As the U.S. government ramps up its crypto regulatory efforts, it is targeting privacy-protecting projects like never before. The crypto community is worried—especially the cypherpunks—and users are currently grappling with the implications of the Tornado Cash ban and how it may be enforced in practice.
But behind the scenes, Bitcoin developers have for years now been working to preserve privacy when transacting with crypto.
“The targeting of an open-source protocol (as opposed to a person) is clearly an escalation in the attempt to make cryptocurrencies ‘fit’ into what the U.S. considers its financial control framework,” Craig Raw, developer of the Bitcoin Sparrow Wallet, told Decrypt. “This is where the importance of holding funds without KYC links becomes apparent, and the fight for financial privacy escalates again,” he said.
Bitcoin was long thought to be private, but that’s not correct. In the early days, many Bitcoin users didn’t know any better and would transact with the cryptocurrency online without thinking of the consequences—including on illicit darknet marketplaces.
These days, authorities can quite easily match Bitcoin transactions to real people, because off-ramps like cryptocurrency exchanges collect personally identifiable information about their customers. In fact, law enforcement agencies have even said they prefer it when criminals use the asset because it is so easily traceable. Bitcoin may be pseudonymous—no one’s identity is recorded…
