Blockchain Security in the Age of Surveillance

Find out what blockchain security features have surfaced in the last decade and how they offer alternatives to traditional surveillance mechanisms that control your financial data.

Today, we look at the state of surveillance in the modern world and discuss its impact on financial privacy. With all of our online (and sometimes in person) data stored, shared, snipped, sold and otherwise used for profit, we are fast losing control over our personal and financial information. Not only that, but governments in many countries can access this data at will.

In fact, there is a push right now happening in the US and beyond to ban end to end encryption, which keeps our personal messages private. Governments and crime units want a back door to our messages in case we are a criminal. Aside from going against basic privacy rights, these types of back doors could also make us more vulnerable to hacks. Not to mention allowing messaging platforms an outlet for the perusal of messages on their own apps.

What is financial privacy?

When you hear the term “Financial Privacy”, you might first think of laws like the US Bank Secrecy Act. The government enacted it in 1999 to compel financial institutions to hand over information on consumers in cases of suspected fraud or money laundering. Essentially, it required financial institutions to monitor all activities related to customer data. So really, bank secrecy was not the real theme of this legislation.

The right to financial privacy

The Right to Financial Privacy Act (FRFA) of 1978 was the culmination of several cases regarding banks and the data they kept on their customers. Generally, it was agreed that customer financial data belonged to the banks, not the individuals. But FRFA did put into place bank requirements to disclose what they planned to do with customer data. In some cases, a way to opt out is also included in the now mandatory privacy statements that banks issue to all customers. The law also sought to require the banks to audit any disclosures to government or other types of agencies.

As a result, Americans today can apply for a loan at a bank one afternoon only to find a loan offer advertisement from a credit scoring company a few minutes later. Not really what one would call ‘financial privacy’. That’s because financial institutions must keep your data private, but not if they’re providing products or services they decide may benefit their customers.

“Privacy today faces growing threats from a growing surveillance apparatus that is often justified in the name of national security. Numerous (US) government agencies—including the National Security Agency, the Federal Bureau of Investigation, the Department of Homeland Security, and state and local law enforcement agencies—intrude upon the private communications of innocent citizens, amass vast databases of who we call and when, and catalog “suspicious activities” based on the vaguest standards.”  – American Civil Liberties Union (ACLU)

Are we being watched?

Most Americans know that our government has the capacity to record text, video, and audio on our devices. The point was driven home the day we all received an eerie text out the blue from the unblockable Potus. Yet the government continues on with the argument that it is in our best interest for them to have absolute power to surveil as they see fit.

What perhaps is most troubling is that it seems highly unlikely that authorities will loosen their grip of control over the data of an entire citizenry and revert back to the days when surveillance was a little more complicated. In China, we’ve seen this power grow to an epic scale, while financial (and personal) privacy has diminished drastically.

As an example, during the anniversary of the Tiananmen uprising, WeChat users were unable to change their profile pictures or post anything related to the anniversary. One personal account detailed how a WeChat user, after posting graphics from the 1989 incident, was blocked from the app. To log back in, he was told that “Faceprint is required for security purposes”.

But the very heart of the issue is the question, Should all people be surveilled on the off chance they are doing something criminal? Maybe you think this is not happening. But the tools are in place to do it and laws making it ‘legal’ exist amongst the world’s leading powers, China and the US included.

“I think most people regardless of their ideology should understand at some level that it’s really problematic for one group or one power or one government or one corporation to control all of our data and all of our money and all of our information” – Alex Gladstein, Chief Strategy Officer, Human Rights Foundation

Enter Social Media

Social media giant Facebook was exposed for its many data breaches and lack of consumer protections over the past few years. It brought to light the fact that everything we do on social media, at every moment, is tracked by whatever platform you’re on. Then, it’s sold to unknown (to you) sources for advertising revenue. This goes the same for Amazon, where all your purchases, reviews, and spending behaviors are similarly tracked and used for profit.

