Cryptocurrency

Force

<ul class="list-ic vertical"> 
 <li> 1 <a>Blockchain technology can change dimensions of the surveillance firms.</a> </li> 
 <li> 2 <a>An op-ed authored by Andrea Togni, examines the associated risks of this partnership.</a> </li> 
</ul> 
Blockchain technology has revolutionized transparency, with surveillance firms playing a crucial role in this domain. Governments utilize on-chain data to detect possible financial wrongdoing. An op-ed authored by Andrea Togni, an educator specializing in history and philosophy, and published by the Mises Institute, examines the associated risks of this partnership. 
<h2 class="wp-block-heading" id="strong-surveillance-on-blockchain-threat-on-privacy-strong">Surveillance on Blockchain Threat on Privacy&nbsp;</h2> 
The piece outlines the erosion of user privacy resulting from the collaboration between authorities and blockchain surveillance (BS) firms gaining access to transaction information. Additionally, it restricts individual transaction autonomy. These companies aid governments in adopting the Risk-Based Approach (RBA) set forth by the Financial Action Task Force (FATF). 
Following this methodology, organizations are classified according to their susceptibility and linked danger. Cryptocurrency exchanges take precedence in this hierarchy of risk. Activities like funding terrorism are categorized as high-risk engagements, whereas utilizing decentralized exchanges and smart contracts carry a lower level of risk. 
Bitcoin’s (BTC) blockchain is assessed as a moderately risky entity by these surveillance companies. This is largely attributed to CoinJoin, a method that amalgamates multiple BTC transactions without reliance on trust. The piece also highlights that these blockchain surveillance firms raise alarms about blockchain transactions even when they have legitimate explanations. 
<h2 class="wp-block-heading" id="strong-harm-from-unsubstantiated-data-strong">Harm From Unsubstantiated Data</h2> 
Andrea Togni draws a parallel between FATF’s travel rule and the “know your transaction” (KYT) practices of BS companies. The former entails intermediaries like crypto exchanges sharing transaction information, impacting user privacy. However, the author points out that there’s little room for discretion within this process. 
Surveillance firms specializing in blockchain (BS companies) create KYT software to aid crypto companies in adhering to regulatory standards and assist law enforcement in tracking illicit activities. These companies employ their own algorithms to consolidate on-chain data and identify potentially suspicious behavior. Unlike the transparent nature of the travel rule, these algorithms are developed in private. As a result, users are unable to access the underlying “heuristic assumptions” these algorithms utilize. 
Furthermore, these tools are marketed for financial gain, and the discretionary heuristic guidelines they employ can inadvertently lead to users being implicated for criminal deeds. According to Togni, “unverified information can be extremely detrimental.” Pointing to the example of Roman Sterlingov, who faced government accusations for operating a <a href="https://www.thecoinrepublic.com/2023/08/13/bitcoin-a-beginners-guide-for-the-cryptocurrency-curious/" target="_blank" rel="noopener noreferrer nofollow">cryptocurrency</a> mixer, the author emphasizes, “This instance illustrates how even a sophisticated legal framework can devastate lives by relying on questionable blockchain surveillance utilities.” 
The article concludes with the author asserting, “In turn, these emerging systems of governance appear to capitalize on manipulating the legal structure to advance state interests.” The BS companies, the author suggests, portray financial privacy within the cryptocurrency realm as inherently suspicious. They profit by assisting the state in exerting greater control over legitimate “markets” while curbing the influence of illicit (free) markets. This convergence of agendas is deemed noteworthy by the author. 
Cryptocurrencies function through blockchains, which due to their decentralized structure, continue to undergo regulatory scrutiny to establish a comprehensive framework for the crypto industry. While regulators remain cautious, a significant player in the payments industry, PayPal, took a bold step by introducing its proprietary blockchain-based currency called PYUSD on August 7, 2023.

Blockchain Surveillance: Striking Balance bw Transparency and Privacy

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Thecoinrepublic.com

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