Silk road LLC – privacy and ethics

The curious contradiction of an emerging technology is that it's simultaneously lauded and condemned. Possibilities good and bad are considered and weighted.

Probably we tend a bit too much toward moralism—almost everyone interested in blockchain has been told that it's just for drugs. There's something to this: many people first heard of Bitcoin as something used on dark net markets, such as the Silk Road, and this use of Bitcoin is arguably responsible for the popularity of cryptocurrency. The same people might then be surprised that you have, in fact, been receiving your salary in Bitcoin for six or seven months.

Each evangelist has to genuinely consider the drawbacks—in Bitcoin, for instance, privacy remains a large problem. As of this writing, this seems very unlikely to change. Take any idea that would do so much for transparency—say, a crypto corporation, with its transactions, or at least its balance sheet, on the record, available for all to see. The idea is conceptually sound, and it would improve tax collection and compliance.

Employees who were previously off the books might enjoy social security credit. Wage parity between people of different racial and ethnic groups might be achieved. Organizations that serve as fronts for money laundering would have to do so under greater scrutiny. Financial statement fraud would be easily detectable. Insurance rates would plummet—or at least my errors and omissions insurance would get cheaper.

All of this sounds pretty great until you consider the obvious drawbacks of everyone being in everyone else's business, and one hopes that the people building and purveying any technology, not just blockchain, stop and carefully consider the value of privacy.

Take another example: electric smart meters offer improvements in efficiency to utility companies. It eliminates obscene amounts of human labor. Rather than having a person come by to read the meter on every single house regularly, the meter transmits data on power usage on a regular basis. In theory, this would also provide benefit to the consumer: unplug your refrigerator for 20 minutes and see how much juice it's using. Less directly (and perhaps out of naïveté), we would also assume that the utility's savings are passed on to the consumer in the form of lower power tariffs.

So, where's the downside? Some of the least sophisticated of these meters could identify, say, the use of a microwave. A sudden increase in power usage in exactly the amount of 1000W for about a minute, for the sake of argument. If you find that a given household uses 1000W right around sundown every day during the month of Ramadan, you've probably identified a Muslim family observing the ancient tradition of fasting. If you find that from Friday night to Saturday night there's no power usage at all, perhaps you've identified an observant Orthodox Jew.

However benevolent an authority may seem now, information tends to stick around, and it is terribly empowering to people with ill intent. Consider that the Holocaust was especially bad in the Netherlands, but killed only a single family in Albania. The former country was great at keeping records. The latter, terrible.