Bitcoin Could Lead To Liberty Paradise, But Also To Surveillance Dystopia

Bitcoin heralds great promise to break that symbiosis between banks and governments that enable erosion of our financial privacy. But in the absence of banks, bitcoin comes with its own set of problems. With bitcoin, money flows are more traceable than ever before.

Two interesting things happened today that are an indication of things to come, and both involve public discussions about how an individual transferred money.

The first was a follow-up to a student holding a “hello mom!” sign in the background on television, but instead of just a hello, the huge sign contained a QR code calling for bitcoin donations. A lot of people other than the person’s mother decided to donate because they thought it was a cool stunt – so many and so much, in fact, that the poor student received over $25,000 overnight, as people used the donation instructions embedded in the QR code that flashed by in an instant on television.

Where this becomes really interesting is that somebody traced how the donations were used, and today, there was a followup story noting that the student had donated 11 bitcoin – about $13,000 – to Sean’s Outpost, a shelter for homeless people. This is noteworthy for generosity, but in this context, it is noteworthy because everybody could audit how the individual chose to spend his donations. Private money is no longer private.

The second story revolves around a heist against a bitcoin-only deep-web contraband shop, Sheep Marketplace, where 96,000 bitcoin was stolen (well over 100 million US dollars – not small potatoes by any measure; to put that amount in context, it’s more than the GDP of several countries).

Where that goes interesting is that skilled detectives in the bitcoin community are able to follow the money. Literally. In real time. Laundering the loot becomes impossible. As the bitcoin ledger is public, there’s no hiding that kind of large amount (remember again, we’re talking about the GDP of a small country).

So for all bitcoin’s promises of liberty, we need to remember that every technology can be used for good and for bad.

Never before in history has every single monetary transaction been entered into a public searchable database, transparent to everybody, friends and adversaries alike.

It’s true that we’re entering an era where a government cannot forcibly collect taxes (but still has the ability to make you sorry for not paying them). However, we’re also entering an era where the government can ask you why you donated a miniscule sum – say, a cup of coffee – to the Banned Opposition Party from the funds you received as last month’s paycheck.

All that glitters is not bitcoin, and privacy remains your own responsiblity.