Various federal law enforcement agencies in the United States have let it be known that they’re not fans of the kinds of encryption technologies that are becoming more widely-used by the general public. Whether it’s the NSA’s preference for “front door” access to user accounts, the Department of Justice’s claims that a “child will die” due to Apple’s use of encryption by default, or FBI Director James Comey begging Congress for backdoor access to Americans’ cellphones, it’s clear that multiple agencies don’t like the idea of ordinary people being able to protect their private data. These sorts of stories could be somewhat troubling to bitcoin users because — in the case of digital cash — data is money.
How can bitcoin users be affected by backdoors?
How bitcoin users are affected by backdoors depends on where those doors are placed. For the most paranoid bitcoin user, the idea of hardware backdoors is always in the back of the mind. If this were the situation, bitcoin as a technology would likely fail. After all, the encryption algorithms used by bitcoin are only secure in a situation where everyone can trust the hardware on which those algorithms are placed.
Then there’s the possibility of backdoors in operating systems such as Windows and OS X. Although this is a less-gloomy scenario, it still makes bitcoin worthless for the average computer user who is not using GNU/Linux — although it’s still possible for bugs or backdoors to go unnoticed in open-source software as well.
The backdoor (or at least backdoor of sorts) that practically no one would claim does not exist has to do with the businesses built on top of the bitcoin protocol. There is no doubt that law enforcement has access to user records from Circle, Coinbase, and other bitcoin companies, but exactly how those records are accessed still seems up for debate at this point. As we’ve seen in the past, “collect it all” means some agencies will be willing to go the extra mile to collect data without a company’s foreknowledge.
Can anyone be trusted?
If a person is realistic, then they should understand that no one should be trusted when it comes to bitcoin. This obviously goes for the various bitcoin exchanges and darknet marketplaces that have turned out to be nothing but frauds in the past, but it’s important to remember that there are a large number of people who are entrusted to act properly in the bitcoin space. Is the random number generator used to create one’s private keys truly random? Has a government agency decided to present itself as a fake Facebook server and push malware to certain computers that connect to the social networks? It’s one thing if we’re talking about private emails and pictures, but can anyone be trusted with your bitcoin? The many scams in the bitcoin ecosystem — including the recent case involving federal agents from the DEA and Secret Service — seem to indicate that no one should be trusted when it comes to the security of your bitcoins. Again — when it comes to data — the stakes are much higher when money is involved. Even if you believe you can trust a private company, it doesn’t mean they cannot be coerced into becoming bad actors by a government.
Building proper solutions
At the end of the day, the proper solutions for making bitcoin more useful will involve the idea of choosing “can’t be evil” over “don’t be evil.” In reality, that’s what bitcoin is supposed to be all about in the first place — not having to trust someone else with your money or payments. In other words, it’s important to build as many applications and tools around bitcoin that do not require trust in a third party as possible. This means P2P marketplaces, open-source software and hardware, “decentralized” exchanges (the exchange from digital to real world items can never be completely decentralized), and other sorts of concepts that are built around software rather than trust. The good news is that many projects are already working on these sorts of solutions. We’ll just have to wait to see if people actually decide to use them.