Now Facebook wants to have their own cryptocurrency. Users on Facebook represent roughly ⅓ of the global population. Facebook is attempting to create a decentralized crypto and is stating they will not be able to access financial data. But they will be one of the up to 100 distributed, governing entities of the Libra Association, which will run the crypto’s reserve, maintenance and governance.

There are even hints of users having more control of their data on the platform. But such talk is hardly credible given Facebook’s history of data-driven profits to the point of breaking the law:

Data has moved beyond our control

If this seems bad, it is. Data is now is a driving force in advertising revenue for big tech. Currently, Facebook makes $1 billion per quarter on ad revenue from using your data. Google made an astounding $24.1 billion in Q4 2018 in ad revenue alone, with Amazon steadily advancing their market share.

Once your information is on another platform, it is essentially no longer yours. Even if it’s on your own website, Google’s crawlers are feeding your links, keywords and other content metadata into its algorithms in real time. We can accept this as the way it is or we can look to blockchain to offer better options.

Will Facebook, Google and Amazon ever give up their monopoly on your data? Currently, the 3 companies are responsible for about 65% of all digital ad revenue. A few US politicians are trying to bring antitrust charges against Big Tech. They want to try and break them up and lessen their power. Until then, let’s see what our alternatives are shaping up to be.

Blockchain Technology

When you hear someone say, “Well, I don’t like bitcoin but blockchain is great!”, turn around and run! Bitcoin is blockchain at its best – a censorship-resistant, immutable, open, public database that is secured tightly by game theory, consensus mechanisms and an incentivization process fueled by cryptocurrency. Without cryptocurrency, blockchain makes no sense. Especially to its core supporters and millions of users.

In the world of cryptocurrency and blockchain security features, you’ll find a very different set of ideas when it comes to financial privacy. Many of them sprout from the idea of decentralized organizations (like bitcoin), which have no central authority and are run by rules and not rulers.

Is bitcoin a bank?

Instead of being a central bank or a private bank, bitcoin is a system of money owned by no one and available to anyone, anywhere. It is run on algorithms that keep it safe – users of the system benefit when they follow the rules. Those that try to break the rules face negative economic effects and get shut out of the system.

In this currency protocol, people across the globe are able to transact freely between each other. Additionally, they’re able to do so without a 3rd party bank, payment processor, or federal reserve. Users on many platforms going forward will also have choices of varying degrees of privacy.

Another feature of bitcoin is transparency. This means all transactional data (wallet id, amount, date) is stored permanently and available publicly on bitcoin’s blockchain explorer. While you never need to use your name, address or email address to transact peer to peer with bitcoin, if you are up to some shenanigans, law enforcement agencies have ways to follow the trail of money, when it’s bitcoin.

Turbulent world economies make the situation worse

In countries where the national currency has deflated most of the value out of its money, people are turning to cryptocurrencies. In many of these places, the financial systems that citizens must use also surveil and censor not just their transactions over $10,000, but all their financial activities.

Where countries are in upheaval, this type of tracking often becomes more prominent. But now we are seeing ‘stable’ countries like the US having a system to surveil all its people’s financial transactions. Not only that, but all their online data. In the next section, we’ll look at how blockchain security features written into bitcoin’s code help to alleviate this data problem.

How Bitcoin differs from banks

  • Bitcoin is not a company or a corporation.
  • There’s no CEO or executive management behind it.
  • It’s decentralized – meaning it resides on servers that are spread over thousands of computers across the globe, making it a most insurmountable hack.
  • You don’t need a minimum amount to open a bitcoin wallet.
  • You don’t need to prove who you are to use bitcoin.
  • Bitcoin allows people to send money from person to person, anywhere in the world, almost instantly, and for very little cost

Can bitcoin come under surveillance?

It certainly can and currently is in some cases. The bitcoin blockchain is being watched. As we mentioned, even with the blockchain security that bitcoin provides to its users, it’s actually pretty easy to see the movement of money (not personally identifying information) to and from certain wallet addresses.

