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Digital Forensic expert finds Bitcoin as one of the most traceable currency

Mar 11, 2018 Posted /  8009 Views

Digital Forensic expert finds Bitcoin as one of the most traceable currency

Michael Perklin, an expert in the digital forensic examination and head of information security architecture at ShapeShift, in an exclusive interview with Binary District, argued about the popular misconceptions like lack of privacy in bitcoin, security issues in storing sensitive user information, and the rapid growth of the cryptocurrency market in general.

In the interview, Perklin described bitcoin as one of the most traceable currencies on the planet, due to its lack of privacy solutions and measures. The implementation of strict Know Your Customer (KYC) and Anti-Money Laundering (AML) systems by nearly every regulated bitcoin trading platform in the market, makes it easy for government officials and law enforcement agencies to trace the identities behind bitcoin wallets and transactions.

Although media coverage depicting bitcoin as anonymous criminal money has drastically decreased since 2016, Perklin insisted that the mainstream media resumes misleading bitcoin as a private currency.

“Bitcoin is one of the most traceable currencies on the planet, and contrary to media misreporting over the last few years, Bitcoin is not anonymous and offers very little privacy protection to its users,” Perklin explained. “If a user values privacy above all else, face-to-face meetings where they exchange value, products, services in private will ensure digital footprints are not left behind.”

As long as strict KYC and AML systems are integrated into the operations of virtually every bitcoin service provider in the market, bitcoin users will not be able to enjoy complete privacy. Perklin expressed his concerns over the KYC and AML systems that cryptocurrency and Bitcoin businesses use. Specifically, the fact that bitcoin exchanges and trading platforms are required by law to maintain sensitive financial and personal data of millions of users, which can lead to various security vulnerabilities.

Despite having raised enough capital and resources to comply with the new regulations of the state of New York, ShapeShift founder and CEO Erik Voorhees terminated the services of ShapeShift and left the country, taking the responsible approach to securing user data privacy.

“You can bet that if we had, for example, followed the New York Bitlicense and were taking personal, private information of every single customer that was on our website, all of that personal and private information would now be in the hands of the hacker [and] all over the dark web”, Voorhees said in an interview.

Perklin agreed with the sentiment expressed by Voorhees and ShapeShift, explaining that companies of any size should be cautious when dealing with personally identifiable information (PII).

“By storing PII on your servers, your company accepts the risk of safeguarding it for each of your customers, and if your systems are breached you not only lose your data but that of your customers as well,” said Perklin. “The recent Equifax breach highlights the dangers associated with storing PII and underscores the need for data protection, such as encryption. It is for this reason that ShapeShift refuses to collect this information in the first place so that our customers are never placed at risk.”

Interestingly, the growing popularity of bitcoin also sparked the emergence of non-custodial platforms and applications that do not store any personal or private information of users. Examples of non-custodial platforms include bitcoin hardware wallet Trezor, and web and mobile bitcoin wallet Blockchain.

Applancer is an open platform for discussion on all things like Blockchain , Cryptocurrency and Ico news updates. As such, the opinions expressed in this article are the author's own and do not necessarily reflect the view of Applancer .

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Tags: bitcoin Michael Perklin privacy in bitcoin

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