Privacy and Confidentiality vs. Anonymity – a key takeaway from The Bitcoin Masterclasses

On the 22nd-23rd February, Dr. Craig Wright will host a second set of The Bitcoin Masterclasses workshops aimed at exploring core ideas and principles related to Bitcoin. In anticipation of the upcoming event, it is worth looking back at some of the key takeaways from his previous seminars which took place over two days in London at the end of January.

The first day of the masterclass focused on confidentiality, privacy, anonymity and “party-to-party”, while the second day covered the concepts of private identity and proof of identity related to Bitcoin.

One concept Dr. Wright spent a lot of time on was clearing up the confusion that often exists between, on the one hand, the concepts of confidentiality and privacy, and on the other, the contentious topic of anonymity.

Essentially, the fundamental difference between these often confused and misconstrued ideas boils down to transparency and legality, which privacy and confidentiality may include, but which anonymity, as applied in the digital resource world, does not.

As Dr. Wright did back in January, delving into the topic in more detail can help further illuminate this difference and serve as a good foundation for those hoping to catch the next of Dr. Wright’s Masterclasses.

The problem of anonymity

Although anonymity may be important for certain specific activities, such as medical research or voting, even in these situations it must be provably linked to a real identity, and there is no such thing as an anonymous signature. You can have a pseudonym, but it must have an identity associated with it.

During the masterclass, Dr. Wright tried to point out how the concept of anonymity is widely misunderstood and misused, especially in online and digital assets, “anonymity is not the function that many in the cryptosphere are trying to convey. to be.”

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Many see the idea of ​​being anonymous as the best way to keep your personal identity, information and data out of the hands of others who might misuse it. But when anonymity is achieved, it often results in abuse, whether it is an illegal activity such as black market trading and fraud or an abuse of ‘freedom of speech’ such as trolling.

“Anonymity doesn’t give you the right to go out and troll other people, and it doesn’t give you free speech. Anonymity takes away freedom of expression,” explained Dr. Wright. This may sound counterintuitive, as anonymity can allow anyone to say and do whatever they want without consequence, but if you require anonymity to act without restrictions, that action is by definition not free.

As for some activity or speech, it’s not free because it’s illegal, and Dr. Wright highlighted this as another key difference between privacy and anonymity, and one that “nobody wants to talk about in cryptocurrency worlds.”

Dr. Wright went on to explain how, often, when people in these ‘worlds’ use the term “privacy coin”, they actually mean “anonymous coin with illegal use.” Thus they abuse the concept of privacy, which in reality depends on the laws of the land and – at least in most common law countries – for good reason. Trolling is a classic example of the misuse of anonymity, but Dr Wright also spoke about the importance of incorporating law into online identity when it comes to more serious matters such as sexual assault.

Privacy and security

Privacy, as opposed to anonymity, can be maintained by keeping personal information confidential where possible, but also allowing access to authorities and institutions when necessary. As Dr. Wright pointed out, “if we want privacy, we need people to be responsible for their actions. That doesn’t mean I need to know who you are; pseudonyms allow for privacy, but if they attach to an identity.”

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Pseudonyms that can be demonstrably (when necessary) linked to a real identity have a certain degree of transparency. This is what privacy offers over anonymity, an obligation to attach a real identity to a pseudonym.

When it comes to Bitcoin and the blockchain, these ideas are crucial for security purposes, which need three core elements: authentication, integrity, and confidentiality. No identity, or complete anonymity, would mean that one could not authenticate people, which would take away one of the basic principles of security.

This effectively undermines the utility of any digital asset or blockchain that allows anonymity, as authenticating people is critical to many transactions and contracts and is made impossible by anonymity.

In fact, Dr. Wright suggested that 30,000 – “at least” – attempts at Bitcoin before Bitcoin failed due to attempts to remain anonymous. This is why he advocates for Bitcoin to have data integrity, individual authentication and privacy instead of anonymity, and this is also where the idea of ​​confidentiality comes in.

Confidentiality rather than anonymity

Confidentiality, as Dr. Wright said, is “ensuring that the right people have private information.” This means letting go of the notion of total anonymity as “identity is firewalled from the blockchain, but firewall identity doesn’t mean it doesn’t exist, it’s not anonymous.”

It also doesn’t mean giving all your private information to everyone, or even anyone, just the necessary information in any situation.

“Confidential means we share with the right people,” Dr. Wright said. He used the example of buying a TV to demonstrate why you don’t want complete anonymity in a normal business/commercial transaction – where would you deliver it without giving an address? How would you return it or get a warranty without being able to prove you bought the item?

However, this doesn’t mean you need to provide all your information, just what is required – in the example of the TV it could be providing your address, but only to the delivery company as they are the only entity that needs it.

In the context of the blockchain, the entirety of a person’s identity can be spread across different keys, which can then be used in different transactions and circumstances to verify a person’s identity without them ever having to give their full information/details to anyone—only revealing what is necessary and what they want for a particular situation.

This is possible through the use of PKI certificates, which contain attributes such as personal information and can be linked to registered, certified keys. Thanks to Merkle trees in Bitcoin that allow selective disclosure, you can verify certain specific information, such as an address, without necessarily revealing anything else.

This, Dr. Wright suggested, is a preferable situation to the one we currently find ourselves in, where either significant personal and private information and data are shared freely by institutions and companies that receive it for verification purposes, or anonymity exists and operates illegally. activities.

By breaking down our identity and private information into its component parts and releasing only what is necessary, we can keep most of our identity and data private and confidential, while avoiding the pitfalls and controversies that come with complete anonymity.

So privacy and confidentiality, with transparency and authentication, over lawless anonymity.

Join the discussion

Clearing up some of this confusion and correcting misuse of core concepts and terms is part of the goal of Dr. Wright’s The Bitcoin Masterclasses series and furthering conversation in the Bitcoin space more broadly.

The next two-day event will focus on the basic constructions and networking fundamentals regarding both IPv6 and the use of multicast, and you can attend in person if you happen to be in Ljubljana, Slovenia on February 22nd and 23rd, or watch via livestream . Register your attendance with nChain here.

See: Bitcoin Masterclasses – Identity and Privacy

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