The FBI, NSA, and Justice Department want access to encrypted communications. James Comey told Congress the bureau needs backdoors into Americans' phones. The DOJ claimed Apple's default encryption wo
The FBI, NSA, and Justice Department want access to encrypted communications. James Comey told Congress the bureau needs backdoors into Americans' phones. The DOJ claimed Apple's default encryption would lead to a child's death. The NSA seeks what it calls "front door" access to user accounts.
These developments matter to Bitcoin users differently than to other people. Unlike emails or photos, encrypted Bitcoin is encrypted money. Someone accessing your encrypted data accesses your financial assets.
Backdoors could appear at three different levels, each with different consequences. The worst scenario involves hardware. If manufacturers put encryption weaknesses into processors, memory chips, or other computing equipment, Bitcoin becomes insecure at a fundamental level. The encryption that protects Bitcoin only works if everyone can trust the underlying hardware. Once that trust breaks—once a backdoor exists in the chip itself—Bitcoin fails as a system.
Operating systems like Windows and Mac OS X present a second problem. A backdoor hidden in your operating system would make Bitcoin worthless for most computer users. GNU/Linux users might escape this particular trap, except that open-source code contains bugs and backdoors too. They just sit there undiscovered, sometimes for years. You can't inspect every line of code, and neither can most developers.
The third scenario has occurred. Law enforcement accesses records from Coinbase, Circle, and other Bitcoin service providers. Nobody seriously disputes this. The real question is how they get the data. Government agencies operate under what they call a "collect it all" mandate. Some will extract information from companies without those companies knowing about it.
Trust in the Bitcoin space has been shattered repeatedly. Major exchanges have collapsed. Darknet marketplaces turned out to be frauds. The DEA and Secret Service have perpetrated scams in the Bitcoin ecosystem. Should you trust an exchange? History suggests no. Should you trust your computer's software? Is your random number generator truly random, or has an intelligence agency compromised it? Has your operating system been backdoored? Could federal agents impersonate social media platforms and distribute malware? These are not hypotheticals. They have happened. Losing your email means losing privacy. Losing your Bitcoin means losing your assets. The stakes change when money is involved.
Solutions to this problem exist and operate on a different principle than the current ecosystem. Rather than "don't be evil," Bitcoin needs tools that can't be evil. Bitcoin itself was designed around this principle—no middleman, no trust required. Applications built on Bitcoin need to follow the same logic.
Peer-to-peer marketplaces work this way. Open-source software and hardware work this way. Decentralized exchanges work this way, even though converting Bitcoin to real-world currency will always require some central coordination point. Several projects are building these alternatives now.
The harder question is whether people will use them.
