The Bitcoin Masterclass (London) Day 1: A misconception about anonymity

Overview:
• Anonymity is often misunderstood and misused, and it does not give people the right
to abuse others or practise transparent free speech.
• Privacy and anonymity are not the same; privacy means private information is only
shared with appropriate individuals, while anonymity is unnecessary as identity still
exists and can be protected by a blockchain firewall.
• It is important to provide only necessary information in any given situation, rather
than giving all private information to everyone.
• Selective disclosure of specific information, without revealing everything, is
preferable to complete anonymity.
• Transparency and authentication are essential, rather than lawless anonymity, in
maintaining privacy and confidentiality.

In January, Dr Craig S. Wright, Chief Scientist at nChain, held the first of his Bitcoin Masterclasses at an exclusive venue in London. The two-day immersive course formed part of a monthly series aimed at helping attendees understand the fundamentals of Bitcoin and the technology behind it.

Bitcoin Masterclass will give you a comprehensive overview of the history, the theory and the design of Bitcoin. Wright discussed the future of Bitcoin and the unbounded scalability of nChain’s blockchain solutions with potential use cases across several industries.

In the first workshop, Wright explained the true concept of identity and privacy concerning Bitcoin and digital cash systems. The second session covered how privacy can be achieved when people exchange information on Bitcoin. The third session focused on anonymity and some of the common misconceptions people have in the blockchain industry.

A common misconception about anonymity

The importance of anonymity is often overstated, even in situations where it may seem necessary, such as in medical research or voting. In these cases, it is still necessary to link anonymity to a real identity, said Wright.

He added that pseudonyms are acceptable as long as they are tied to an identity, but that anonymity is frequently misunderstood and misused, particularly in online and digital asset spaces. Many believe that being anonymous is the best way to protect their personal information and data from misuse. However, anonymity often leads to abuse, such as black market dealing, fraud, and trolling.

Wright emphasised that anonymity does not give people the right to abuse others or practise transparent free speech. Anonymity takes away free speech because it allows individuals to act without restraint. In the world of crypto-assets, people often use the term “privacy coin” to refer to “anonymous illicit use coin,” misusing the term privacy.

Privacy and anonymity are not the same

One of the biggest misconceptions people have is conflating anonymity and privacy. Wright noted that confidentiality means that private information is only shared with the appropriate individuals. He added that complete anonymity is not necessary because identity still exists, even if it is protected by a firewall on the blockchain.

Wright noted that it is important to only provide necessary information in any given situation, rather than giving all private information to everyone. For example, when purchasing a TV, you would only need to provide your address to the delivery company. In the context of the blockchain, a person’s identity can be spread out among different keys and used as needed for different transactions, without revealing all personal details.

PKI certificates can contain personal information and be linked to certified keys. Merkle trees in Bitcoin allow for selective disclosure of specific information, without revealing everything. This approach to privacy and confidentiality is preferable to the current situation where personal data is freely shared or anonymity fuels illicit activities.

By breaking down identity into its constituent elements and only providing necessary information, privacy and confidentiality can be maintained without resorting to complete anonymity. Transparency and authentication are essential, rather than lawless anonymity.

Comparing Privacy and anonymity side by side

Privacy	Anonymity
Privacy is about keeping personal information confidential and sharing it only with the appropriate individuals.	Anonymity is about concealing one’s identity and acting without restraint.
While complete anonymity may seem necessary in some situations, such as when protecting oneself from malicious actors or avoiding persecution, it can also lead to abuse, such as fraud and trolling. Anonymity can be misused when it is used to conduct illicit activities, and it can also lead to the erosion of free speech.	In contrast, privacy is a more nuanced approach that aims to protect personal information while still allowing for transparency and authentication. For example, in the context of blockchain technology, a person’s identity can be spread out among different keys and used as needed for different transactions, without revealing all personal details.

Overall, privacy is a more balanced approach that aims to protect personal information while still allowing for transparency and authentication, whereas anonymity can be more extreme and may lead to abuse and the erosion of free speech.