Why Data Privacy Matters – Even If You Have Nothing To Hide

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In the aftermath of 9/11, the United States was in panic. Immediately, the government sprung into action. In a matter of just 45 days, a 342-page piece of legislation outlining the government’s new strategy against terrorism was created, introduced, and passed. Never before had Congress been so proactive and unified.

The result was the USA PATRIOT Act, which gave the government vast new powers to breach people’s privacy in the name of rooting out terrorists. Phone calls, emails, bank accounts—everything was now under the purview of the state.

While some had doubts about these new overreaching powers, it was generally accepted that it was worth sacrificing a portion of one’s freedom in exchange for greater security against terrorism.

Fast-forward 10 years to 2011 and over 35,000 people had been convicted and nearly 120,000 arrested through the powers given by the USA PATRIOT Act.

Many of these individuals undoubtedly engaged in illegal activity, but the vast majority of the convictions had nothing to do with terrorism. Tax evasion, failure to pay child support and a long list of other minor financial and drug offenses made up well over 90+% of convictions.

While we were told our privacy was being sacrificed to stop terrorism, in reality, our privacy was being sacrificed to catch run-of-the-mill tax cheats and deadbeat dads.

If You Have Nothing to Hide, There’s Still Reason to Fear

Despite little evidence to support it, many people still believe that sacrificing individual privacy for expanded police powers is a good trade-off.

And now, the focus is on cryptocurrencies.

If governments can’t track where assets are going and to whom, they say, cryptocurrencies could be used for money laundering or terrorism.

This was reinforced in a conversation I had recently with a prominent Israeli law professor and former banking regulator who argued that all cryptocurrency transactions should be available by any OECD country upon judicial subpoena. The real clincher came with her conclusion, “if you are not a terrorist or a money launderer you have nothing to fear.”

I was a bit stunned that an Israeli law professor unknowingly quoted Joseph Goebbels, the infamous Nazi Minister of Propaganda, who is attributed with using the phrase, “If you have nothing to hide, then you have nothing to fear.”

It was under this doctrine that Nazi officials sanctioned the invasion of people’s privacy that allowed the targeted persecution of segments of their population.

Why Protecting Your Personal Information Matters

While comparing anything to Nazi policy may seem extreme, the undeniable truth is that the right to privacy is at the core of every right we possess. No right can truly be exercised freely without the ability to do so privately.

What is the right to free speech if everything you say or read is monitored, tracked, and potentially used to classify you as a bad person?

When your personal data is recorded and stored by the government, who knows how that could be used and how you might be targeted.

It’s for that reason that Democrats are so strongly against the implementation of a recorded list of women who’ve received abortions. And why NRA supporters are so vehemently opposed to a national list of gun owners.

Everyone understands and respects privacy when it comes to an issue they think is important.

While concerns that governments will grossly misuse data may sound like paranoia in modern America, not everyone is lucky enough to live in the United States. There are many countries around the world (even OECD countries) where voicing the wrong opinion of a politician, a party, a book, a religion or any number of topics can land you dead or in prison.

Defending Data Privacy On the Blockchain

When it comes to blockchains and cryptocurrencies, it is important to remember what’s really at stake in the war against privacy.

Sensing a threat from this new technology, many governments around the world have been on a campaign to outlaw it. Luckily, that is an impossible task. Someone once said, “A government cannot regulate Bitcoin, they can only regulate their country out of Bitcoin.” And even that is getting increasingly difficult for most countries.

Riccardo Spagni, one of the core team members of Monero, said in a talk I attended recently, the only areas where officials can regulate cryptocurrencies are at the “on and off ramps”. On and off ramps are the points at which cryptocurrencies are being exchanged for fiat. Beyond that, there’s not much they can do.

I followed up with Riccardo afterward to ask him what he thought about the expression if you don’t have anything to hide, you don’t have anything to fear. To which he said, “when people say that I ask them if they’re fine with putting their last 3 months’ bank statements up on Twitter. Nobody’s taken me up on that.”

dean steinbeck riccardo spagni monero
Dean Steinbeck and Riccardo Spagni aka “Fluffy Pony” of Monero core team

What does this mean for Crypto Law Insiders?

If you are investing in and/or starting a privacy-oriented blockchain project, be aware of the regulatory risks involved. Governments have never been fans of privacy and they never will, because it gives them less control. It may not be right, but for now, it’s a reality you need to consider.

Though government regulators are unable to regulate cryptocurrencies world-wide, they will strike where they can. As Riccardo Spagni mentioned, be prepared to see increasing regulation on the on ramps and off ramps for cryptocurrencies. This may involve heavier Know Your Customer (KYC) and Anti-Money Laundering (AML) requirements on crypto exchanges and wallets.

For Crypto Law Insiders we recommend taking action from the start. Incorporate KYC and AML policies and procedures in your business model from Day 1, otherwise, you could face trouble down the line when government regulators come knocking.

Dean Steinbeck

Dean Steinbeck

Dean Steinbeck, Managing Director of Crypto Law Insider, is the leading authority on legal issues related to cryptocurrency and blockchain technologies.
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