Bitcoin: An ‘Ideal’ System Misunderstood by the Public
Experienced Bitcoin users will gladly tell people how the popular digital currency will not help much regarding privacy and anonymity. Even though mainstream media outlets keep preaching the exact opposite of that statement, a new study by Rutgers shows how transactions are not as privacy-centric as people assume. Plus, there are still some questions regarding Bitcoin’s convenience that need to be addressed.
Bitcoin ‘Ideal’ but not Anonymous
To many people who have never used Bitcoin or any other digital currency, the entire concept seems to revolve around user privacy and anonymity. Nothing could be further from the truth, however, as the recent Rutgers study indicates Bitcoin is neither privacy-centric nor anonymous by any means. However, the popular digital grants user some level of pseudonymity.
For people looking to gain more financial privacy or anonymity, Bitcoin has very little to offer them. In fact, one could argue that cash is the most anonymous form of monetary exchange in the world, as it is impossible to track its origins or whereabouts outside of bank accounts.
Bitcoin, on the other hand, is a protocol where transactions are broadcasted on a distributed public ledger. Anyone in the world can track Bitcoin payments from its source to destination in real-time, without having to register for access to the system. This effectively removes any illusion of privacy or anonymity when using digital currency.
There is a major difference between privacy-centric, anonymous, and pseudonymous. Even though plenty of people want to see Bitcoin as anonymous, it isn’t. This is also part of the reason the popular digital currency should not be used for criminal activities, as the truth will always prevail sooner or later.
Pseudonymity, on the other hand, is something Bitcoin does provide up to a certain extent. Any digital currency user can be identified based on their Bitcoin wallet address, although that piece of information will not reveal any other information that isn’t associated with the address. This concept is no different from using an alias in a chatroom, or your in-game character name when playing an online game. It is important to distinguish pseudonymity is far from being anonymous, although it is not hard to see why people would confuse these two terms.
Nevertheless, the study did reveal that once the information was presented to new users, the participants saw it as an “ideal” system for payments.
People who have never used Bitcoin […] don’t think they ever could. Even Bitcoin users are not well-versed in how it works and overestimate, for example, the privacy of transactions […] Still, study participants overall viewed Bitcoin as an ideal payment system.
Source: Bitcoin News