Beyond the ever-expanding collection of public blockchains that serve as the industry’s permanent record, Twitter serves as the town square for open discourse, advertising, and public relations, and it is where the majority of the industry’s users and aficionados hang out.
For better or worse, social media and on-chain platforms provide skilled data analysts a perfect opportunity to start making connections due to their completely public nature.
The idea that social media profiles may someday be connected to on-chain wallet addresses is probably a terrifying inevitability rather than the result of anxiety. When that day comes, public blockchain ecosystems will be effectively free of default anonymity. Users looking for privacy from their peers will be forced to retreat to the centralized, opaque operational environments of traditional finance in such a dismal setting.
A new status quo of default public exposure would trigger an outflow of money and people from cryptocurrency and put the entire industry back several years if there are no tools and mechanisms to restore and renew one’s on-chain anonymity. The idea that social media businesses are online devils that Web 3.0 users love to loathe is now almost a joke.
Despite appearing to be at odds with one another, social media platforms and Web 3.0 protocols have one thing in common: their value propositions govern the open, public venues they make available to their user bases. The centralized platforms itself collect and retain user data on streaming services like Netflix, online retail behemoths like Amazon, and search engines like Google.
The wealth invested in user data is effectively controlled by these organizations. However, users have a rather high level of privacy as it relates to the general public. On the other hand, offering value to users on social media platforms and Web 3.0 protocols requires registering, timestamping, and preserving a public record of all activities and transactions. An estimated 4.48 billion people use social media, occupying a constantly growing virtual space with more than five million gigabytes of data.
Social media is a key component of marketing, community development, and communications in the digitally native Web 3.0 arena. There is no turning back now because the information and links are now set up on servers all across the world. It is just a matter of time before entrepreneurs and development teams gather money and create exclusive algorithms to confirm on-chain addresses with genuine identities and pseudonymous aliases, driven by demand from advertising.
However, it is not surveillance for the people; rather, it may be free market monitoring of the people, by the people. Capital moves to technologies in the banking sector that offer better features and safeguards. Despite being completely visible to and shared among financial institutions and regulatory agencies, bank statements, ATM withdrawals, and credit card transactions are currently exempt from free market surveillance activities.
It’s not hard to envision that banks and other legacy institutions would start to attract the attention of users who are concerned about their privacy in a future where on-chain transactions entail rapid and ongoing public exposure.
To that end, algorithms that make use of publicly accessible metadata run the risk of undermining even the most cherished and repeated cypherpunk maxim, “Not your keys, not your coins.”
Protecting one’s anonymity in the on-chain space would include giving up stablecoin DAI in favor of a bank account at Chase denominated in dollars and moving away from on-chain Bitcoin (BTC) in favor of a Vanguard ETF (exchange-traded fund).
It would entail moving away from decentralized finance (DeFi) and toward centralized finance (CeFi), to put it more generally.
Whether in quest of yields or privacy, re-igniting CeFi would be a terrible step backwards since it would mean forgetting the crucial (and painful) lesson of 2022: don’t trust, verify.