Bitcoin's true believers have held
on through its wild price swings
because they see enormous value
in its intrinsic properties and
now more than ever.
While government money printing has
created a global inflation crisis,
Bitcoin has a fixed number of units
that can't be increased
at a time when governments can block
any transaction through the
traditional banking system.
Bitcoin is uncensorable, meaning
no third party can prevent one
person from sending value
to another.
No matter the reason.
We support it because we've seen a
need from dissidents under
authoritarian regimes for it.
Alex Gladstein is the Chief Strategy
Officer at the Human Rights
Foundation and author of "Check
Your Financial Privilege." He sees
Bitcoin as freedom money
that's especially useful for people
living in authoritarian states.
So we come from first principles
here in the global struggle for
human rights.
The most important thing is that
it's confiscation resistant and
censorship resistant and parallel
and can be done outside of the
government's control.
Bitcoin proved hard to stop in
Canada.
In February, Prime Minister Justin
Trudeau declared a state of
emergency after truckers
parked their rigs outside the
capital and blocked the border
bridge in protest of the
government's vaccine mandates.
His administration ordered financial
institutions to freeze donations
flowing into the truckers.
But hundreds of thousands of dollars
worth of Bitcoin still got through.
This man who asked to go by
Caribou and requested that we not
use his real name, organized the
fundraiser.
Here's the thing with Bitcoin versus
Fiat. Fiat you can confiscate
first. Thing with Bitcoin.
You have to go through the process
of trying to confiscate funds before
you actually take possession of
them. And that asymmetry, it gives
you the high ground as a defender
and it actually makes the law have
to work first before action
is taken.
When you had GoFund me, they were
able to just freeze it with a phone
call or a button click or whatever.
But with Bitcoin, they can't do
that. So they have to literally file
an injunction. They have to use
police officers, they have to get to
people's homes.
It makes the government do the work
to go like dox or arrest
people, which is really important.
Today it's nearly impossible to stop
bitcoin, but not to uncover
the real identities of those using
it after their funds are sent
or received.
That's because Bitcoin transactions
are recorded to a public ledger
called the blockchain.
By design, all participants are
pseudonymous, but law enforcement
agencies and the private firms they
contract with have proven highly
skilled at connecting Bitcoin
transactions to real people, which
is why advocates say that the
Bitcoin community should do all
it can to make Bitcoin more
private.
When you're running a fundraiser in
a country in the Middle East or in
Russia, for example, and you're
doing human rights work or
environmental work or labor rights
work, it's already a crime to
receive maybe foreign funding, it's
already a crime to do human rights
work, etc..
So a secondary and
very important consideration is then
privacy. Like how can we make sure
they don't know so we don't get
arrested?
The Canadian government froze
hundreds of thousands of dollars
worth of Bitcoin intended for the
truckers and police raided the home
of the campaign's lead fundraiser to
confiscate his computer.
But advocates say this problem is
solvable.
Various tools already exist
that can help Bitcoin stay
anonymous.
They just need to start using them.
Gladstein says that the Canadian
fundraiser could have set up what's
called a BTC pay server,
which generates a different address
in the blockchain for every
transaction.
I think that today it's fair to say
that privacy is
much better achievable than than
it was perhaps five years ago.
There's a lot of amazing tools in
Bitcoin.
You have to kind of know what you're
doing.
With the Canadian truckers.
We see how governments can take away
money, but more importantly than
that, once money is in the hands
of government, they have shown with
100% certainty that that
monetary control will be abused.
Craig Raw is the creator of
a privacy oriented application
for storing and transacting Bitcoin
called Sparrow Wallet.
The Honk Honk HODL organizer told R
eason that if he had to do it all
over again, he would have used
Sparrow Wallet.
I think that that worked people up
to the idea of maybe we need to have
some funds at least that the
government can't just freeze that we
have access to no matter what.
Integrated into Spare Wallet
is PayNym another
tool for creating different payment
addresses for every transaction,
throwing off the sleuths.
Are these privacy preserving tools
illegal?
Generally, they're not.
Just as long as there's no third
party service involved.
In April, the feds seized bitcoins
valued at $34 million
from an individual in South Florida
accused of selling stolen passwords,
whom they caught by connecting his
online profile to an address
previously listed to receive
shipments.
The suspect was charged with money
laundering for using a so-called
mixing service that exchanges
Bitcoin for other Bitcoin to throw
off the trail.
Using a custodial mixer is money
laundering in the United States.
You can't just extend your Bitcoin
to somebody as part of a business
and or as a client and have them
send you bitcoin.
It's like alphabay.
Not legal.
What is legally protected as open
source software and free speech is
is coinjoin because they are merely
their open source code.
There's no no one taking control of
your bitcoin.
