Edward Snowden Goes After Bitcoin Developers: Should Bitcoin (BTC) Add More Privacy Features?

One of the most touted features of Bitcoin is its anonymity. While all transactions and portfolios are publicly available, users can hide behind wallet addresses. Additionally, with no centralized entity behind the technology, there is no single party with the ability to view data for individuals or be hacked. However, according to infamous whistleblower Edward Snowden, Bitcoin is still not private enough.

"I’ve been warning Bitcoin developers for ten years that privacy needs to be provided for at the protocol level. This is the final warning. The clock is ticking," Snowden wrote in a post on X

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Snowden is a strong proponent of digital privacy, losing his job and U.S. citizenship when he uncovered that the U.S. government was conducting mass surveillance on citizens. So, it makes sense that he is advocating for cryptocurrency. However, recent events have caused Snowden to call for further privacy measures.

The post by Snowden was in direct response to a ban on U.S. users by Wasabi Wallet. The wallet service, developed by zkSNACKs, is known for its strong privacy features. Specifically, its "coinjoin" service. The protocol would aggregate many transactions across many wallets into a single transaction on the Bitcoin chain. This would effectively allow any single wallet or transaction to remain anonymous to those viewing Bitcoin transactions. However, the wallet announced via X that it would be "shutting down its coinjoin coordination service, effective June 1, 2024."

Additionally, the wallet banned all users with IP addresses in the U.S. The move was likely in response to the arrest of the founders of Samourai Wallet, a similar wallet service. 

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According to a news release from the Department of Justice, "Keonne Rodriguez and William Lonergan Hill Are Charged with Operating Samourai Wallet, an Unlicensed Money Transmitting Business That Executed Over $2 Billion in Unlawful Transactions and Laundered Over $100 Million in Criminal Proceeds."

Roman Storm, co-founder of Tornade Cash, another crypto-mixing service, is also facing trial for fraud allegations.

So, the move from Wasabi Wallet and zkSNACKs is likely a preemptive move to avoid legal issues in the U.S. However, according to Snowden, the real issue is in the overall Bitcoin protocol. Third-party services have to create their programs to provide complete anonymity on the Bitcoin chain. These services are then subject to governmental laws and have been getting seized in the past several months. According to Snowden, the solution to this is to change the Bitcoin protocol as a whole.

Snowden's "final warning" calls out Bitcoin developers to create a change at the protocol level that would provide more anonymity and take away the need for outside businesses to create wallets to circumvent the issue. However, it is unclear what Snowden's "warning" actually entails and if developers will heed the call. 

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