Don’t wait for the tax bureau to come up with complete data on the chain before you begin to pay attention to privacy projects!

Time:2020-10-17

Don't wait for the tax bureau to come up with complete data on the chain before you begin to pay attention to privacy projects!

Don't wait for the tax bureau to come up with complete data on the chain before you begin to pay attention to privacy projects!

It seems a bit metaphysical to discuss only privacy technology solutions, but if there are real needs, this problem can not be ignored. In China, digital currency trading has always been a tax haven, but at the beginning of the year, a classmate in the relevant department called me many times and asked me what happened to bitcoin and blockchain, and also told me that her Bureau was already studying the scheme of taxing large households.

Don't wait for the tax bureau to come up with complete data on the chain before you begin to pay attention to privacy projects!

From May, the volume of tornado’s decentralized mixed currency business has increased three times. The author’s point of view: no use, there are too many competing privacy solutions. The terms in this article are the upstream and downstream of the future privacy field. Fortunately, this concept has not yet froth.

Did you know that every time you do anything on Ethereum, you will always leave a transparent record? You must know! Keeping privacy on Ethereum is a nightmare at the moment, with a lot of friction costs. That’s why there are privacy tools like tornado cash that allow you to hide your transfer records by mixing currencies.

Don't wait for the tax bureau to come up with complete data on the chain before you begin to pay attention to privacy projects!

As can be seen from the data in the figure above, since tornado cash was launched into the Ethereum main network at the beginning of the year, its business has been growing steadily, reaching 6.8 million US dollars, which has doubled in September. This is mainly because the better the liquidity of tornado cash, the stronger the ability to provide mixed currency services. The most important thing is that the “anonymous set” is also growing, which has brought about a stronger ability to mix currencies.

But even if tornado cash is growing well, I don’t think privacy tools will become mainstream unless it becomes the default way to interact with Ethereum. I believe this will be done with popular wallets that support private transfers by default – imagine that metamask has a switch feature that allows you to switch privacy transfer on and off. But since private transfers are usually more expensive than public transfers, this is not a good solution – especially recently Ethereum gas fees are high.

This is the use of layer 2, which allows us to conduct larger scale privacy transactions at a very low cost. As for the universality of Ethereum layer 2 technology, we will not repeat here. However, there is an area worthy of attention, namely ZK Starks. We can also pay attention to its alternative solution zk-snarks. We can also conduct more in-depth research through the list of main resources.

Finally, we have more privacy protection tools that are already available, such as tor, brave browser with built-in advertisement / anti tracking, VPN with hidden IP, and various anti tracking browsers. Although these tools won’t help you hide the behavior on the chain, they will try to hide your general online traces to prevent you from being phished.

Even though I have said so much, I am pessimistic that most people don’t care about the privacy of online or online behavior. I personally understand the importance of privacy on the chain, but even for advanced users like me, there is a big friction cost to strive for privacy.

However, I think that when the tax department comes to the door with complete historical transaction data of users, people may really pay attention to the issue of privacy on the chain! On tax and privacy issues,http://Rotki.comHelp can be provided in both areas.

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