Anonymity and privacy

This post originally appeared on ZeMing M. Gao’s website, and we republished with permission from the author. Read the full piece here.

In the world of blockchain and digital currencies, there’s a struggle over the distinction between anonymity and privacy. Even some of the most articulate people struggle and stumble over explaining these concepts.

The struggle is due to misunderstanding of the concepts and reality.

Sure, one can make a distinction based on the literal meaning of the words. For example, one may emphasize that anonymity covers identity, while privacy covers acts, events and relationships, etc.

But such an academic distinction is not instructive in the context of blockchain and digital currency at all.

The truth is, in a hypothetical society that doesn’t have any form of government but has only individuals interacting with each other, anonymity and privacy would be essentially the same thing, because both are drawn to the same concept of not being known by others.

But in reality, we live in a structured society that is consisted of the government, individuals, and various authorized parties as agents. For this reason, anonymity and privacy should be used to describe different kinds of “knowing” or “being known.”

Specifically, proper distinction between privacy and anonymity should make it a matter of who is allowed to know what under which circumstance, and how the one who knows is authorized to act. The difference is a qualitative one, not just a matter of degrees.

Viewed in this framework, we explain “Privacy” and “Anonymity” as follows:

Privacy” means the general public is not supposed to know, nor does it have the right to know, while the government may have a right to know only if there is probable cause.

Anonymity” means that it is intentionally and completely hidden, made to be physically unknowable, not even by the government with a probable cause.

Privacy and anonymity are not mutually exclusive but rather overlap with each other. But they are different.

Privacy is a legitimate result of legal, social and political negotiation.

In contrast, anonymity is a unilateral decision to intentionally hide identity, often with the specific purpose of evading law enforcement. Anonymity is not always illegal, but often is, especially in matters related to money and finance.

In the above distinction, “probable cause” is also a key, in addition to government versus public.

Probable cause

“Probable cause” is an element of “due process” which is one of the most important legal concepts in modern legal systems. The concept only exists in societies that operate under the rule of law. 

People often talk about freedom in abstract today and forget that human societies have always relied on a system called government. Even the Bible says the government is God ordained (Romans 13:1). Within the government, although the officers may be corrupt due to their personal sin, the office itself as a principle is not.

Citizens in a democracy can only advocate a better government but cannot advocate anarchy. Democracy and anarchy are mutually exclusive.

However, societies should avoid a system like the one that China has built in the recent years, in which the government knows everything by default and without a legal, political and social negotiation. There is no requirement of “probable cause” in the Chinese system.

In fact, there is not even a concept of “probable cause” in the Chinese legal system, because it has no concept of “due process” in the first place.

It does not mean that the Chinese law authorizes the government to do anything it wants to (a commonly misunderstood and exaggerated point), as the system does have an overall concept of “justice.” But it singularly focuses on the “substantive justice,” disregards “procedural justice,” and has no concept of “due process” or “probable cause” as a formal legal process. 

The result is a surveillance society, which has now underlined the debate over privacy in other societies. 

Giving up eating for fear of choking

In fact, the Chinese system is so intrusive and scary that its existence is providing a strong motivator for the Western societies to push to the other extreme: not permitting government to have any access to private information, even when probable cause exists. 

This is like giving up eating for fear of choking.

In the Western societies, grassroot resistance has usually worked as a balance to government abuses. But in this particular matter of privacy in the digital age, there is a danger of knee jerking reaction lacking adequate understanding of the underlying issues. Misunderstanding and misconception lead to wrong decisions and wrong policies.

It’s always a struggle and an act of balance.

Even when the government has indeed become largely untrustworthy, categorically rejecting and resisting law enforcement is not a solution. The only hope of a democratic society is to elect wiser representatives, lawmakers and officials, who are more trustworthy and capable to change the system for the better.

But if all that fails, if a democratic society fails to elect trustworthy and wiser leaders to form an adequate government (either because the society fails to produce good candidates, or the voting system is so corrupt that it does not yield the right results, or people themselves are so corrupt that they fail to discern), then the remaining choices are few. There may only be two clear choices:

authoritarianism or anarchy.

And the history has taught us that authoritarianism is always a better choice than anarchy.

The cold truth: If a society’s majority values and beliefs no longer support democracy, or have become unworthy of democracy, then authoritarianism is what it deserves. One just hopes that it does not slip into anarchy.

Technology’s role

Technology can help, if the right kind of technology is allowed to prevail.

Blockchain technology can help because it can improve privacy without compromising the rule of law, and increase transparency without sacrificing privacy. But not every blockchain is the same. Bitcoin Core (BTC), for example, pretends itself to be “anonymous” when it is actually not. Not being anonymous is not the problem, not being truthful is. BTC uses such a pretense to maximize its own benefits from an illusory separation from the government and out of the reach of the law. But in reality, not only is everything BTC traceable but also lacks privacy. Traceability is itself not a problem because Bitcoin is intended to comply with the law. However, the false sense of anonymity has led to a system that provides no effective means to enhance privacy.

To make it even worse, in doing that, BTC has sacrificed utility in order to create an illusion of anonymity, and has become purely a vehicle of Ponzi-driven speculations.

Others either copy the model of BTC, or make it anonymous in fact using illegal means.

In contrast, Bitcoin Satoshi Vision (BSV) recognizes the fact that bitcoin is not anonymous when it is subject to the law enforcement from onset, and for that reason has developed robust strategies and methodologies to maintain privacy without becoming illegal. One example is the use of hierarchical deterministic wallets to create numerous disposable addresses and makes it impossible for unauthorized parties to identify and trace the user, especially that of small payments.

Bitcoin Satoshi Vision (BSV) is the real Bitcoin blockchain truthfully based on the original Bitcoin design by Satoshi Nakamoto. It is the only blockchain that has honest privacy without illegal anonymity.

Read more articles on BSV (as serious tech/economics studies):

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