Speaking at a decentralised internet conference, NSA whistleblower Edward Snowden has warned that Bitcoin’s public ledger is a “long-lasting flaw” that has large implications for the overall privacy of the cryptocurrency.
Bitcoin is built on a piece of technology called the blockchain, which is a record of transactions that’s available to view by anyone. It’s also decentralised, meaning that its data is held in multiple locations all around the world, without being in the control of one single organisation.
Although Bitcoin has gained a reputation as an anonymous means of purchasing illegal goods on the dark net, the public ledger means that it’s actually possible for anyone to view the transactions that are taking place, even if the blockchain doesn’t tell you who each of its digital wallets belongs to.
Snowden believes this could be a godsend for any governments that are looking to outlaw the cryptocurrency. The ability to trace transactions means a law enforcement agency could, in theory, track a Bitcoin transaction that’s gone to a wallet known to be used for illegal activities, and follow the transactions until they end up at an exchange like Coinbase.
Once the money is exchanged into a real world currency, the identity of its owner could be revealed.
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The privacy question
Snowden, as reported by Coindesk, says that these privacy concerns are a far bigger danger to Bitcoin than the transaction limit, which governs how many transactions the network can process at a time.
“Everybody is focused on the transaction rate limitations of bitcoin being its central flaw, and that is a major one…the much larger structural flaw, the long-lasting flaw, is its public ledger,” Snowden said, adding that he doesn’t think “Bitcoin will last forever”.
That’s not to say the transaction limit isn’t a problem. In recent months the popularity of Bitcoin has put a strain on the network as a result of this transaction limit, meaning that even online criminals are moving away from the currency.
Although there are methods of increasing the privacy of transactions on the blockchain (such as by using cryptocurrency tumblers) Snowden instead sees more promise in cryptocurrencies built from the ground up to prioritise privacy, such as Zcash.
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Editorial independence
Editorial independence means being able to give an unbiased verdict about a product or company, with the avoidance of conflicts of interest. To ensure this is possible, every member of the editorial staff follows a clear code of conduct.
Professional conduct
We also expect our journalists to follow clear ethical standards in their work. Our staff members must strive for honesty and accuracy in everything they do. We follow the IPSO Editors’ code of practice to underpin these standards.
