Is Bitcoin broken? The Controversial Bitcoin Fix

Is Bitcoin broken
pic credit: Pixabay

What was Bitcoin’s initial promise? Freedom. But what if that’s called into question? Is Bitcoin in trouble? And what if there’s a better alternative that does a better job of offering the freedom we desired? See, Bitcoin was created to solve weaknesses in traditional fiat currencies. We sought free-flowing, decentralized money that was not controlled by any government or central bank. And it happened.

Bitcoin, unlike dollars, cannot be counterfeited or produced by governments. Approximately 80% of them were printed in the previous 30 months as a result of various stimulus initiatives. The difficulty is that when you have a lot of anything, it loses value, and this is known as inflation. Cryptocurrencies were created to avoid all of this.

Crypto was supposed to be safe, discreet, and private because transactions are not monitored by a bank. However, we’ve discovered in recent years that this isn’t always the case. As anonymous as Bitcoin may have first appeared, it’s not. Not really, anyway, because every single transaction, start to finish, is logged on the blockchain.

Sure, a Bitcoin address is anonymous, but if someone, say, the FBI gets a subpoena for your internet and email records, that anonymity is completely gone. Check this out. The picture is May 7, 2021. You’re part of the eastern European hacker group DarkSide. You and your pals just seize control of the colonial pipeline, which, by the way, happens to supply 45% of the fuel to the east coast of the United States. It’s kind of a big deal.

So you demand and receive a ransom of 75 Bitcoin. This is panning out to be quite the heist. However, a month later, just when you’re choosing what colored Lambo to get, the department of justice was able to trace the transactions back to a wall containing these Bitcoin before taking almost all of them back. No more Lambo. Now, obviously, we shouldn’t feel too much sympathy for a group of professional cybercriminals who are holding our country’s fuel supply, hostage.

But sometimes, just sometimes, you need to take a look at extreme situations like this in order to see the underlying story by looking at bitcoin’s anonymity or lack of it we can learn more about how it affects all of us. Bitcoin and other cryptocurrencies are now so easily trackable that there’s this whole underground business devoted to laundering crypto.

Maybe you want your Bitcoin clean because you came into it through rather unsavory methods, or maybe you just really care about your privacy.

How can you do it?

Not financial advice, of course. There’s one service called the Treasure Men. They can be found and hired on Hydra – the world’s largest dark net marketplace. When you enlist the services of the Treasure Men, you send them all the crypto that you want to be laundered. They then take the coin after subtracting their fee, of course. They got to make their money. Then they leave literal bundles of cash for you to pick up.

Maybe this cash will be buried underground, maybe hidden in a bush but wherever it is, they send you the coordinates. You go and retrieve it like buried treasure. Get it? Now, maybe you don’t fully trust a group of anonymous money launders to actually leave a giant bag of cold, hard cash for you. And that’s totally understandable. I don’t blame you. You worked hard to steal those coins, or at least you took a lot of risks to do it.

Enter Privacy Cryptos

Privacy Cryptos

The biggest privacy crypto by far is Monero (XMR). So let’s just use that for our example here. Monero is designed with the explicit goal of correcting what they consider an inherent flaw in Bitcoin and many other popular cryptocurrencies – a lack of true privacy.

Monero differentiates itself from Bitcoin in two main ways. Number one, stealth addresses. Basically, every Monero wallet has a public view and public send key that is, well, public. But you don’t use that public info to send transactions. Instead, transactions are sent through one-time stealth addresses, which are generated for a single transaction, and then, poof, it’s gone – untraceable.

Think of Monero as a secret agent. It has a public address, which is sort of like an alias, a civilian who seems to have a totally normal pedestrian life. Maybe they drive a mini van or something, and no one, not even their closest family or friends, knows their real identity, which is, of course, a highly skilled secret agent. So that’s the first change.

But there’s another way Monero differentiates itself from other cryptos. This is through a ring signature. And before I talk about that, I need to let you know. Monero and hundreds of other crypto assets are available on FTX. FTX is a highly secure exchange that allows you to buy all kinds of digital assets for super low transaction fees. They have two platforms an easy-to-use app for beginners and a more advanced platform with more features.

What is a Ring Signature?

Basically, instead of one account sending one transaction, which is easy to track, a circular ring of different users sign the transaction and send it. This way, the person sending the transaction is just one of many potential accounts associated with each and every transaction.

What this means is even if you’re able to figure out the one-time stealth address for a Monero transaction, you would still need to sort through this ring of associated users, most of whom have nothing to do with the actual transaction. They’re all decoys.

It’s almost as if you were able to send a letter in the mail, except the return address is every single address in your entire city. The creators and proponents of Monero say that they’re offering what Bitcoin and other cryptocurrencies were always designed to offer – total privacy, total anonymity, and total freedom.

They say that Monero is just the natural evolution of crypto, that these changes are improvements taking us one step closer to the fundamentals that crypto was built on – Freedom.

