Edward Snowden who first rose to fame in 2013 as the whistleblower who exposed the National Security Agency’s (NSA) massive surveillance program has had a love-hate relationship with Blockchain. Snowden worked in the global communications division at the CIA (Central Intelligence Agency) headquarters in Langley, Virginia and has a background in computer systems. Snowden has been residing in Russia since his expose and has been granted political asylum there until 2020. Snowden has gained a following and stays relevant to public debates by appearing in news broadcasts and has close to 4 million followers on his Twitter account. Let’s take a look at his statements on Blockchain over the years.
Cryptocurrency is here to stay but not Bitcoin
According to Snowden, Bitcoin has some critical flaws that make it likely to fade out over time like its speed and transparency. But Bitcoin’s biggest flaw according to Snowden is not its speed but its public ledger. That is because Snowden values privacy over everything and a public ledger is a record of every transaction that takes place in Bitcoin for all the governments to scrutinize. The strength of these digital currencies comes from the fact that transactions can’t be stopped or reversed, without the explicit, voluntary participation by the people involved. For Snowden, that means that as long as there are people who want to make transactions without going through banks and intermediaries, cryptocurrencies will remain relevant.
Bitcoin has minimal fundamental value but a genuine scarcity
When asked in a recent interview whether he believes that Bitcoin has intrinsic value, Snowden replied that there is very little difference between fiat money and cryptocurrencies beside the fact that the value for fiat currencies comes from the backing of the state. By comparison, Bitcoin’s value comes from the fact that it has a finite supply of 21 million and the fact that people across the world are willing to accept it as payment.
Bitcoin is slow
Snowden has expressed concern at the fact that Bitcoin’s throughput is severely limited by factors such as block size and on chain scaling. He claims that while Visa and Mastercard routinely process over tens and thousands of transactions per second, Bitcoin can handle only seven. In order to be useful for everyday transactions, Bitcoin would need to increase its throughput by many orders of magnitude. Users have had to wait several hours and pay over $20 in transaction fees for their transactions to go through everytime the network gets congested. Bitcoin needs to overcome this challenge if it is to survive in the long term.
Bitcoin is not private
Snowden’s biggest gripe with Bitcoin has always been the fact that transactions done via Bitcoin are not private and are available for the entire world to see. He believes this is very harmful to the idea of private money that can be spent freely. Businesses would not want to advertise to their competitors how much money they have because they can lose their leverage by doing so. Combined with the massive surveillance programs that governments around the world are engaged in, a public ledger is very susceptible to correlation attacks where a lot of information can be gleaned about a user by going through their history. Snowden has also revealed that the CIA has been developing a tool that can make coin mixing services obsolete by running a host of analyses on the public ledger. This means that certain Bitcoins could have a “dirty” history attached to them making them less fungible.
Bitcoin Holders, you are being watched!
This should come as no surprise to people who have followed Snowden’s leaks in the past and are familiar with blockchain technology. Governments around the world are developing more sophisticated monitoring systems that can sort through the large public ledgers to make the underlying connections more apparent. A public ledger such as Bitcoin is a gold mine for such governments, and it stands to reason that they would do everything in their power to monitor it. Snowden has said that the logical next step in this evolution is the emergence of private blockchains such as Monero and Zcash which offer privacy by default. He claims that if such blockchains aren’t the norm in the next five years, it will be because of government laws and not the technology.