Coinbase is selling surveillance software to the United States Secret Service. It is no longer a suspicion or comment that nobody dares to make: a contract is known to exist between the company founded by Brian Armstrong and the organization, attached to the Department of Homeland Security. This contract It will last 4 years, for which Coinbase will earn more than $ 180,000.
Before leaving with this article, make it clear: I understand that there is a commercial, influential, economic interest, in short, that there are compelling reasons for Armstrong’s company to proceed in this way. However, I share an ethical foundation closer to today’s privacy activists, cypherpunks, and Satoshi Nakamoto himself, so facilitating surveillance for money is not what you would do if you had the choice.
For almost two years I’m taking privacy and surveillance seriously. Before, they seemed interesting subjects to me, but thinking and acting on this new concern is not exactly easy.
Coinbase: business is business
That is why it seems so particular to me that a company related to Bitcoin -with cryptocurrencies-, give in so cheerfully to the claims of the authorities. And also, its CEO justifies it as a convenient decision, even for Bitcoin.
It is that Armstrong not only took advantage of Twitter to present his opinion on the case, but he did it to justify his position, completely aligned with the commercial interests of the company.
In fact, so justified On twitter:
“Blockchain analytics software is nothing new, it has been around for a long time, it uses publicly available data to try to track crypto transactions, generally to catch bad actors.”
Surveillance tools exist and are used, far beyond the ideal that we may want to see in Bitcoin. There are those who dedicate themselves to profiting from blockchain surveillance, and like Chainalysis, they consider it something positive, necessary, important.
The worst thing is that upon the acquisition of Neutrino, a team of “analysts” and specialists who had ceded their software to authoritarian governments without any scruple, was qualified as something that just “didn’t go so well.”
Again, for the CEO of Coinbase, it is clear that the information available is a business, and that they run it without ethical perks of any kind. The same is the privacy of cryptocurrency users, who will be increasingly refined monitored, as in the case of Coinbase Analytics available to the Secret Service.
“It is expensive to develop this capacity, and we want to recoup the costs. There is an existing market for blockchain analytics software, so we also sell it to a handful of people. It also helps us build relationships with the police, which is important for the growth of crypto“He pointed out.
Obviously from this perspective, more than a right or the space of the individual’s realization, privacy is a business. Who can pay takes better care and who can investigate and snoop the data in a better way, can capitalize on it. They are two sides of the same subject, but completely different perspectives.
In fact, if you want privacy, you should use privacy coins, as Armstrong used to offer: “If people want real privacy, that’s what privacy coins are for.” Will we see Monero at Coinbase? I do not think so, as I do not believe or share a half word of what was said by the company or its CEO.
This is the same character who was betting on SegWit2X, even against the interests of Bitcoin node users and operators.
This article had been devised only to address this issue, but, during its writing, the Twitter hack also happened, allowing me to expand on the “positive” position of this type of surveillance tools, no longer just as a business, but as a supposed protection against malicious actors.
The Twitter hack and the narrative of “convenient surveillance”
The fact that cybercriminals have had access to a high level of management within Twitter, enough to take control of the accounts of Joe Biden, Kanye West, Bill Gates, Elon Musk, among others, and request ransoms in Bitcoin has rekindled the narrative of the convenience of tools like Coinbase Analytics.
It may interest you: Twitter promises additional security measures
In fact, as soon as the hack was revealed to Twitter, analytical firms began to give detailed information about the funds moved in the Bitcoin blockchain. The idea is simple: this type of companies and their surveillance tools are necessary because, in these scenarios, they can respond to the needs of the companies affected and even to the governments that request it, helping the industry to be more transparent and have better compliance with the law.
Thus, surveillance, the violation of privacy, ceases to be a problem, and becomes an efficient way of controlling the activity of users of a technology that was born, precisely, so that nobody can avoid its use.
All UTXOs are the same
It should be said that, in the specific case of Bitcoin, its movement towards fiat is conditioned, since within the system and the network, each UTXO is equal to the others.
The creation of these types of tools, and their commercialization, is justified, not only because the data is available, but also because this is something “good for Bitcoin”. And it is not only the companies that work developing this type of control and espionage tools; also those that use them for their expansion in the global market.
As a fact, and while this surveillance narrative gains momentum pushed by this and other events, the data Analyzed by Crystal Blockchain, it shows that the amount of bitcoin sent to mixers or CoinJoin implementations by Darknet entities increased significantly this year.
“From 790 bitcoin totals in the first quarter of 2019 to 7,946 bitcoin in the first quarter of 2020. The same growth was also seen in USD: an increase of $ 3 million in the first quarter of 2019 to $ 67 million in the first 2020 quarter. This indicates a rapid adoption of cryptocurrency mixing services by Darknet entities”, Which reveals an unusual interest in privacy that, like it or not, reveals the interest of the market beyond law enforcement and blockchain surveillance.
There will be more and more justifications to “monitor” the chain for “positive purposes for bitcoin” and few will understand that this is false. I am among those.