Bitcoin Masterclasses: What does privacy mean when it comes to blockchain and Bitcoin?
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Bitcoin’s inventor, Dr. Craig Wright, continued his Bitcoin Masterclasses series with a talk on the importance of privacy related to blockchain and Bitcoin. After covering confidentiality in the first session, this one further explained the concepts and the important differences between privacy, confidentiality and anonymity.
Breaking down the concept of privacy
In 1992, the United States ratified the UN’s provisions on privacy, making them federal law, says Dr. Wright. Therefore, even though they are not in the US Constitution, they are law. Europe did the same, and the UK ratified them via the Human Rights Act in 1998.
“Privacy is really about who, why, how and what,” he says. We need to think about the people involved, what they might do, why they might do it, when, etc. Dr. Wright gives the example of medical records; a doctor can access your medical records, but if they then take them and post them online (eg because you’re famous), that violates your privacy. The doctor has certain permissions with your information, but not others.
Purpose – Dr. Wright then breaks down privacy into different concepts, starting with purpose. Access to information must only serve a specific function related to one’s role or purpose in an organization.
“We have to limit what people do,” he says, explaining that this can be managed with access controls, cryptographic controls, alerts and other techniques.
Fairness – Dr. Wright elaborates on fairness and says that we need to think from both parties’ perspectives. For example, a company may receive fair data usage in exchange for a free service.
Dr. Wright is notorious for his dislike of Google (NASDAQ: GOOGL ), Facebook (NASDAQ: META ) and other Silicon Valley firms, and he sees the inability to pay for the service as opposed to trading data for it as unfair .
“Fairness means you should be able to negotiate between the parties about what they can and cannot do,” he notes.
Legality – “Anonymity does not include legality, but privacy does,” says Dr. Wright. “You have no right to privacy if you plan to overthrow the government,” he rightly explains.
How would legality work in a global context, given that most countries do not operate under Common Law? Dr. Wright explains that we need to monitor the location and source of the activity, and authorities will need to start acting to control some of this.
Some of the controls may be implemented by Internet service providers, such as blocking access to some types of illegal information. Furthermore, criminal proceedings can be started civilly, with companies first building cases and then handing them over to authorities.
The concept of legality will always depend on the society you are in, Dr. Wright explains, reiterating that legality is one of the most important differences between privacy and anonymity. Basically, identity must be linked to activity so that someone can be held responsible if illegal activity occurs.
Transparency/Transparency – Transparency means making visible what is happening and holding those involved accountable, but it does not necessarily mean that everyone knows who everyone is.
For example, open communication requires identity. Dr. Wright gives the example of coffee shops and how people openly debated political concepts, building the foundations of Western society. Unlike on Twitter, you can’t be ten people in a coffee shop; you can only be one, and what you say is tied to your identity. There is a degree of openness about who people are and what they say.
Storage Limits – Dr Wright explains that under EU law there are limits to data storage such as the right to be forgotten, how long a company can keep information about you etc.
“We have this thing called a blockchain now, and that can make it difficult to get rid of data,” he says. How do we know it’s gone? This is where pruning comes in.
Dr. Wright challenges us to think about the big picture; when Bitcoin reaches tens of billions of transactions per second, we are talking about petabytes of data stores every year. At that level, people don’t run nodes at home; they want SPV and selected data related to their companies. “If you’re Amazon, you want data related to Amazon,” he says.
The requirements for how long an entity is obligated to retain information can also be problematic for blockchains such as Ethereum. For example, copyright information must be kept for 95 years in some places. How will this be possible when Ethereum developers change the protocol so often? It will not.
Data Minimization – Speaking of petabytes of data, Dr. Wright points out that people in the future are not going to want to keep everything. Similarly, not all data is relevant for a given organization. For example, a UK home ownership database does not need to keep records of motor vehicles in New Zealand.
Even if the data host prunes a record, a user can still use SPV and Merkle proofs to prove that their record is valid. It will be possible to link transactions to the data in block headers (which are only 80 bytes each), making records absolutely provable.
By using public and private key pairs, data on the blockchain can be private and accessible only to the parties with the keys.
See: Bitcoin Masterclasses Highlights: Identity and Privacy
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