Edward Snowden’s Final Warning to Bitcoin Developers: “Make Privacy a Protocol-Level Priority or Risk Losing It
In Brief
Edward Snowden warns the Bitcoin community of urgent protocol changes to ensure its survival and preserve anonymity.
The Bitcoin community has received a severe warning from Edward Snowden, the public figure who exposed widespread monitoring operations. His message is quite clear: in order to secure Bitcoin’s survival, immediate protocol changes are required. There’s not so much time left to preserve the cryptocurrency’s anonymity.
A Critical Call for Privacy
Snowden raised his concerns on May 3rd on X, the previous Twitter platform, over the deteriorating privacy of Bitcoin. “I’ve been warning Bitcoin developers for ten years that privacy needs to be provided for at the protocol level,” said Snowden in his post. This piece was a reaction to recent events that point to a concerning trend in the US government’s attack on crypto privacy options.
Snowden’s alert came after Wasabi Wallet’s developer, zkSNACKs, declared that it would stop providing the CoinJoin service soon. Through the use of CoinJoin, many Bitcoin users may aggregate their purchases, making it more challenging to identify specific inputs. For Bitcoin users who value confidentiality, the closure of this site is a major loss, and this is the reason why the crypto community is very concerned.
What is a Cryptocurrency Mixer?
These platforms are services that let users and companies conceal the source and direction of their cryptocurrency money, giving them a higher level of anonymity than traditional transactions. These services enable users to trade and “clean” coins without leaving records on the ledger; they tend towards anonymity. Criminals have welcomed them as a safe way to convert money obtained via illegal means into fresh currency.
The procedure for laundering cryptocurrency is the same as that for washing cash, except that coins are kept on the blockchain. When users insert their coins into a mixer, the machine uses a mathematical method to mask the identities of the coins’ origins, recipients, and withdrawal parties. Each player receives their proper coins back in a random fashion that seems real.
Crypto mixers come in two options: decentralised mixers that conceal transactions using “ZK proof” and centralised mixers that keep track of the coins belonging to the sender and the receiver. Although they are not a kind of mixing platform, privacy coins—which were created for enhanced security—are utilised for similar objectives.
Crypto mixers provide recipient concealment and payment protection while providing anonymity for financial transactions. They can be cleared in as little as an hour, enabling high-security, quick worldwide transactions. Nevertheless, a lot of people try to misuse cryptocurrencies, maybe sharing their funds with cybercriminals, money launderers, or terrorist financiers. Cryptocurrency companies that accept these currencies risk regulatory penalties, financial loss, and harm to their brand.
When consumers place their faith in a third party, it might result in service hacks, data breaches, or service freezes, all of which can harm a company’s reputation. Due to unforeseen errors in the computational process, cryptocurrency mixers might sometimes unintentionally result in financial loss. Since virtual currency is included in the regulatory purview of the Fifth Anti-Money Laundering Directive, legal compliance is a top priority for cryptocurrency exchanges and initial coin offerings. If mixed currencies are accepted, it can be challenging to make sure an exchange adheres to 5AMLD.
The Regulatory Crackdown
The discontinuation of zkSNACKs’ CoinJoin service is a reflection of the mounting legal pressure on US cryptocurrency mixers. The owners of the well-known cryptocurrency mixer Tornado Cash were charged by the US authorities last year with money laundering, running an illegal money transmission service, and evading sanctions. The creators of Samourai Wallet were recently detained by the (DOJ), which sparked concerns that the government’s campaign against privacy-focused digital currency firms was becoming worse.
The DOJ’s legal proceedings have shocked the cryptocurrency industry by raising the possibility that self-custody wallets would be subject to more stringent enforcement actions against non-custodial crypto options if the authorities decide to treat them as illegal money-transmitting enterprises.
A Dire Warning from Snowden
The note of Snowden is particularly relevant given the present regulatory environment of heightened scrutiny. He criticised the DOJ’s efforts towards Samourai Wallet, saying it sets an unsafe example for prosecuting innovators who protect users’ confidentiality of money. Snowden tweeted, “Making money private by default is the way to fix this.” “Privacy must never be considered “special,” or else it will be illegalised.”
The significance of tackling these obstacles is emphasised by his request that Bitcoin developers give privacy first priority at the protocol level. Snowden’s warning is especially important because of his lengthy history of supporting cryptocurrencies and advocating for digital privacy. He frequently stresses the vital necessity of preserving financial independence by using privacy-prioritising technology.
The Broader Impact
The decision made by zkSNACKs to discontinue its CoinJoin service has an equivalent effect on users of other wallets connected to the zkSNACKs coordinator. Wasabi Wallet’s secrecy characteristics are significantly diminished without the CoinJoin capability, even if it can still be used as a Bitcoin wallet.
The consequences go beyond a single wallet. The need to explicitly include privacy safeguards in the Bitcoin protocol is underscored by Snowden’s warning. The long-term prospects of financial anonymity in the crypto space are still unclear in the absence of major protocol-level modifications, particularly in light of the increasing legal pressure.
Another problem for BTC wallet providers looking for income sources is privacy. The CEO of Wizardsardine, the company that created the Liana wallet, Kevin Loaec, stated that it is a challenging undertaking to monetise wallet services while maintaining user privacy and implementing KYC (know your customer) requirements. Liana is currently attempting to ascertain what individuals are prepared to pay for as a result.
What Can Be Done?
Snowden’s last cautionary post serves as a reminder to the Bitcoin community. In order to identify methods that protect privacy without running afoul of regulatory authorities, developers, stakeholders, and users must collaborate. This can entail looking at decentralised substitute coordinators, putting other setups into place, or arguing for legal clarification on self-custody wallets and cryptocurrency mixers.
Bitcoin’s potential to provide financial autonomy and anonymity may be compromised. Snowden’s warning is a strong call to action, highlighting the rapidly shrinking time for decisive action.
Disclaimer
In line with the Trust Project guidelines, please note that the information provided on this page is not intended to be and should not be interpreted as legal, tax, investment, financial, or any other form of advice. It is important to only invest what you can afford to lose and to seek independent financial advice if you have any doubts. For further information, we suggest referring to the terms and conditions as well as the help and support pages provided by the issuer or advertiser. MetaversePost is committed to accurate, unbiased reporting, but market conditions are subject to change without notice.
About The Author
Victoria is a writer on a variety of technology topics including Web3.0, AI and cryptocurrencies. Her extensive experience allows her to write insightful articles for the wider audience.
More articles
Victoria is a writer on a variety of technology topics including Web3.0, AI and cryptocurrencies. Her extensive experience allows her to write insightful articles for the wider audience.
