ReFiNitely #7: Anonymity In Web3 and Crypto
Last week, we hosted a great Twitter space with one of our new partners, Open Forest Protocol. During the call we discussed forestry, carbon markets and how web3 can help scale these industries.
The free flowing conversation went in a variety of different directions, we even got a chance to discuss the benefits and disadvantages of revealing your true identity in the crypto space. In the early days of the industry, anonymity was extremely common, even the legendary creator of Bitcoin is only known by their pseudonym Satoshi Nakamoto.
There are also plenty of people using pseudonyms in the ReFi space, including some of us on the Solid World team, although our identities are pretty easy to track down if you look beyond Twitter.
This aspect of crypto culture has come into question over the past several months, as serial scammers have been caught jumping from project to project, ripping off investors, and then changing their names to do it all over again.
This has happened in DeFi recently when one of the main contributors to the Wonderland protocol was unmasked as Michael Patryn, the co-founder of an early crypto exchange called QuadrigaCX, which famously lost all of its users’ money in 2019. Patry was also arrested for identity theft and credit card fraud in the early 2000s, before moving into crypto.
These incidents have many investors prioritizing teams that are willing to show their faces and reveal their true identities, but does this clash with crypto values? Not really.
The culture of privacy in crypto comes from its founding figures, a group of cryptographers who called themselves the cypherpunks.
This niche group of early internet adopters conceptualized things like cryptocurrency, file sharing, and social media years before they were a reality. Their take on privacy was clear: “Privacy for the weak, transparency for the powerful.”
If an individual or small group is holding the keys to a project’s treasury, or if the outcome of the project is mostly dependent upon their success, it is reasonable for people to expect a certain level of transparency from these teams, because they hold a significant amount of power in their ecosystem.
Since we are in an open system, everyone has the right to be private if they want to, and this includes builders, but this decision could also make some investors more skeptical about their project.
On the other hand, there are also times when anonymity is necessary to innovate in the face of repressive regimes or corrupt regulations.