It's a collaborative spend that's
completely legal here.
Coinjoin, which are built into spare
wallet, are another technique for
obfuscating the trail.
They combine lots of bitcoin and
then break them back into pieces
so it's hard to figure out whose
money is going where.
I think the best analogy for it
is like smelting
gold.
This Bitcoin developer who asked
to be identified as Samourai,
is the creator of the Samurai
Wallet, which created paynyms
and a coinjoin protocol called
Whirlpool.
You take your Bitcoin,
you add it into a whirlpool,
and whirlpool smelts it
into new pieces
that are not associated to
the original piece.
How much of this is
going to be kind of an arms race
between you and
the blockchain analysis
type companies where they're
just going to change their
heuristics and get more
sophisticated in their analysis?
Yeah, there's some of that.
I think that we can move quicker
and we've proven that we can move
quicker than the chain surveillance
companies.
What is the reason for that
asymmetry.
Where a small open source team and
generally you can
move quicker without the bureaucracy
of a chain surveillance company?
A front line in the developing
Bitcoin privacy arms race is
the lightning network, which is a
decentralized payment network for
Bitcoin.
The Bitcoin network itself can never
scale to the size of a Visa or
MasterCard because every transaction
needs to appear on the blockchain.
And if there were too much data
stored on this public ledger, it
would become too unwieldy for users
all around the world to maintain a
constantly updated copy,
which is what makes the network
decentralized and thus highly
resistant to government control in
the first place.
The Lightning network was designed
to extend Bitcoin's capacity
almost infinitely, and it's
analogous to a bar tap
in which lots of small purchases
are added up and combined into one
transaction at the end of the night.
But it also enhances privacy
because, like with a coinjoin chain
analysis, firms can't easily
untangle what transactions were
included in the bundle.
You might have a Cash app or
Coinbase account or some sort of
account that the government knows
about. And you have income coming
in, but then you withdraw into the
lightning network and you get that
same degree of privacy.
Ditto with deposits.
There are cryptocurrencies
specifically designed to
anonymize transactions such as
Zcash and Monero, which
use zero knowledge proof encryption.
But Raw and Samourai
have focused their attention on
Bitcoin because it has wider
adoption, a larger network
and it's more decentralized.
Monero is interesting from a privacy
point of view, but less interesting
from a store of value point of view.
And really store of value I think is
going to become the driving reason
people turn to Bitcoin in the coming
years.
The people are using Bitcoin.
Bitcoin is here.
It has the longest amount of history
and has the largest user base.
So where the volume makes sense for
us to just say,
okay, all of
you, you're screwed.
Privacy wise, excuse me.
Now, that's not how it works.
An unsolved problem is that
all of these privacy preserving
tools require that users maintain
custody of their own bitcoin,
which requires some technical savvy.
It's much easier to store your
Bitcoin on an exchange like
Coinbase, which requires you to
upload an image of your driver's
license to comply with the federal
anti-money laundering regulation
called "Know Your Customer" or KYC.
Samourai isn't available for iPhones
and Spero Wallet doesn't
exist yet for mobile at all.
Samourai says that using
Bitcoin anonymously might
be more difficult, but that it's the
raison d'etre of a technology
rooted in the privacy obsessed
Cypherpunk movement of the 1990s.
That message has gotten diluted
as the years have gone on, but at
its root, it's a cypherpunk tool
to root around the state
and it's only useful if
we use it that way.
Ross says that the biggest
privacy boon for Bitcoin would
be a protocol change built into the
network itself that combines
transactions automatically in
effect, making coinjoins the
default.
It's one of those things that
everyone in the privacy Bitcoin
world really has their
eye on.
So that's for me, the most important
thing that I would hope hopeful in
terms of the future.
Gladstein says that in a world
where entire countries like Russia
are being cut off from the global
financial system, Bitcoin's privacy
and uncensored ability are more
vital than ever before.
And that privacy preserving tools
can make Bitcoin more like cash.
The ATM model.
It gives people the option to have
freedom money. Yes, the government
will know all the ins and outs of
what the flows are coming in and
out. But they won't know what you do
with it when you leave.
And that that allows us to preserve
the privacy of cash, which I think
is essential for a democratic
society.
It's not always easy being a Bitcoin
HODLER.
This past year, the world's most
widely held cryptocurrency lost
more than half its value, down
70% from its all time high
of about 69,000 U.S.
dollars.
But the true believers say it's
still early days and that eventually
the price will catch up with the
tremendous value that a fixed
supply, censorship free, and
ultimately private money
brings to the world.
Why should the government
be able to see everything that we do
from a transaction point, point of
view? I mean, it's a very
Orwellian world where,
you know, all of that stuff is just
available. And furthermore, once it
becomes available, it becomes easy
to stop.