Former Central Intelligence Agency (CIA) computer advisor Edward Snowden spoke at the Ethereal Virtual Summit 2021. The main topic was privacy coins, NFTs, decentralization and its relationship with freedom.
A clip of the summit was shared by Alex Gladstein, Chief Strategy Officer (CSO) of the Human Rights Foundation and the Oslo Freedom Forum, on his Twitter account. The video sparked a debate about Bitcoin’s privacy shortcomings.
Snowden said Bitcoin failed in this category and, contrary to popular belief, its potential upgrade, Taproot, could make it even worse. Gladstein called the clip “a disaster,” and was particularly against Snowden’s comments on Taproot and his classification of the BTC Lightning Network as “Shenanigans”. Gladstein said:
Taproot is a data protection upgrade that is currently being activated and forms the basis for much more powerful data protection features like SigAgg. Everything designed by developers. And yes, LN is part of Bitcoin’s global data protection development and definitely not an IMO gimmick.
He added that Taproot is a real privacy upgrade for Bitcoin that can “obscure” chain analysis. This type of research is used to track down the identity of BTC users by examining transactions. He added that in order for a cryptocurrency to become a world cash register system, core BTC developers need to consider other functions:
To build a robust digital money system with a decentralized mint that will serve the world for hundreds of years, you can’t just focus on privacy. You also need to ensure decentralization, scalability, auditability, and economic incentives.
Bitcoin and its “missing stairs”
Snowden Gladstein later replied calling his statements “misleading”. As a Bitcoin holder, the former CIA advisor feels that he is responsible for publicly discussing BTC’s “flaws”, such as data protection.
With Bitcoin attracting more dragon-level wealth, Snowden believes the community will be afraid to criticize the project. Snowden believes there is a high public cost to not pointing out what are known as BTC’s shortcomings. He said:
Bitcoin’s catastrophic privacy is the “missing staircase” of cryptocurrency. Every expert understands that there is a problem, but as experts they themselves know how to compensate for the risk in their personal interactions with Bitcoin and therefore don’t feel compelled to actually fix it.
He praised some privacy projects like Zcash and Monero. But claims BTC is the only cryptocurrency large enough to face a potential regulatory attempt at suffocation. Therefore, according to Snowden, a key characteristic needs to be further developed: fungibility:
The central property of cash is fungibility – that is, a dollar spent by a plumber is honored as much as a dollar spent by a sex worker: they are indistinguishable. Bitcoin’s public ledger controversial chain analysis degrades fungibility over time. Only privacy guarantees fungibility.
Bitcoin is trading at $ 58,816 with a gain of 3.1% on the daily chart and a gain of 1.7% on the weekly chart. During the weekend, BTC hit the higher level of its current range with positive indicators of further appreciation.