Venmo’s puzzling decision to turn payments into a social media feedwhere public transaction is default, was immediately met with criticism. But at least, it’s always possible make Venmo transactions private. Now imagine a financial system that is not only public by default, but can never be made private and nothing can be deleted or removed.
That’s how cryptocurrencies work. And for years, it was too rarely recognized as a problem — largely because systems like Bitcoin, Ethereum, and other crypto platforms are technically “anonymous.” More specifically, unlike banking or financial apps, you don’t have to attach your real name, address or other identifying information to the wallet. Sure, everyone can see what a random wallet is doing, but they don’t necessarily know Who are doing it.
However, NFT completely destroys this inherently fragile anonymity.
Public blockchains are low-privacy environments
With any new technology, a supposedly beneficial feature often comes at the expense of another. For example, one way to describe an immutable blockchain that contains a public record of every transaction is as a transparent way to Maintain accurate records.
Another way to describe it is a low privacy environment, among others, law enforcement access arrive transaction history of the entire network—It was a case in which the US Department of Justice arrested two individuals accused of stealing $4.5 billion worth of cryptocurrency. Assistant Attorney General Kenneth A. Polite Jr. At a time“Today, federal law enforcement proves once again that we can track money through blockchain.”
Cryptocurrency wallets can be pseudonyms, but many exchanges have Know your client protocols and collect lots of other data about users. Furthermore, transactions necessarily share your wallet with another party. As a software engineer Molly White wroteonce someone knows your wallet address, privacy can be difficult, if not impossible, to maintain: “Imagine if, when you dated on Tinder for half your meal, now Here they can see every other transaction you’ve ever made — and not just on Venmo, but also the ones you’ve done with credit cards, bank transfers, or other apps, and don’t have the option to place an order. visibility of the transfer to ‘private’. ”
The main way to combat public scrutiny is shuffling method like using a unique wallet per transaction or use a tipping service or mixer. The latter combines the money of many people into one pool and then redistributes it to obscure which money is going where. While the process itself isn’t inherently illegal or even questionable, you’d be forgiven for thinking about it. sounds a bit like money launderingbecause it’s sometimes used for exactly that.
These techniques doesn’t mean easy, but even if it were, it’s a cumbersome job class and simply doesn’t scale. A crypto-obsessed investor with a lot of time on his hands can learn to manage dozens of crypto wallets, wallet managers, mixers, and every other tool needed to stay anonymous. But it was a job that an ordinary person couldn’t do on his own.
NFT completely breaks the illusion of privacy
A key component to keeping crypto activity anonymous is avoiding binding transactions to any identifying information. That means that NFTs can, in essence, undermine this goal. The idea behind NFTs is that they are essentially unique, identifiable tokens. And while they doesn’t work the way advocates say they doit is still technically true that no individual NFTs can be reproduced.
This means, if a user associates the NFT with any part of their IRL or online identity — say by use NFT as profile picture on Twitter or maintain records on the NFT market—Can easily find out what else their wallet was used for.
