There is nowhere to hide on the blockchain!
Data is likely the most important commodity today. Some even call it the “New Oil”. Which is part of the problem. Unlike oil or wheat, data is collected and traded in the shadows. Most people don’t understand that the online data they create is a huge business.
Public blockchains like Bitcoin are valuable in part because they are an immutable record of every transaction on the network – ever. No matter how large or small, every move on the blockchain is recorded forever.
As totally public blockchains – anyone can inspect the data. Anytime, anywhere, the Bitcoin blockchain is open to all. Just part of how it works. Anyone can look at every transaction in the history of Bitcoin, which creates transparency.
On the face of it – blockchain transparency is a great thing. But it also opens up some issues, especially as the world becomes politically perilous – and laws change retroactively.
A Naked Tyrant
Totalitarian governments crave control. Before control comes data gathering. East Germany is a good example of this dynamic. The East German secret police were data obsessed. Called the Stasi, these hilarious psychos recruited over 2% of the East German population to rat on their fellow citizens (inmates).
As East Germany existed prior to 1991 – the level of personal tech that existed was low. Especially in the Soviet satellite states.
Data gathering was a lot of work, and crunching that data was equally difficult. Even with basic computing – real world data was largely analog – so anything going in to the machine had to be entered by a human.
Another world indeed!
As a totalitarian state, East Germany offered little in terms of human rights or due process of law. If the Stasi thought you were a thought criminal – they could do anything they wanted. Including exporting you to the mothership in Moscow.
Point being – data matters for totalitarian control systems. Remember that going forward.
The Nark in Your Pocket
We never expected smartphones to be so popular. But we understand the value of privacy. The top brass at the Stasi had wet dreams about the kind of data gathering smartphones enable. And AI makes it so easy to analyze.
The world we live in today is driven by online user data. And all the big players are at the data party. Social media platforms are about data. When you use them, the platform has more data to sell. You have no expectation of privacy. The platform is collecting and selling data about YOU.
While there is a level of anonymity on a public blockchain like Bitcoin or Ethereum – it is easily broken if law enforcement takes an interest in you. Up to this point most crypto users have gone unnoticed by the powers that be – but that may not always be the case.
All of your data can easily be harmonized by AI systems. We are talking about multiple platforms, across decades. It is all sitting there waiting to be used. Including the data from public blockchains.
Digital Cash?
Bitcoin was designed to be digital cash – but it isn’t. At least in some key areas related to privacy. Platforms like Tornado Cash came along on the side of privacy – and found governments were not fans of online financial privacy.
Imagine that!
In fact, few blockchain platforms put privacy first. NFTs, memecoins and all the noise are great for speculation, but don’t really give you the same privacy protections that cash or a metal like gold or silver do.
We are trapped by our expectations of profit measured by fiat currency – regardless of how much data we are creating on totally transparent blockchains. For the moment it seems like a good place to be. But things can change.
The Forming Function
Data driven algorithms are curious creatures. They must start by using existing data, and modeling it. Simple enough. But once they have a model – things change.
Let’s trot out the social credit system in CCP China as an example.
The CCP’s social credit system is an algo that creates the social structure in most of China. Unlike credit ratings in Western nations, the CCP’s social credit system is holistic. It determines a person’s access to health care, education, and ability to travel.
If a person has a low score, they will be reeducated by the state. The social credit system in China is enforced by the police and communist party, and there is no way to opt out. All electronic data a person created is used as a part of the social credit system.
In this situation, it’s simple to see how the algo takes on a forming function. It determines how a person can live, and what they are allowed to do within the society.
Dictators In Libertarian Clothing
In Western areas like the USA, UK, and EU, the data gathering side of the CCP’s social credit system is already in place. People love to use apps – and all that data is simple for companies and governments to access.
Location data, financial transactions, social media posts – it’s all there.
Peter Theil, one of the big brains behind PayPal, also backs companies like Palantir – which would be a key component for a CCP-style social credit system in the West. While Theil claims to be a libertarian – he created a number of platforms that enable Stasi-esque data gathering and analysis.
As we saw during the Biden administration – politically motivated lawfare is real – and could be rolled out en masse at any point (by any administration). A totalitarian regime could use all the existing data for whatever perverse goals it has – and would 100% do so.
Blockchains like Bitcoin were created to support human rights and privacy – not enable totalitarians!
Decentralized Systems Are The Goal, Not A Feature
Bitcoin is flirting with the $100,000 handle because it offers a novel solution to a global problem. Centralized authority has run amok – and is abusing power at every level.
Now that BTC is a white-hot Wall St. asset – people don’t seem to care about why it was created in the first place. Fiat currency is deeply flawed, and empowers the darkest parts of humanity.
Decentralized systems and limiting power are solutions. We are not there yet – no matter how much garbage fiat currency BTC is worth.