The dark side of Monero

The dark side of Monero

But as you can probably guess, there’s a dark side to all of this. Monero has become the cryptocurrency of choice for a certain subset of users: hackers, thieves, drug dealers, and all sorts of questionable characters. Two of the most active markets on the dark web, ASAP and the Versus project, both accept Monero, and it’s the currency of choice for some very dangerous movements and political causes.

Monero, after all, allows you to donate money without ever having your name or reputation associated. The Daily Stormer, a Neo-Nazi publication, now explicitly requests that its users give support via Monero rather than Bitcoin. Various far-right activists fundraise with Monero, and there’s reason to believe that monero is the primary means of fundraising for the “Unite the Right” rally in Charlottesville.

Now, it’s worth noting a lot of this is presumptive due to the nature of the coin, the privacy coin. It’s impossible to track its movements, so we can’t know any of this with certainty. But a number of extremists publicly embrace Monero, and that’s not anything. I mean, Jonathan and Diana Toebbe, that US couple who allegedly tried to sell nuclear secrets to foreign countries, asked undercover officers to pay them in Monero.

Let’s summarize this

Black markets, hackers, and double agents selling American secrets abroad all point to Monero as the coin of choice. Yikes. This has created a bit of backlash. Privacy coins have unsurprisingly come under a lot of scrutiny from governments all around the world. Australia and South Korea have banned exchanges from offering privacy coins.

Japan just went ahead and banned them entirely. The FBI, no big fan of cryptocurrency to begin with, absolutely hates Monero. Some even argue that these criminal activities aren’t just some unfortunate side effect of privacy coins, but in fact, are their entire reason for being.

They argue that the total anonymity of Monero was built with the express purpose of benefiting criminals. Another yikes. No one, even the biggest proponents of Monero, would deny that the coin has become popular with the criminal element. But their argument is that it simply proves the coin is doing what it’s designed to do.

It’s untraceable, unlinkable, and that’s the point. And that these nefarious uses, as unfortunate as they may be, they’re unavoidable. And that’s life. That’s the cost of progress.

So what’s the argument for Privacy Coins?

It’s not all dark web this, laundering that. Prominent activists argue that the same protections that insulate criminals from law enforcement also can serve a very important positive purpose in protecting activists and those fighting governments, trying to capture or hurt them, people who need to keep their identities and financial transactions are hidden for good reason.

But how do you tell the difference between a criminal and an activist? You can’t. The strongest proponents of Monero will generally argue that this isn’t really about any individual application, good or bad. It’s about a principle. It’s about people trying to reclaim some degree of privacy when it comes to their financial decisions. And how hard that can be in an increasingly digital, highly surveilled world.

This is the fundamental argument in favor of Monero and other privacy coins. Privacy isn’t just for people with something to hide it’s a fundamental human right. People should be allowed to live their lives without having every financial decision tracked by an overreaching surveillance state. Monero is a way for people, all people, to exercise that choice. Activists will also argue that the criminal element that has embraced Monero is unavoidable. An incredibly familiar story that any new technology, especially at its inception, is just going to be used for criminal purposes. It’s inevitable.

But that doesn’t mean the technology itself is to blame

I mean, illegal contraband has been sold online for decades. Does that mean the internet should just go away? The open source network used to access the dark web was originally developed by the US Naval Research Lab. The first widespread use of Bitcoin itself was, you guessed it, on dark web marketplaces like the Silk Road, where you can supposedly purchase all kinds of interesting things.

And like I said, Bitcoin’s sense of confidentiality was a huge part of its appeal to users. But this has become strained over the years. Government regulators and analytics firms have found ways to surveil the public blockchain. But anonymity was the original goal, and privacy cryptos are simply filling that gap.

There will always be people who take a new technology and use it for nefarious purposes. This has been the case throughout the history of the Internet, and then before that, throughout the history of human civilization. About the first time someone got killed with a hammer, people looked at it and they were like, that’s not supposed to happen. And here’s the tough part about all this.

Both sides of the privacy crypto debate are right. It’s complex, it’s messy. And in a culture that often demands easy, simplistic answers to problems, there really isn’t one here. As we move forward in the next decade of technology growth, there are going to be a lot of moral gray areas. Artificial intelligence, deepfakes, the metaverse, the automation of everything.

Final Thoughts

So many of the advancements that are coming down the pipe are going to pose these sort of complex, frustrating moral questions, and there are no easy answers. And that’s why I can’t really tell you what to think about Monero or other privacy coins, as you see in this article. Whatever side I might personally fall on, I could make a counterargument just as easy, and so can you.

And that’s why, when it comes down to the question of privacy cryptos, you just have to decide for yourself. You have to do the research, look at both sides, think critically, and come to your own conclusions.

Also Read:

Are your crypto securities? For Solana fans, it’s unclear

The Future of Crypto, NFTs, and Web 3.0 in 2025

The Only 10 Personal Finance Tips You’ll Ever Need

Leave a Reply

Your email address will not be published.