Over the past year, the world of cryptocurrency has experienced intense upheaval for what benefactors had once championed as a stable industry. In November, the downfall of Sam Bankman-Fried and FTX sent shockwaves through financial circles. Once worth up to $40 billion, FTX collapsed after surging withdrawals overwhelmed a company that was unprepared to meet customer demand. Echoing the fall of Lehman Brothers, FTX became insolvent and Bankman-Fried is currently living on bail.
In the wake of the FTX controversy, many experts are reconsidering what they know about cryptocurrency, including the safety measures of personal data. This has become even more prevalent with the recent filing of FTX customers to keep their information private and out of the court proceedings. As our economic structures continue to face an inevitable shift from bank to blockchain, it is imperative that users and developers stand as a united front. Users need to be aware of existing privacy measures whenever they engage with crypto companies as well as new developments in the industry that can alter privacy protections.
As others have noted, with the rise of crypto adoption, exchange regulation has tightened, especially with respect to the retention of identification data. However, the issue with this tightening is that user vulnerability closes to one point of attack—and hackers know this. Furthermore, exchanges are only as strong as those who are on the exchange: even one bad actor threatens the security of the whole. In a similar vein, although blockchain analytics and tracking technologies can aid in locating hackers and preventing them from future attacks, these technologies can also be utilized by the same actors they work against by allowing them to turn back on users to help facilitate targeted attacks.
Additionally, a recently proposed bipartisan bill attempts to reduce personal privacy for those facilitating blockchain transactions by forcing individuals to tie their identity to their digital assets. This legislation was proposed for the purpose of making it more difficult to finance criminal activities; however, this sweeping legislation would virtually eliminate anonymity in digital transactions. For this reason, it is impossible to definitively say what the future holds for crypto privacy and protections, but any user wanting to grow their digital assets needs to abreast of all legislative and technological developments.
Privacy
The Crypto Privacy Problem
