The Internet identity crisis

CoinSheet #232

They who can give up essential liberty to obtain a little temporary safety deserve neither liberty nor safety.

— Benjamin Franklin


The Internet identity crisis

This isn’t going to be a rant about how Facebook employees are so paranoid they’re using burner phones to communicate (can’t blame them tho, they know the extent to which data is mined more than anyone).

It won’t even be about the gigabytes of data Google has on you.

I just want to give you some intangibles to consider.

Your data will get stolen if you trust Quora.


Your data will get stolen if you trust myfitnesspal.


Your data will get stolen if you trust T-Mobile.


Your data will get stolen if you trust Equifax.


Your data will get stolen if you trust the government.

Yes, the photo below is real, I still have the letter.

In a previous life (this was circa 2015) I considered working for the government. I went through a rigorous background investigation and had all my data stolen because some dude thought it was a good idea to use public WiFi in Southeast Asia.

I did not accept the offer.


The US has seen 6,551 individual data breaches 2013-2017

In 2017 data was stolen at a frequency of about:

  • 7,000,000 records per day

  • 296k records per hour

  • 4,946 records per minute

  • 82 records per second


Not if, when

It’s not a matter of if an organization you trust is going to get hacked, but when is that organization going to get hacked.

Google can’t secure your data. Banks can’t secure your data. The NSA can’t secure your data.

The only way an organization can secure your data is if they don’t collect it in the first place.

It is ridiculous to even think that a startup is going to be able to secure your data when a national intelligence agency can’t secure the details of my background investigation.

This includes cryptocurrency related startups like Coinbase and Binance and every crack pot ICO you’ve every heard of.


The price of losing privacy

Andreas Antonopoulos has a great talk about the price of losing privacy and I’m going to try to summarize the main points here.

The problem with privacy is that the implications of losing your privacy are not immediately apparent (i.e., you can lose your privacy today, but go to jail in 6 years because of something in your browsing history).

Ever hear of the phrase let one thousand flowers bloom?

Mao Zedong created this program in post-revolutionary China.

To "let a hundred flowers blossom," which was the idea of openness to allow the explosion of creative expression. Even those of dissidents.

Letting a hundred flowers blossom and a hundred schools of thought contend is the policy for promoting progress in the arts and the sciences and a flourishing socialist culture in our land.

-Mao Zedong

The Chinese intelligentsia were invited to criticize the political system in Communist China.

And people believed it.

And their opinions were carefully recorded and cataloged.

And then the purge happened, and hundreds of thousands of folks who believed the idea were murdered.

You lose your privacy everyday but you don't pay the price for that perhaps until a lot later and you can't immediately identify the moment at which your loss of privacy goes from something that is an inconvenience to something that is a deadly risk.

-Andreas Antonopoulos


Bitcoin is consumer protection

It is very difficult to overlay identity on top Bitcoin. Which is good, because no one knows how to secure data.

Your internet identity may be compromised, but you should atleast try to be vigilant of folks trying to steal your Bitcoin financial data.

Regulators have failed to protect consumers. Bitcoin protects consumers by putting control in the hands of the consumers themselves.

An alarm should go off in your head anytime you hear words like “Know-your-customer (KYC)” or “ Anti-money laundering (AML).”

Here’s an example:

Last month Stellar announced they’re airdropping $125 million to Blockchain wallet users. No big deal right?

Just one condition, you need to KYC.

The problem here is that Airdrops come at the expense of privacy.

Would you trade potentially 7 years of Bitcoin transaction history for $25?

The idea that a bitcoin exchange or some crypto startup is going to secure your KYC/AML and all of your privately identifiable information is a joke.

Like I said before, It is ridiculous to even think that a startup is going to be able to secure your data when a national intelligence agency can’t secure the details of my background investigation.


With Bitcoin, only YOU can de-anonymize yourself

You de-anonymize yourself when you associate a bitcoin addresses with an exchange, or a merchant that does KYC, or a shipping address, or your name, etc…

Chain analysis is real and it is scary.

Financial surveillance is not a joke.

Censorship resistance doesn't matter if you don't have privacy.

So please, don’t shoot yourself in the foot.

-Dmitriy