcoin-blockchain\/","url_meta":{"origin":650,"position":2},"title":"Reaching Everyone, Pt. II: Resilience, Censorship-Resistance and the Bitcoin Blockchain","author":"pllel","date":"31\/01\/2019","format":false,"excerpt":"Source: Kevin Durkin for In The\u00a0Mesh ICYMI on In The Mesh, read the next parts there first. This article is the second in a four-part series by Matt B (@MattoshiN) and Wassim Alsindi (@parallelind) on the use of Bitcoin and the technology stack built atop it to assist those living\u2026","rel":"","context":"In \"Articles\"","block_context":{"text":"Articles","link":"http:\/\/www.pllel.com\/industries\/tag\/articles\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":527,"url":"http:\/\/www.pllel.com\/industries\/article-qa-on-reaching-everyone-the-political-and-humanitarian-potential-of-bitcoin\/","url_meta":{"origin":650,"position":3},"title":"Q&A on Reaching Everyone: the Political and Humanitarian Potential of Bitcoin","author":"pllel","date":"13\/02\/2019","format":false,"excerpt":"This conversation with In The Mesh was recently published on their website. Wassim Alsindi, director of research at Parallel Industries, is currently co-writing a series of articles In The Mesh in which he\u2019s deep-diving into bitcoin and the potential for cryptocurrency to be leveraged to assist those living under authoritarian\u2026","rel":"","context":"In \"Articles\"","block_context":{"text":"Articles","link":"http:\/\/www.pllel.com\/industries\/tag\/articles\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":791,"url":"http:\/\/www.pllel.com\/industries\/economic-and-social-risks-panel-from-breaking-bitcoin\/","url_meta":{"origin":650,"position":4},"title":"Economic and Social Risks Panel from Breaking Bitcoin","author":"pllel","date":"10\/06\/2019","format":false,"excerpt":"Wassim recently moderated a lively panel discussion on \"Economic and Social Risks\" at the Breaking Bitcoin security conference in Amsterdam. .@AaronvanW bringing the ?by saying we like to think bitcoin is free of human biases but in reality it is a shared fiction (manifested in software) because money is essentially\u2026","rel":"","context":"In \"Talks\"","block_context":{"text":"Talks","link":"http:\/\/www.pllel.com\/industries\/tag\/talks\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":606,"url":"http:\/\/www.pllel.com\/industries\/reaching-everyone-are-stablecoins-the-answer-to-bitcoins-volatility\/","url_meta":{"origin":650,"position":5},"title":"Reaching Everyone: Are stablecoins the answer to Bitcoin\u2019s volatility?","author":"pllel","date":"23\/02\/2019","format":false,"excerpt":"It depends on the question. 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This is a brief aside from our \u201cReaching Everyone\u201d article series on In The Mesh, by Matt \u0e3f (@MattoshiN) and Wassim Alsindi (@parallelind) on the use\u2026","rel":"","context":"In \"Articles\"","block_context":{"text":"Articles","link":"http:\/\/www.pllel.com\/industries\/tag\/articles\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]}],"_links":{"self":[{"href":"http:\/\/www.pllel.com\/industries\/wp-json\/wp\/v2\/posts\/650","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/www.pllel.com\/industries\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.pllel.com\/industries\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.pllel.com\/industries\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/www.pllel.com\/industries\/wp-json\/wp\/v2\/comments?post=650"}],"version-history":[{"count":1,"href":"http:\/\/www.pllel.com\/industries\/wp-json\/wp\/v2\/posts\/650\/revisions"}],"predecessor-version":[{"id":651,"href":"http:\/\/www.pllel.com\/industries\/wp-json\/wp\/v2\/posts\/650\/revisions\/651"}],"wp:attachment":[{"href":"http:\/\/www.pllel.com\/industries\/wp-json\/wp\/v2\/media?parent=650"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.pllel.com\/industries\/wp-json\/wp\/v2\/categories?post=650"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.pllel.com\/industries\/wp-json\/wp\/v2\/tags?post=650"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}