Anonymity in the Cryptoverse

There is nothing new about anonymity in the cryptocurrency industry. From Bitcoin and its creator, Satoshi Nakamoto, through Komodo, Peercoin, and other projects, there have always been developers and founders who choose to navigate the cryptocurrency world anonymously. According to conventional thinking, Satoshi Nakamoto’s anonymity allowed the original cryptocurrency to grow spontaneously, without its evolution submitting to the disproportionate weight of a single authoritative figure.

There are several reasons why a project team should remain anonymous while retaining the project’s integrity and openness. Today, we will discuss some of the reasons why certain crypto leaders want to stay anonymous.

🛡️ Staying safe in Crypto

Keeping one’s identity concealed keeps them secure. While it is improbable that a person’s health would be jeopardized as a direct result of operating a cryptocurrency project, it has occurred in the past and can occur for a variety of reasons.

Andre Cronje, the developer of Yearn, was working on an unfinished project called Eminence in late 2020, which may have been one of the more significant instances (EMN). Based on the popularity of Cronje’s past works, investors gave funding to the unpublished project once the community caught on. The following exploitation and draining of an Eminence project smart contract resulted in a $15 million loss.

As a result, Cronje got a number of death threats via social media and was even sued by a few of the investors. Both of these problems may have been avoided if the developer was fully anonymous or at least concealed his connection to the Eminence project, which the community overhyped because of the success of Yearn in the past.

💻 Social manipulation attacks

Eliminating attack vectors is another excellent argument for anonymity. The crypto sphere is infested with fraudsters and hackers due to the nascent nature of cryptocurrencies and the infancy of the ecosystem, where many individuals are still susceptible to being duped.

As a result, individuals working in blockchain organizations or projects might be viewed as hacker targets, and social engineering is frequently one of the most effective methods for gaining access to an individual’s computer or accounts. These sorts of assaults may be highly successful and can affect even the most skilled and technologically knowledgeable professionals.

Hugh Karp, the founder of Nexus Mutual, was hacked recently, resulting in the loss of 370,000 NXM. According to the blog post that summarized the events leading up to the breach, while the assault was an intricate hack that compromised Karp’s computer, it was also an obviously targeted one.

The hackers were aware of their actions and their targets. Something which could have been prevented.

📑 Regulation in crypto

Despite the fact that projects often aim to adhere to the law, it can be difficult to do so in an environment with limited regulatory guidance. This is the situation with crypto, a fledgling industry that is being regulated as innovation accelerates, meaning that new legislation or action by authorities might have disastrous effects on the enterprise.

XRP from Ripple is a perfect example. The Securities and Exchange Commission (SEC) has filed a lawsuit against Ripple, causing exchanges like as Binance US, Coinbase, and others to delist the coin. As news of the case spread via the media, the price of XRP dropped dramatically.

The Financial Conduct Authority (FCA) restriction on cryptocurrency derivatives for retail investors in the United Kingdom is another intriguing instance. However, many point to decentralized derivatives as a potential solution to evade the restriction, providing ordinary traders access to the financial instruments of their choosing. While decentralized initiatives cannot be “stopped,” other vectors can be used, including pursuing the developers and founders of the project.

While it is commonly believed that DeFi is legal, regulatory obstacles may soon emerge, and if they do, anonymity may be the only option to protect the public’s access to decentralized financial instruments.

🎭 Cryptocurrency identity scams

As previously said, frauds are rife in the cryptocurrency industry and come in a variety of ways. Posing as the creator of a given project or company or a well-known individual in the industry is possibly one of the most prevalent methods of duping naive investors out of their hard-earned money.

Many of these frauds are disguised as gifts, loans, or promises of greater profits. For instance, in July 2020, a large Twitter attack compromised the accounts of prominent figures like Elon Musk, Jeff Bezos, Warren Buffet, Coinbase, and Binance. Other common instances include false Twitter or Telegram profiles, which prompted Vitalik Buterin, the founder of ETH, to modify his handle to “vitalik is not giving away eth.”

As a result, maintaining a low profile helps protect the project’s community from these sorts of attacks.

🏛️ Politics and crypto

With the rise of “cancel culture,” even innocent fictional figures, such as the popular Pepe frog, can be recast as “hate symbols.” This final example is growing increasingly important over time. On the Internet, individuals frequently share their opinions, whether they are political or not. A project leader’s controversial beliefs, remarks, or actions might have a detrimental effect on the project.

For instance, Tesla stock prices declined following the infamous Joe Rogan podcast episode in which Elon Musk smoked marijuana with Joe Rogan. The same thing occurred when he tweeted that Tesla’s stock price was “too high.”

There are further instances inside the crypto industry. For instance, Bitcoin forks have a poor reputation due to some of the individuals associated with them, such as Roger Ver and Craig Wright, who have questionable reputations in the crypto sphere, and whose association with their respective Bitcoin fork projects has harmed the reputation of said projects.

As such, anonymity may be a terrific method to exercise one’s right to free speech in one’s personal life without fear of repercussions in one’s professional life.

🌍 Less developed countries

In today’s connected world people travel or work from remote places. There are countries that have unreliable state services like police or significant organized crime problems. In such conditions a publicly known crypto person can become a target if the malicious group sees an opportunity for some relevant gains and methods can be employed that luckily most of us know only from movies. Just the recent war conflict in Europe showed how targeted raids after personal funds and privileged information and access are indeed possible even in a democracy.

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