In the first few years after Bitcoin’s creation, an idea was presented in both conventional and social media that the network allowed for anonymous transactions. This was a belief held by some Bitcoin users, as well as those who were simply curious about the technology. The idea was propelled by its use in illicit circles, namely those who frequented Silk Road, an infamous black market network, back in October 2013.
However, this idea collapsed dramatically when law enforcement agencies were able to use Bitcoin addresses and transactions to locate individuals involved in these illicit activities. It was a clear signal that Bitcoin was not, in fact, anonymous, but rather pseudonymous. And since then, Bitcoin, and most other cryptocurrencies, have not been perceived as such.
The reaction to this depended on people’s understanding of how Bitcoin worked. Anyone who read the Bitcoin whitepaper likely knew that such a thing was a possibility. However, users who gained their insights almost exclusively from the media, or who were passive in their involvement with the ecosystem, may have been blown away by the revelation that transactions can be monitored and pinned to certain individuals.
Since law enforcement’s successful blocking of Silk Road, it has been rare to come across anybody who claims that the crypto industry implies anonymity. It effectively cut the concept out of major discussions. To some extent, this is a good thing, as it would be misleading to suggest otherwise. Not only this, but most permissionless blockchains actually utilize public ledgers, which seems to be a concept that is against the notion of anonymity.
From that point onwards, anonymity became excluded from blockchain discourse, being viewed more as a concept that was accidentally connected to the field by the media, rather than one that truly belonged there. You could even argue that the abandoning of anonymity-discourse helped to provide legitimacy to the industry, leading to giants like Coinbase and Circle gaining prominence in centralized financial spaces such as the traditional stock exchange. It was almost as if the killing of this discourse back in 2013 helped it to mature and fit in.
But… is this the truth? Was anonymity really a concept that was mistakenly tied to blockchain tech? Or, is it actually a notion that deserves to be embraced, analyzed, and placed within the larger embodiment of the industry’s core and nature? Let’s try to unpack this idea.
Understanding Anonymity in the Context of Blockchain
Anonymity is a concept that has been shunned for several decades, with governments speaking of it in a way that suggests it is wrong to seek it. It is often conflated with the desire to do something unsound, immoral, or illegal, rather than as a human right. It is hard to map this specific brand of disdain for the concept, but in the West, it became more widespread to think this way after 9/11.
It makes sense, on the world stage, why many people in the blockchain space may have had the desire to push away anonymity from the field so that further adoption and acceptance could happen globally. However, it might not be so easy to truly rid the field of the concept.
Anonymity From a Developer Stance
Anonymity might not exist automatically when people create Bitcoin addresses or perform transactions, but it does run through the network in a different way. While we generally refer to Bitcoin’s creator, Satoshi Nakamoto, as a pseudonym, the fact that we do not have a clear indication or any proof of who they are means the author is still anonymous. A name that points to no real person is not a useful identifier.
Considering Satoshi Nakamoto has never explicitly revealed themselves, it appears that this concealment was entirely intentional. And this, alone, indicates that privacy of this type is a part of the blockchain space (at least on a conceptual level). It might feel trivial, but this idea of not broadcasting project creators has echoed through to the current day. There are many networks and developments that belong to unknown people. The most popular non-Bitcoin example would be the creators of the Board Apes Yacht Club, perhaps the most famous NFT project nowadays.
While we now know who they are, due to a media exposé, this was not their intention. They had tried to work without revealing their true identities– and considering their rise to fame and fortune occurred during this concealment suggests that there is a cultural and ideological acceptance of anonymity within the industry that still exists to this day. Another major project with anonymous developers that has gained prominence is SushiSwap. This is a decentralized exchange whose creators are hidden behind pseudonyms.
The fact that there is a tolerance for building projects in this space without revealing identifying information is extremely fascinating. It is a sociological phenomenon that is rare to see in other fields and sectors (barring perhaps the arts). At its core, there appears to be an openness from the blockchain industry toward concealment. This cannot be ignored, largely because it is so hard to find in other professional spaces.
Anonymity From a Network Stance
Along with this, there is still a huge desire for anonymous blockchains to exist. It may not be the most lucrative, and it may not receive the best press, but Monero is one of the most important and prolific blockchains to have ever graced this field. Released in 2014, Monero acts as a deeply powerful thorn in the world of blockchain tech. It is often described as the coin that people thought Bitcoin was– a network offering fully anonymous addresses, wallets, and transactions.
The time of its release may raise eyebrows for some, considering it arose one year after Silk Road closed down, but make no mistake, Monero’s roots are a little older than this. Its origin can be traced back to late 2012. In December of that year, a whitepaper named CryptoNote v 1.0 was published by Nicolas van Saberhagen, a character who has proven as hard to track down as Satoshi Nakamoto, making them practically anonymous. This whitepaper (and especially the sequel, v 2.0), contains some of the fundamental ideas that eventually evolved into Monero. Note that this is not the founder of Monero, but could be considered a grandparent of it.
In fact, you could even say that anonymity discourse existed before this whitepaper, with Satoshi themself speaking positively about the notion of privacy-based transactions and addresses back in 2010. This is important because it shows that, even in the early days of the industry, there was a push for digital privacy, not only in the form of founders staying hidden, but also as a method of allowing users to be hidden, too. And best of all, these discussions were being had by network pioneers.
Unfortunately, Monero, and other privacy coins, are often viewed unfavorably by governments, although this is no surprise. This knock-on effect can often lead to them being delisted or banned from certain exchanges, making them harder to acquire than economic leaders like Bitcoin and Ethereum (despite Satoshi and Vitalik speaking favorably about blockchain privacy).
Thankfully, despite this, there is a greater push for privacy features to be implemented into the industry, further normalizing them. For instance, additional blockchain layers which incorporate zero-knowledge proofs are being pushed for in the Ethereum community at the moment. Zero-knowledge proofs are a cryptographic process where there is a “prover,” that can prove to another party, the “verifier,” that they know a value (or a statement is true), without conveying any information apart from the fact that they know the value (or the statement is true). In highly simplistic terms, it is a way of revealing to somebody that you know a secret without revealing the secret itself.
This concept has been around for some time, with Zcash, one of the biggest privacy coins on the market, using it as their primary method of offering anonymity. However, the technology is gaining more and more traction as the days go by.
Why Does Any of This Matter?
The blockchain industry is typically presented as a financial development, or an arm of the FinTech space. These are both true, but they do not encompass the magnitude of the field. This industry is also a socio-economic and political movement powered by a collection of ideologies. And when it is viewed like this, it becomes important to identify and mark what these ideological stances and streaks are if we want to fully understand its trajectory, telos, and shape.
The point I want to make in this piece is that anonymity is one of the defining ideological elements of the blockchain space; the reason this is important is because it helps us to understand the makeup of the industry, and understand what its values are.
This space is going through a strange time. It is trying to achieve its goal of global adoption, but the process of being anointed a mainstream status is calling into question many of the ideas that it stands for and is intertwined with. Privacy and anonymity are one of those ideas that it is grappling with as it tries to fulfill its aim on the world stage. If we are not clear on what its cornerstone features and themes are, then over time, it could become disfigured and reformatted to become something else. It is important to remember, and highlight, anonymity as this is one of its defining traits, and one of the reasons why early projects were developed, and early adopters jumped on board.
In other words, it is a necessary element of the industry. It should not be forgotten.
