The blockchain is definitely one of the most innovative applications of this decade. It has helped in the significant transformation of the monetary transaction system through cryptocurrency. But the novelty of this technology often brings forth questions regarding its overall impact on the lives and functioning of people across the world.
In this article, we will understand the security issues regarding blockchain, and whether they threaten our freedom.
The banning of cryptocurrency by several countries across the globe is the primary reason why such questions are being raised.
Countries like China have taken strict measures to ban crypto trading and investments. In India, the Reserve Banks initially proposed the banning of cryptocurrencies, which however could not be implemented due to the Supreme Court’s intervention. Does crypto encroach into our freedom?
To understand this we need to understand how blockchain works.
A brief history of blockchain
The blockchain was developed in the ’90s by two computer scientists who wanted to introduce a technology that would allow them to track digital assets. They created a unique way to timestamp assets.
In 2009 Satoshi Nakamoto used this technology to create the first-ever cryptocurrency, the Bitcoin. This would be a decentralized ledger system that would allow peer-to-peer currency transactions.
Without the mediation of the banking system transactions could be faster and more efficient. Corporate investments increased in crypto as the transactions could be done quickly and also cost less as the transactions would be directly from one peer to another peer.
The introduction of trading applications like this trading platform also encouraged traders to invest in crypto. Currencies like Ethereum and Bitcoin were considered stores of value.
Bitcoin and Freedom
Contrary to the prevalent belief that cryptocurrencies in some way hamper our freedom, there is enough proof to suggest that the blockchain offers more privacy and security to the users.
- Anonymous transactions through blockchain technology
As mentioned above the blockchain is based on a decentralized ledger technology that will allow users to make transactions without the intervention of any intermediate institutions.
Mostly, banks and other institutions require the user’s address, identity proof, email, and other modes of verification. These identity verifications are a must for account holders.
However crypto owners can make transactions anonymously if they possess a crypto wallet and a private passkey.
- Security issues
Transactions via blockchain are theoretically more secure than transactions through traditional financial institutions. Every digital currency is digitally tracked through the blockchain technology. It is impossible to add counterfeit currency without destabilizing the ledger that is simultaneously maintained by multiple nodes all over the world.
From this, we can understand how the identity and data of the users are protected through anonymity. Today the whole world is facing the issues of surveillance. Corporations monetize on user patterns of consumers on the internet in order to create profiles of them based on their data. This data feeds the algorithm that brings relevant products to users of the internet.
Social media like Facebook, WhatsApp, telegram are prone to this tendency as they sell user data to other buyers. This questions the efficiency of the encryption and security measures used in these applications. Whatever the user does or says on the internet is always vulnerable on the internet.
The government also uses the data on users for surveillance. In China censorship is a critical threat to users. It curbs their right to free speech and free action. In similar political conditions, free speech becomes a distant dream.
How does blockchain bypass censorship and surveillance?
- Through blockchain technology, users can make anonymous transactions. Thus it becomes impossible for banks or other institutions to block or blacklist accounts of users.
- Through platforms like Ethereum, users can send messages across without the threat of surveillance and censorship. This means of communication has been employed in China.
- Blockchain is instrumental in protecting the identities of users in an oppressive political regime due to its decentralized nature.
Despite the anonymity feature of blockchain transactions, it should also be noted that the technology is at a high risk of being exploited for anti-social activities. Crypto has been used in silk routes and for money laundering which may indirectly threaten the political and economic infrastructures of countries.
Alex is fascinated with “understanding” people. It’s actually what drives everything he does. He believes in a thoughtful exploration of how you shape your thoughts, experience of the world.