The US government’s sanctions against Tornado Cash have rekindled a public debate about privacy. This intervention by the federal government seems revolutionary to many in the crypto community. The privacy tussles between private sector and state are not new. They can offer compelling insight into what the future holds for privacy in crypto.
Phil Zimmermann published Pretty Good Privacy (PGP) in the 1990s. It was one of the first publicly available public-key cryptography apps that offered end-to-end encryption (E2E). Zimmerman’s creation led to a criminal investigation, which was dropped. Federal court decisions were made that protect encryption under the First Amendment of the U.S. Constitution. The encryption wars were born out of this clash over privacy.
Similar: Tornado Cash proves that DeFi cannot escape regulation
Today, the encryption wars continue. Officials from the U.S. as well as other countries are urging tech companies to abandon strong E2E encryption. This would allow law enforcement to access a vast array of sensitive personal data.
The Office of Foreign Assets Control’s (OFAC), sanction of Tornado Cash is the next chapter in the encryption warfare. OFAC’s sanction of Tornado Cash is the first ban on the application. It eliminates the distinction between “providers anonymizing services” or “anonymizing software suppliers”. This distinction was made by the Financial Crimes Enforcement Network, (FinCEN), another Treasury department.
I wrote to Treasury Secretary Yellen about the unusual sanctioning of Tornado cash. OFAC will face new challenges due to the increasing adoption of decentralized technology. Nonetheless, technology is neutral and the expectation of privacy is normal. pic.twitter.com/0aN4a4A6tb
— Tom Emmer (@RepTomEmmer), August 23, 2022
In order to identify that software can be removed from an entity controlled either by a group of individuals or a group, Congressman Tom Emmer wrote last month to Treasury Secretary Janet Yellen asking for clarifications on the sanctions. This is the largest privacy clash since Snowden exposed mass surveillance practices at the National Security Agency.
Is history repeatable or a rhyme?
These sanctions recall the days when PGP was used to justify a ban on encryption data. The ban was ultimately defeated, which led to innovations on the internet like secure logins, personal communication, and internet commerce. Similar to the Tornado Cash sanctions, upholding them creates a dangerous precedent which would hide technological breakthroughs from economic prosperity.
Related: Coinbase fights back as the SEC closes down on Tornado Cash
In other words, criminals have used technological advances throughout history to illicitly profit. Banning this technology would be worse than beneficial. If the Tornado Cash sanctions are not challenged, many of our everyday conveniences could be at risk. They also may hinder future advances and breakthroughs that we don’t yet know about.
The reality is that society is aware of the ways in which big tech uses personal data in masse to profit from surveillance capitalism. Many citizens will consent to give up their data privacy in return for free tech products. But, privacy invasions that are mandated by law can be a different matter. E2E encryption would be effectively banned by the European Union’s newly introduced legislation.
Although the policies’ goals are often well-intentioned and will be used by evil actors, legislation that allows for the creation of “backdoors” to E2E encryption could cause more harm than good.
Privacy is the future
E2E encryption with Web3 identity standards is the answer, not the problem. Cybercriminals of all types have found a way to use Big Tech companies as centralized identity providers. This is not the case with cryptography and decentralized infrastructure. Web3 is being used to create self-governing identity tools that balance privacy, accountability, and regulation.
The human race has a tendency to resist technological advancement. Calestous Juma explains that early Motorola cell phones were considered toys by rich people. Mobile devices are more advanced than anyone could have imagined. Juma believes that people are more resistant to technological advances if they only have a limited benefit. E2E encryption is not a possibility because privacy is only for criminals.
Related: The US will be undermining cryptography with Tornado Cash sanctions
Multichain web 2.0 will allow users to manage their identifying information without compromising privacy or security. This would allow communities to take control of their own ethics and not rely on authorities or digital service providers. It is possible to incentivize moral behavior, which would allow ethical coding and the wisdom from the majority to be used to police the ecosystems.
Programming is just another type of speech. Some people use their words to do good, while others use them for evil. Anyone should be able to write even if they use the English language in a negative or hateful way. The OFAC sanctions are therefore unconstitutional. They should be challenged. Better is better for humanity.
Chad Barraford, the technical lead of THORChain is a noncustodial protocol for decentralized liquidity that enables users to seamlessly transfer their digital assets across multiple blockchains.
This article is intended for informational purposes only and should not be construed as investment or legal advice. These views, thoughts and opinions are solely the author’s and do not necessarily reflect the views or opinions of Cointelegraph.