Addressing the audience at a Blockstack event in Berlin in early March, Snowden said that although “everybody is focused on the transaction rate limitations of bitcoin being its central flaw,” that actually, “the much larger structural flaw, the long-lasting flaw, is its public ledger.”
Snowden explained that the idea of a public ledger “is simply incompatible with having an enduring mechanism for trade.”
“You cannot have a lifelong history of everyone’s purchases, all of the interactions be available to everyone and have that work out well at scale,” he said.
He does believe that other cryptocurrencies with more advanced privacy and security features have brighter futures: “Zcash for me is the most interesting right now, because the privacy properties of it are truly unique.” He also noted that there are an increasing number of cryptocurrencies seeking to “emulate” greater privacy and security.
‘Bitcoin is Probably the Most Transparent Payment Network in the World’
Bitcoin was once lauded as the most anonymous way to pay for anything on the internet – it was the currency-of-choice on the infamous Silk Road network, and has been criticized as a tool for money-laundering and funding terrorists. However, Bitcoins are much more traceable than many people would like to believe.
Every wallet on the Bitcoin network has a public address that can be regarded as a ‘pseudonymous’ identity. The further that Bitcoin users can keep their pseudonymous identities from their real-world identities, the more anonymous their identities will be.
However, this is often easier said than done – IP addresses can be traced, transactional patterns can be identified, and other factors can make it possible for law enforcement authorities or even just curious members of the public to identify who a particular wallet address belongs to.
While there are certain security features that can be used in conjunction with the Bitcoin network (ie CoinJoin and TumbleBit), Bitcoin.org notes that “Bitcoin is probably the most transparent payment network in the world,” and that as the user, “it is your responsibility to adopt good practices in order to protect your privacy.”
Snowden: Don’t Tell Anyone You Own Crypto
Snowden echoed this sentiment later in his comments at Blockstack, saying that “as a privacy advocate, I would recommend no one ever say that they have cryptocurrencies.”
The NSA Worked to “Track Down” Bitcoin Users, Snowden Documents Revealhttps://t.co/nCBgVKH76n
— Bitcoin (@Bitcoin) March 20, 2018
He added that while a public ledger may be an attractive feature for a consumer base, it could give governments a serious advantage when it comes to collecting data.
Indeed, it was only last week that leaked documents revealed that the NSA may be collecting information on Bitcoin users. “Bitcoin is #1 priority,” stated an internal NSA report from March 15, 2013.