Many among us cherish the blockchain for what it truly is : a public ledger of all addresses, balances and transactions. However, there are plenty of people who don’t want that kind of information to be publicly available, which is only natural. Bitcoin is all about transparency, while a lot of altcoins are trying to obfuscate the blockchain in their own independent ways. But can there ever be a compromise?
Public Ledger : Pros and Cons
With the current financial infrastructure, there are way too many “deals under the table” and “legal obscurities” banks, insurance companies and rich people seem to be able to get away with. Paper trails are very hard to follow, as shill companies and strawmen are used more often than not. Money laundering carousels are popping up left right and center, and no one seems to be able to do anything against it.
Even though there is a paper trail, a form of public ledger in its own right, it is very easy to obfuscate paperworks, get fake stamps, use newly created identities and whatnot. Plus, there are certain financial safe havens, such as Switzerland, Luxemburg, the Cayman Isles, and so forth. Even if everyone had access to all documents and paperwork, I doubt many people would be able to make much sense of it all.
The blockchain on the other hand, as it is found in its transparent form when using Bitcoin or other alternate cryptocurrencies, is far harder to trick. Granted, users can create nearly infinite addresses, but the trail can always be put together again. Where the funds comes from, where it moves to, and how does accounts sluice the money away again, it’s all visible to the public eye.
Even more interesting is the fact we have timestamps of transactions, and an awesome visual representation of which amount went to what address. All of this is made possible thanks to services such as blockchain.info, as they offer “Tree Charts” for each and every transaction, linking them together in a professional and elegant way.
Thanks to the “open ledger” aspect of the blockchain, this proves to be an incredibly powerful tool for charting and analytic purposes. Things such as the weighted average price, the number of transactions, estimated transaction volume in Bitcoin and fiat currency, and many other bits of information are at everyone’s disposal.
Playing the devil’s advocate here for a moment, having all of the financial data of every user out in the public is not something everyone would want, is it? Personally, I don’t mind if people know how many Bitcoin I own at the moment. But I can see why certain people wouldn’t want others to find out that kind of information, as everyone is entitled to their financial privacy.
Do keep in mind that while your Bitcoin address information is visible to anyone in the world, that does not mean everyone knows it is YOUR bitcoin address. Bitcoin addresses are generated, and all addresses are publicly visible. However, no Bitcoin address is linked to your name, address or location in any way, thus still protecting user privacy. Besides, as you can generate multiple addresses, every address you own can be used for different kinds of purposes.
However, there are multiple reasons why people wouldn’t feel comfortable about being part of a public ledger. For those people, there are the alternate cryptocurrencies, of which most are working on implementing anonymity features in order to protect your financial privacy. But this also comes at a cost, at least when you consider the public perception.
Cryptocurrency Anonymity : Pros and Cons
There are plenty of advantages to be found when it comes to using cryptocurrency anonymously (or at least as anonymous as you can at this point in time). First of all, none of your financial information is publicly visible, as coin transactions get mixed with other transactions, amounts get chopped into pieces and merged again, and so forth. This makes following a paper trail seem like child’s play at times.
Furthermore, not only can you send coins anonymously, but you can also receive them anonymously, thanks to the implementation of Stealth Addresses. Stealth Addresses are a “disposable” address, which is in no way linked to your actual wallet address, and is perfect for “one time” transactions, such as getting paid “off the books”.
Unfortunately, this is also where a lot of negative attentions will come in, as a lot of people assume you’d want to use anonymity because you’re either hiding something, or you’re involved in criminal activities. And let’s be honest, that’s the general perception everyone has about cryptocurrency already at this point, so why feed the uneducated masses even more by offering anonymous technology?
While I can see the benefits of anonymous technology in cryptocurrency up to a certain level, at this point in time it is only confusing people more. Until we can actually educate people about cryptocurrency in its “open” form, hardly any “everyday” person will care about how to hide their identity and transactions concerning a concept they cannot even grasp in its “simplest” form.
What are your thoughts on the open ledger vs anonymity topic? Leave a comment below!