Edward Snowden, a former U.S. National Security Agency and CIA contractor-turned whistleblower, on Thursday criticized what he called bitcoin's lack of privacy protections.
He said that the growth of cryptocurrency exchanges, financial services, and other applications mediating the crypto-economy have jeopardized bitcoin's ability to serve as a pure peer-to-peer currency.
"You have to make the idea that cryptocurrency is private by design," he said.
The privacy advocate, who currently lives in Russia and is wanted by the United States government for leaking classified documents and stealing government property, spoke at Decrypt's Ethereal Summit, a virtual conference for blockchain investors, technologists, and entrepreneurs.
Snowden commended so-called "privacy coins" such as Monero and Zcash, which allow for fully anonymous transactions but have struggled to gain legitimacy.
The longer core developers wait to address this, he added, the harder it will be, stressing that leaders in the space need to commit to privacy now, even as they benefit financially from the current system.
"The problem with the cryptocurrency space at the largest scale today is the people who make these decisions have the biggest stake in the system, and the system has benefited from the fact that it has not been regulated out of existence," he said.
In other words, as governments look to regulate cryptocurrencies — a fundamental red line for those who see decentralization as the whole point of alternative digital currencies — there will be an incentive among power brokers in the space, such as crypto-exchanges, to cooperate with new regulatory restrictions, even if they compromise users' privacy.
"The idea of the bitcoin protocol — the peer-to-peer, electronic hash system — is the idea that we can send these payments to anyone permissionlessly," he said. "This is true if it's in your wallet. But how do people fill their wallets? They get it through exchanges, and these guys are imposing permissioning steps that are intermediately to your transaction."
Snowden called for a kind of "purification" that would remove identification information from the cryptocurrency economy.
Speaking to an audience of decentralized finance developers and entrepreneurs, he added that "getting rich and doing something great are distinct goals."
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