With the increasing popularity of Bitcoin and the blockchain, more and more companies are pushing new blockchain ventures. But while many of those companies are trying to do their best to appeal to consumers and meet consumer needs, others are trying to anticipate the desires of government agencies and provide products for them. Enter Amazon.
In a recently approved patent that Amazon first filed in 2014, the company created a method for removing the anonymity inherent in cryptocurrency transactions and identifying participants in Bitcoin transactions for governments and law enforcement agencies.
Bitcoin isn’t completely anonymous, it’s only pseudonymous, but it’s incredibly difficult for someone to unmask who exactly is on the other end of a Bitcoin transaction. Since Bitcoin addresses are just a string of numbers and letters, and a single individual could have dozens, hundreds, or even millions of different Bitcoin addresses, trying to find a particular individual would be like trying to find a needle in a haystack.
Amazon envisions tying together Bitcoin addresses along with other data, such as IP addresses, or shipping names and addresses from retailers that accept Bitcoin as payment. Tying all that data together, it could be possible to identify particular individuals making Bitcoin transactions and tie them to specific IP addresses or physical addresses, information which could then be sold to law enforcement agencies to search through.
It’s important to remember that Amazon’s patent doesn’t envision individual search warrants, but rather law enforcement agencies buying data by the gigabyte and just combing through it to see what they find. That’s obviously very worrying for those who value their privacy and anonymity online.
Thankfully that shouldn’t hold much importance for Bitcoin IRA investors, however, since Bitcoin IRA investors are already known to the government, paying taxes on any distributions, and not trying to hide anything. The worst that might happen is a possible misidentification, but that should be easily resolved. Still, it’s a good reminder that just because something is new and exciting doesn’t mean that someone somewhere won’t try to use it in some way that isn’t necessarily in consumers’ best interests.