Digital identity protection in the crypto era

In the world of cryptocurrencies, everyone can know all the details of your bank account transfers and payments if they enter your IBAN on Google. This is crazy, isn't it, an attack on your privacy? Well, this is happening right now.

Blockchain.com and etherscan.io are search engines that allow you to view the public ledger, the immutable blockchain. Here you can find all transactions, since the beginning of time, for Bitcoin and Ethereum.

Look at any transaction that has taken place,

Know the wallet the funds were sent to and from.

Know the exact time the transaction took place and the amount that was transferred.

Know which accounts your money has passed through by tracing back to learn the original source of the funds (for example, the €5 bill the grocer gave you could have passed through many accounts before landing in your hand).

The way blockchain works gives authorities a greater advantage in the fight against money laundering and terrorist financing compared to traditional banking systems. The blockchain provides details on all transactions, including who sent and received the funds, the identity of the person who owns the address, and the origin of the money.

The addresses of the audiences that are linked.

To send cryptoassets from one wallet to another, you must know the address of the person or entity receiving the funds. This is similar to knowing the IBAN of an account you are sending money to in the traditional banking system.

In blockchain, the wallet format is alphanumeric. So, an Ethereum address would have the following format: 0xd8dA6BF26964aF9D7eEd9e03E53415D37aA96045. Hard to remember, isn't it? Not to mention the problems you'll run into if you make a mistake when entering an address.

In today's banking system, if you enter the wrong IBAN, you can contact your bank to cancel the transfer. In cryptocurrency, however, the only thing you can do is rely on human goodwill: write a comment on the address in the search engine, pray that the owner reads it and decides to return the funds.

To solve the alphanumeric address dilemma, the Ethereum Name Service (ENS) protocol emerged, which works to link an easy-to-remember domain (.eth) to your Ethereum address. This way, to make ether transfers, you only need to know the domain associated with the destination wallet.

The use of blockchain allows regulators to better monitor transactions through their traceability, thus controlling criminal activity. However, all of these compromise the privacy of your assets. Especially in ENS domains, in addition to being able to know all your transactions, you can also publicly link to a wallet.

After the banning of Tornado Cash in the US, he predicted that the future of ENS domains or known public addresses will become obsolete. Tornado Cash helps the vast majority of them to be able to send or receive funds in their wallets for the sole purpose of preventing the rest of their addresses from becoming public. Without this arrangement, many people would think twice before donating to a cause.