Mar 6, 2019 15:15 UTC
Mar 7, 2019 at 08:18 UTC
Blockchain Surveillance Companies: An Analysis
Blockchain surveillance has become a big business today, with various governments partnering with big surveillance companies to keep a track on the customer funds. Even major crypto exchanges pay hefty sums to these firms to map the movement of crypto funds in the market. The crypto community is quite skeptical of such firms because they joined the crypto ecosystem on the pretext of anonymity and surveillance resistance.
We would look at various companies dealing with blockchain surveillance and how a market which is against the basic principles of blockchain and decentralization is thriving.
A report suggests that the US government alone spends around $6 million yearly on transaction monitoring tools, while another report says that the total spending on the services of such forensic firms has touched the $80 million mark.
Crypto Exchanges Are Spending heavily on Surveillance Firms
Crypto Exchanges are often subjected to scrutiny for the density of centralization integrated into these exchanges. while cryptocurrencies were projected as a privacy-centered and surveillance-free form of economy, the exchanges seem least concerned over the matter. The KYC service for registration was already a cause of the problem for the users as it requires certain identification which violates the basic principle of cryptocurrencies.
Now, these firms have gone a step further to partner with the forensic firm and invest in fund tracking of the customers. Coinbase invited a lot of criticism when it bought its own forensic firm in the form of Neutrino.
People who were attracted to the cryptocurrencies because of the vision portrayed by the original inventor Satoshi Nakamoto must be feeling cheated as these exchanges work just like any other centralized banks, where they charge you for holding your crypto, making a transaction and heck even for withdrawing your own funds. It negates every aspect of the cryptocurrency which distinguishes it apart from the fiat.
The Pretext of Using Surveillance Tools
The story that these exchanges and other institutions use for the surveillance is quite void, according to their theory these forensic companies help them track crypto being laundered or used for illegal activities. however, most of the tools used are highly improbable and often creates problems for the regular users violating their privacy and often freezing their crypto assets on these dubious claims.
The pretext is hollow because the criminals using crypto for laundering or using it for illegal activities are usually a step ahead of these forensic companies. They usually don’t use the services of exchanges for such actions. It’s the bankers and in certain cases the owners of the exchanges which uses the platform to launder money as was the case with Mt. Gox.
Governments use the surveillance tools for obvious reasons, but what if they used the same resources to regulate the crypto, I think that would save them more energy and time than paying for the surveillance of funds, which is not right in the first place.
The funny thing is, these surveillance firms turn out to be an absolute turd when it comes to the tracking of the hacks on exchanges and more often the lost fund are never recovered. I mean what’s the use of a monitoring tool when it cannot monitor the huge sums of crypto being moved, while it never fails to track the customer’s fund. Sounds fishy right?
while there are quite a few exchanges which are limited to the KYC, but the majority of them have partnered with some forensic firms. It is quite unethical on their part, but if they don’t use the surveillance services, they often are liable to come under the eyes of regulatory agencies.
The concept of surveillance in itself unethical and when you have to combine it with cryptocurrencies, it tells you that the government is more concerned about your freedom to use your own money than eradicating the issues that contain them from regulating the digital assets.