Web3 is not as private as you think

ETHDenver begins with waiting in line out in the cold, making new friends on Telegram and getting invited to parties. After administering a covid test and grabbing a wristband, I stand in another line to get into an elevator going up to the 4th floor where the conference was taking place. Outside, a McLaren patterned with the iconic Doge revs its engine.

ETHDenver is a cacophony of languages and accents, NFT enthusiasts and DAO members, noobs and experts, all of them friendly and chatty. Free merch abounds, and every five minutes or so I overhear the first in-person meetings of online comrades. “What brings you here?” is the entry point for nearly every conversation. But isn’t it obvious? The panels with new crypto start-ups, the coders competing in hackathons strewn across the shared spaces, the shortlist of famous names in crypto–like Nadya Tolokonnikova of Pussy Riot and pplpleasr, the namesake of pleasrDAO–and the opportunities to network with people who share your same interests in Web3.

One of the first panels I went to was on a topic I’ve spent a lot of time thinking about: privacy in the age of the internet. With all of the recent conversations around user data and the ensuing calls for privacy, it is easy to feel like web3 could be our savior, our return to anonymity, and the reclamation of our virtual sovereignty. 

The problem is, it’s not.

Adrian Brink is the founder of Anoma, a proof-of-stake blockchain that markets itself as a truly private, “asset-agnostic,” payment platform. Their goal is to ensure that their customers maintain their privacy, even as they send money back and forth between people and parties.

But isn’t blockchain anonymous?

No. Not only is your computer’s IP address tracked by services like MetaMask and Etherscan, thus connecting a geological location to your wallet, but the platforms you use to buy crypto currencies may also share your data as well. Coinbase is one of the largest crypto exchanges in use today, and one of the hot topics at this year’s conference was how they take private data from their users and then share it with other exchanges globally. They’re not the only ones.

According to Brink, one of the biggest problems with modern-day democracy is the lack of privacy afforded to individuals. In fact, when it comes to our public lives, we are as open to the world as ever, whether we engage with social media or not. Search engines track our search history, online banking tracks our sensitive information, and every single website stores (and collects) information with every visit.

But why should I be worried if I have nothing to hide?

Because privacy is not just about what people know, but how people act. According to Michel Foucault’s Discipline and Punish, people act differently when they know they are being watched. Even just the appearance of surveillance has the same effect, whether or not anyone is actually watching. This state of heightened awareness, epitomized by the feeling–fear? worry?–some of us have before hitting “send” on a Tweet that may be too political or in any way offensive to anyone, changes the way we act.

So why does this matter in a democracy? All forms of governance are about human coordination, which requires both common sense and a shared reality. Without these two things, societies cannot have shared goals or even civil conversations, and thus cannot achieve anything. Furthermore, with data-driven ads and news, each person experiences the internet, and by extension the world, in a different light. This is a clear problem that we are witnessing today, and not just in the United States, but all over the world.

And while it is true that DAOs are an effective solution for tackling specific problems, Brink does not believe that they are the answer to our problems. The solution, or one of them, is to return to a world where individuals have privacy.

Privacy matters because it changes the power dynamic between individuals and corporations. If Facebook owns your data, then they not only profit from giving you personalized advertising, they also affect your worldview, showing you content that makes your blood boil–I mean, that keeps you engaged. They can sell that data to bad actors (Cambridge Analytica, for example) who want to change the outcome of a political event, like a protest or an election (like in 2016). But if you own your data, that puts you back in control of your online life, and fights against surveillance capitalism all at the same time. 

As of right now, Brink says, 99% of all systems are completely transparent, and 99% of users aren’t aware of it. And between IP address tracking and the increase in KYC (Know Your Customer) requirements, even the pseudonymous nature of Web3 is slowly eroding. While there are companies tackling this very problem, like ZCash and Hopr, for Brink, the future of Web3 has to be multi-chain, and it has to happen sooner rather than later because governments are already starting to go after the business of blockchain.

And with that, Brink’s time is up. He thanks us for our time and attention and leaves the stage. Outside, a light snow begins to fall. I have a drink at the bar. As I pay my tab, a notification pops up on my iPhone. 15 people liked your Tweet from #ETHDenver. 

Damnit.