Home Crypto Libra Libra: How Much Privacy can We Expect?

Libra: How Much Privacy can We Expect?

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Libra Pseudonymous Operation

Last Tuesday Facebook, through the Libra.org Association web page, unveiled to the World its Libra project, a cryptocurrency aimed to be global, stable and private.

The Libra White Paper states that the Libra cryptocurrency will be based on the Libra Blockchain which, among other properties, would allow its users the creation of several pseudonymous addresses, meaning several wallets not linked to an identity. They also stated they would continue “enhancing privacy” but, at the same time, they should consider the regulatory aspects of it.

So the first question is, how much privacy and anonymity can any user expect. There will also be another question to be answered later: Is it possible to create a true anonymous account using Libra?

What Does Pseudonymous Mean?

Let’s explain, first what the Pseudonymous term means. To do it, we will explain how Bitcoin operates, since Libra will work similarly to it.

Everybody can create a Bitcoin wallet address with no information about who has done it. There are several ways to create a wallet, but the most anonymous way might be creating a paper wallet at http://bitaddress.org/. And if you truly want to remain anonymous, you could, even, use a Tor browser to perform this action. Below a complete Bitcoin wallet with public and private keys created using that web page. Everybody can do that operation and get a completely anonymous and unknown wallet.

So the creation of a Bitcoin wallet can be anonymous, right?

Right!

The issue is not the anonymous creation of a wallet but its use.  All data and operations of the Bitcoin network are public. If you have a bitcoin address, you can see the current balance and the complete list of transactions. Also, since you know all these transactions, you’ll be able to follow every transaction made in other wallets linked to the first one. For instance, the image below shows one of the seven famous Bitcoin address, associated with the stealing of 7,000 BTC in Binance.

source:https://blockchair.com/bitcoin/address/bc1q2rdpyt8ed9pm56u9t0zjf94zrdu6gufa47pf62

The Libra Network

The case of the Libra transactions won’t be that public since the nodes controlling that network will be restricted and those organisations willing to act as nodes will have to comply with strict demands about privacy.

Therefore, we don’t expect Libra transactions to be freely available, but it will be fully available to the node administrators. Visa, Mastercard, Paypal, Facebook, and 30+ others will have a copy of all transactions people make.

A Computerworld publication on Jan 29, 2015, talked about a Science study that showed that just four pieces of data could be enough to identify a person. To these corporations using big data identifying people by their records will be a question of milliseconds. A connection of a transaction with the mobile device which has performed it will be enough.

Although the Libra White Paper strives to push privacy for its users, the real truth is that a Libra wallet is no more private than a credit card to a node corporation (or government).

Will it be possible to create short-term anonymity under Libra?

We can’t answer that with certainty, but possibly YES.

Cash

According to what we know about Libra, people can fund it using several methods, and since one of its goals is to be a paying vehicle for all, including people without a banking account, people will be able to fill it using cash, possibly with no ID needed.

Since it can be funded by transferring from other wallets, there is always the possibility to purchase Libra in the street from people willing to sell it for whatever reason. Currently, localbitcoins.com operates as an escrow service to exchange fiat to Bitcoins and vice-versa. Surely, this carries its risks, including physical assault.

Buying from ATM

There is no mention to ATMs, but surely, a coin aimed at persons with no bank account will make use ATMs for founding. It is left to know if they will require identification.

Funding Using Other Coins

Currently, we don’t know if Libra wallets would accept other cryptocurrencies as a way to fund it. In any case, currently, there is the possibility to move coins in and out from exchanges on a limited basis without identity verification. Thus, other coins could be converted to fiat and transferred them to Libra using a pseudonymous id.

Conclusions

  • Libra Users cannot expect total privacy and anonymity using Libra
  • Therefore, if they need it they should create temporary accounts using another device.
  • There will always be a method to fill a Libra wallet anonymously, although up to a limit. Nobody can expect to load millions of dollars/pounds/euros that way.

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