Banking insider to authorities: You should want Bitcoin to be much more private
According to this banking insider, the authorities have it all wrong. Bitcoin is one of the least private assets out there and they should change policies for the pendulum to swing the other way. In the banking insider’s opinion, instead of protecting them, the authorities have harmed citizens with the current draconian measures. It sounds convenient to bitcoiners, but this banking insider seems like the real deal.
He or she, on condition of anonymity, wrote an essay for The Bitcoin Policy Institute. It begins with: “Financial privacy – and more specifically the requirement to obtain informed consent before collecting and using the personal financial information of others – is fundamental to individual freedom.” From there it goes to Mordor and back. Is the bank insider onto something? Or is the banking insider just toeing bitcoin’s party line? Let’s examine what she or he said and find out.
But first, we should not separate this paragraph from the opening lines. It accompanies and complements them.
“Due to the twin threats of exponentially increasing cybercrime and increased government monitoring and scrutiny of financial transactions, individual financial privacy is and has been under attack on multiple fronts, and the true costs are beginning to manifest in tangible ways.”
This is a very important topic and the world should discuss it thoroughly ASAP. This banking insider is doing the authorities a favor by explaining to them how privacy works in bitcoin. The essay also sounds like a preemptive strike against possible Tornado Cash-like sanctions against the bitcoin network.
About the author/ The Banking Insider
Normally we wouldn’t disrupt the flow of the article with author info, but this time it’s important. If readers don’t believe the bank insider, they won’t take his words of wisdom seriously. This person knows what’s going on.
“The author chooses to remain anonymous to protect their identity and the company they work for. They have worked in several listed financial institutions in fraud prevention and combating; from ground-level tactics to corporate strategy and policy.”
They also worked on “identity verification” and are involved in KYC and AML “compliance and reporting.” The bank insider currently works at a bank, helping them “prevent fraud and comply with existing regulatory guidelines around customer identity.” Their warning to governments and citizens alike is as chilling as it needs to be.
“As someone who has seen identity theft destroy the lives of countless victims, I know how important financial privacy is to protecting consumers from the fraudsters and criminal networks that have proliferated over the past 15 years. Global fraud losses are estimated to be equivalent to 6.4% of global GDP, coming in at a staggering $5.38 trillion in 2021. Experts cite protecting and securing personal financial information as one of the most important actions a person can take to reduce these the threats.”
And since we give credit where credit is due, The Bitcoin Policy Institute defines itself as “a non-partisan, non-profit organization researching the political and societal implications of Bitcoin and emerging monetary networks.”
BTC price chart for 09/22/2022 on FX | Source: BTC/USD on TradingView.com
The Banking Insider on privacy
According to the bank insider, “Cash provides the highest level of privacy.” Second, we have credit card companies or banks, in other words, “third parties to perform transactions on our behalf.” By using these, there is “a relatively high level of privacy” because these companies are “legally bound not to disclose our transactional information to others without our consent.”
You know who’s third, “because Bitcoin is an open, public ledger, a user’s transaction history is publicly available to anyone.” The transparency of the bitcoin network means that “anyone can see all the transactions in the past associated with the holdings in that wallet address – and in many cases how much Bitcoin is in the wallet!”
That leads us to prevention. Just in case lawmakers are thinking about directing a Tornado Cash-like attack on bitcoin:
“Bitcoin users who do not want to share their entire transaction history or net worth when transacting with a merchant can use collaborative transaction tools to bring their financial privacy on par with their other payment methods. These tools provide a similar service to what Visa provides its users today; they shield transaction details from both the counterparty to the transaction and from external observers.”
It is not just that collusive transactions are not a crime. They are absolutely necessary for the system to provide privacy.
“These collaborative transaction tools show a clear benefit to end users, but are viewed with suspicion by policy makers and the financial institutions that enable crypto exchanges and services, as these tools are also conceptually attractive to criminals who want to try to ‘break the chain’ of visibility into the sources of their funds.”
Conclusions
Ultimately, the bank insider says only that bitcoin users deserve “the same level of financial privacy that Americans are legally entitled to for everyday transactions — regardless of how those individuals choose to pay or be paid.” And that the system is different enough to deserve a new set of regulations. And that this is not a trivial matter.
“As Bitcoin users grow via regulated exchanges, lawmakers must ensure that their financial privacy is protected at the same level as all other regulated payment rails. If this is not addressed soon, the global threat posed by fraud today will only accelerate.”
Remember, “experts cite protecting and securing personal financial information as one of the most important actions a person can take to reduce” privacy threats.
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