One of the biggest privacy issues in today’s society revolves around the use of overreaching know-your-customer (KYC) and anti-money laundering (AML) laws. Despite the fact that many cryptocurrencies were designed to avoid these invasive practices, KYC and AML guidelines bolstered by political parasites and their followers have perverted the original crypto-anarchist ideologies espoused by the cypherpunks.
When people talk about scams in the cryptocurrency industry they usually look at a certain project or the initial coin offerings (ICO) that raised billions in 2017 and 2018. However, the biggest scam in the blockchain ecosystem is how some members of the community and bureaucrats have pushed their statist ideals into the crypto industry. KYC/AML practices have increased a great deal and influencers want politicians to bless and define digital currencies like BTC. The financial regulations known as know-your-customer and anti-money laundering laws require crypto-based businesses to verify the identity of their clientele and also make sure customers are paying taxes by flagging unusual behavior. Even though these practices are immoral, unethical and cause significant friction, bureaucrats and law enforcement use these methods to track and monitor every financial transaction they can observe.
Probably the biggest qualm with KYC/AML regulations is how businesses and large corporations track and store data that hackers can exploit. Thousands of companies hoard vast amounts of important information about a person’s identity, residence, social security numbers, and credit information on centralized servers. These servers are breached by hackers and opportunists on a regular basis and because of severe leaks, people’s private information can be sold on the black market. Data stemming from the Risk Based Security researchers’ 2019 mid-year data breach report shows that 4.1 billion records were compromised in the first six months. Bitcoin and other cryptocurrencies were built to avoid invasive KYC/AML practices and if these regulations did not exist, collateral damage like massive breaches would be dramatically reduced. However, there are many services invading the crypto industry right now and rough-shodding KYC/AML standards into our everyday practices.