While your name and tax id number are nowhere to be found**, a particular address can be tracked using node triangulation. This is something that the US Treasury’s crime division, FinCEN, has already been doing to trace traffickers and terrorist organizations.

**Though this changes whenever you decide to go outside of peer to peer transactions and enter a centralized exchange or try to cash out your coin. Anytime you need to deal with a bank or other authoritative entity (such as Coinbase), you lose more privacy. Know Your Customer and Anti Money Laundering rules will come into effect and you must then prove who you are and submit to surveillance.

How will blockchain security solve these problems?

There are currently many blockchain projects that are building on top of bitcoin. These additional layers help to further protect against surveillance and maintain your financial privacy.

  • Some are as simple as ‘tumblers’ which mix bitcoin addresses in with many others so it’s more difficult to trace.
  • Others are related to using/issuing a new address for each and every transaction.
  • Privacy coins like Monero make wallet addresses private by default. Even the transaction details are kept hidden. Other privacy coins like Zcash or Pivx also make this an option for users.
  • New anonymity protocols are constantly under development to increase financial privacy (and security) for users of bitcoin and other networks. MimbleWimble is one such effort that enhances privacy. It utilizes technologies such as CoinJoin, confidential transactions and Dandelion to mask transactions and render them untraceable.

Other projects that work to end surveillance

Bitcoin as a cryptocurrency and transaction protocol represents a monumental solution to surveillance. Because people can transact peer to peer in a safe and secure manner. There’s no need for a bank or clearing center to process your transaction. When a person in one country can swiftly send bitcoin to someone in another country, completely free of intermediaries, financial privacy takes on a whole new meaning.

Outside of bitcoin, there are other efforts that help contribute to the solution of degraded financial privacy. These projects utilize blockchain security features and work towards giving you more control of your data.

A few examples are below. The first addresses censorship free websites. The second creates a decentralized solution to centralized companies owning and profiting from your data. Last but not least, a messaging app that is working towards peer to peer, heavily encrypted functionality.

Unstoppable Domains

The Unstoppable Domains team is basically building a censorship-resistant internet. They are currently selling domains off the .zil blockchain and will later this year roll out hosting and other services to support the creation of websites that are unstoppable. Meaning a government cannot shut down a domain anymore if it’s a .zil domain name. It’s there forever, on the Zilliqa Blockchain. So this represents a major step forward in blockchain security vs. mass surveillance.

Owners of these new domains can also move them around in a peer to peer fashion. Just like a crypto asset. In fact, someone can send crypto directly to your domain. So for example, instead of asking someone to send bitcoin to an address that looks like this: 28342aDJEaG($##AFG(GA#$R$1dfEFG@g566 (not a real address), they can send it to whatever your domain name is. It could be your own name or a company name.

Brave Browser

Over half of all people use Google’s Chrome browser, which is a virtual heyday of data and revenue for Google. But now there is a decentralized option for searching the web. The Brave web browser enables users to financially benefit from ad revenue. It also blocks ads and trackers and blocks unwanted content by default. Users can make cryptocurrency microtransactions for supporting content creators who receive payment in Basic Attention Tokens (BATs).

Vega Messenger

Belgium-based Vega Messenger has brought to life encrypted messaging, chats, file sharing, video conferencing and more. Though not yet integrated with a blockchain, they are developing peer to peer capabilities to further enhance the security of their messaging app. Additional information about the app is available on their security white paper.

Since mobile messaging is growing exponentially, the need for better data control concerning our private messages grows alongside.

Once information is in the government’s hands, it can be shared widely and retained for years, and the rules about access and use can be changed entirely in secret without the public ever knowing.


Massive surveillance has almost obliterated financial privacy. Thankfully, thousands of creative innovators are working with blockchain security solutions to create ways to control your own data.

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