Progression of Payment Anonymity with Newer Technologies
By Space Coast Daily // May 11, 2019
Needless to say, modern societies are gradually moving towards an era of cashless transactions. While this transition has long been considered to be an inevitable one, many people agree that the option of anonymous and untraceable payments must remain.
As it stands, the use of cash across the globe makes up less than a third of all consumer payments. First, it was just credit and debit cards leading the future of payments, but then crypto blew up and now there are even more options for new payment services. Even so, there is still the question of whether they match up to the expectations of the users.
Why Is Anonymity Such a Big Deal?
Well, the right to anonymity is regarded as an essential pillar of any modern democratic society. As a matter of fact, it is derived from the fundamental rights to freedom of expression and informational self-determination.
This right to anonymity is by no means limited to the analog world but extends to the online space where individuals have the right to browse anonymously. Now, the question is, does this right apply to payments?
Why Is Cash Still Important?
As much as newer technologies have made a huge impact on the world’s economy and are increasingly becoming popular, there is no doubt that cash is still a vital component of our day to day lives and this is largely because of the main focus of this piece – anonymity.
The anonymity and privacy of cash cannot be disputed and this can be proven by the fact that very many countries including the United States have been very reluctant to ditch cash and focus all their efforts on newer technologies.
Recent breaches of digital data as well as violations by people who are entrusted to protect said data has heightened the angst of citizens about security issues.
It is therefore only natural that the more that cashless or digital payment systems are exploited and compromised by governments, the more people continue to cherish the anonymity and freedom that is guaranteed by cash.
That said, in the world of analog payments, the right to anonymity is indirectly established by the existence of cash – not only does it leave no traces of data but it also has the special status of being a legal tender. As long as cash still exists as a legal tender, people will always have the option and right to anonymous payments.
The Bitcoin, Crypto and Blockchain Revolution
Considered as the most likely replacement for cash, cryptocurrencies have been trying to find their place in the global economy for quite some time. An increasing number of product and service providers now allow their customers to make payments using digital currencies such as bitcoin.
One of the reasons why digital currencies are being perceived as the long-awaited replacement for cash is because of the great promise of anonymity. To put this into perspective, the transactions themselves are recorded and made public but they are only linked to an electronic address.
So, for instance, if you make a deposit at any of the best bitcoin poker sites you do not have to worry about that transaction being traced back to you. it is safe to say that anonymity is part of the bitcoin culture and the fact that the whole idea was to circumvent the powers that be makes it even more appealing to people.
It is however very important to understand the fact that the nature of the blockchain, which is the technology that supports bitcoin transactions, is that each and every transaction is totally traceable and cannot be erased. This creates a bit of a paradox but thankfully the verification of digital wallet owners is not a forced endeavor.
Digital currencies and blockchain technology have indeed come a long way and are continuing to improve each and every day. Maybe someday, the applications will be robust enough to be a worthy replacement for cash-based systems especially or people who are really concerned about anonymity.
Tradition Online Payment Services Want In
Most tradition payments services including credit cards, debit cards, and e-wallets are notorious for being the least anonymous ones on the planet – they leave digital footprints everywhere and this, for the privacy-conscious mindset is totally unacceptable.
It does not help that authorities in places like the United States have plans to develop forensic techniques to deanonymize digital currency transactions.
After seeing that anonymity has been a major selling point for most digital currencies, there have been efforts by existing payment and banking services to offer the same. Most recently, MasterCard announced that it is working on anonymizing its electronic transactions using blockchain technology.
This new system will work by providing a primary address for the transaction which then stores the transaction data including the final destination address and the final amount. At the same time, a new transaction and digital signature are created with a new private key and this new transaction is what is responsible for ensuring that the funds reach their desired destination.
New Technology, Old Problems
Now, despite the fact that transaction anonymity is fundamental to the growth of any payment or transaction service, it is vital to acknowledge the fact that it may result in certain dangers. Some of these concerns pertain to the use of anonymous payment technologies to fund criminal activities such as terrorism, money laundering, trafficking, and even tax evasion.
This presents a rather unique dynamic whereby the payment service providers and innovators need to come up with solutions that give the customers all that they desire in as far as anonymity is concerned while at the same time ensuring that the same systems are not exploited for illegal activities.
As it stands, there is almost no other way of solving either of the issues without significantly compromising the other.
In conclusion, anonymity with newer technologies is certainly getting better but the technology is yet to get to a point where it is robust enough to replace cash for the privacy-conscious user.
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