JVTech News Are Bitcoin and cryptos still synonymous with freedom and anonymity?
The project of the founder of Bitcoin, Satoshi Nakamoto, was to design a payment system that advocated freedom and anonymity. After 14 years in the making, does crypto still hold true to its core values?
Are Professionals Depriving Bitcoin and Other Crypto Holders of Freedom?
After the recent events in the crypto ecosystem, a number of users are wondering about the anonymous and mobile nature of Bitcoin.
As a reminder, Bitcoin, the first cryptocurrency, was designed by Satoshi Nakamoto to become a decentralized and anonymous payment method. With its architecture built around a blockchain network, Bitcoin offers the possibility of decentralized payments, i.e. without going through a third party or trusted authority. In short, it is the computing power of the hardware that acts as a trusted third party. According to this logic, Bitcoin was initially created as an alternative to banks in the aftermath of the 2008 financial crisis.
However, the collapse of crypto-industry giants such as Terra LUNA or the exchange platform FTX has shown certain shortcomings in this sector. In fact, the fall of these giants has had a real impact on all users, as well as on other competing companies in the sector. Many customers who stored or deposited cryptocurrencies on struggling exchanges were ultimately not free to withdraw them at the appropriate time, due to the lack of liquidity on these platforms.
In the ideal Bitcoin model, everyone controls their own currency and is responsible for their transactions. Thus, when an institution temporarily blocks cryptocurrency withdrawals from its users, this reflects a glaring lack of decentralization.
So it seems that these CEX are less loyal to the initial values of bitcoin, because they are managed by centralized companies, such as banks. However, it is important to remember that these crypto exchanges have greatly contributed to the mass adoption of bitcoin and cryptocurrencies by making it easier to buy, sell and store them.
Bitcoin is increasingly regulated
Far from the other side of the privatization of crypto services, some of these companies over time have become so big financially that they have had to abide by certain rules. These measures put in place by the authorities and governments aim to regulate the sector in order to combat the misuse of cryptocurrencies – such as money laundering or illegal transactions for example.
Most cryptocurrency exchanges (especially CEXs, centralized exchanges) require users to fill in personal information to register. It is generally necessary to provide an email address, phone number, and also information regarding his identity – verified most of the time by the KYC system (verification of identity papers).
With this information, various companies can control and track user transactions. Although this is the general principle of blockchain, which is to provide a record of transparent transactions – what changes here is that the company knows the identity of the sender and sometimes the recipient. Thus, it is clear that this set of actions plays on the anonymity of bitcoin and cryptocurrency transactions.
Moreover, in response to this growing desire for anonymity, many services have regained interest. Such is the case with DEXs which are often seen as more aligned with Bitcoin values. These decentralized platforms do not depend on any central entity, and transactions are performed directly between users. Widely used by hackers, cryptocurrency mixers have also seen an increase in the number of their users. They allow funds to be divided and mixed to make them less traceable.
In conclusion, although cryptocurrencies are still considered more private than the current banking system, they are no longer synonymous with absolute freedom and anonymity. This does not come from Bitcoin and cryptos, but from the oversight of crypto professionals and institutions.
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