The USA PATRIOT Act demanded that all banks in the United States verify the identity of their depositors, in order to undermine the ability of terrorists to use our financial system. So it’s ironic that Andreas Antonopoulos qualified the practice as “dangerous” in a YouTube post which has increased recently. The concept has become known as “know your customer” or “KYC”. We talk about it a lot at fintech and bitcoin gatherings.
M. Antonopoulos wrote Mastering Bitcoin for O’Reilly Media, a company that has a knack for publishing the definitive books on technical subjects. So it’s fair to say that the man who wrote the bitcoin book believes KYC is doing more to endanger consumers than protect them, yet the New York Department of Financial Services has put KYC at the heart of it. the cryptocurrency license it came out last year, known to Bitcoin entrepreneurs as “BitLicense”.
Startups that want to provide financial services through bitcoin or other cryptocurrencies in the state will need to prove that they can verify identities. As the country’s financial capital and the first state to act on these currencies, several sources in the cryptocurrency community told the Observer that they expect other states and countries to use BitLicense as a model. regulatory.
“The idea that a Bitcoin startup is going to start promoting your customer and fighting money laundering, by collecting all of these personal identifications,” Mr Antonopoulos says in the video, “it’s both ridiculous and disastrous, because what will happen is that information will leak.
I personally tried to open my first bitcoin account on Gemini recently, the most pro-regulatory of bitcoin companies. This required a scan of my government issued ID and an invoice showing my address. I receive my bills digitally and utility companies are the heaviest. So I tried a tax bill, which I had on paper, which was rejected. I tried an internet service bill, and this was also rejected. It was two too many documents sent over the Internet, so I gave up. It was my little taste of KYC in action. It was in bad taste.
“Bitcoin doesn’t require you to identify yourself, and that’s not a bug. It’s a feature,” says Antonopoulos. He goes on to explain that when regulators ask banks to collect personally identifiable information, they invite hackers.
Bitcoin has a different solution: no information, no hacks. Bitcoin belongs to wallets that people control with encryption. This way it works like real wallets. If I take $ 20 from my wallet to pay you a high-five, the transaction is complete as soon as it enters your wallet. I don’t need to know your name. I don’t even need to see your face (just your hand).
Mr. Antonopoulos made the remarks during a question-and-answer session after a speech he gave in Barcelona in March. In it, he accused governments of using terrorism as a pretext to create a system of total financial surveillance, in which every transaction we make is trackable.
This process is well advanced in Sweden, as indicated in the last issue of Wired, which describes a country in which few urban bank branches have cash on hand. To switch to cashless, the Swedes are using a technology the banks have put in place called Swish – certainly not privacy-friendly bitcoin.
“Privacy is the right of billions of individuals not to be watched,” Mr. Antonopoulos said in the full speech, “and secrecy is the power of very few to escape responsibility.”