We have all probably used a credit/debit card or a trusted third party payment network to purchase something whether it be online or at a brick and mortar store. When you make a payment, you might also think that you’re only paying with your money but that isn’t the reality. With every swipe of your card, you are also paying with your personal privacy. You should only have to pay for things with your money; not with your privacy. Don’t worry though. Bitcoin fixes this.
Paying With Your Money
Whenever you pay for something with cash, you pick up a product on the shelf and go to the checkout counter and purchase it. If you use cash, then that payment is settled instantly at the point of sale. There’s no lasting record or fingerprint of your purchase. Nobody knows about that transaction except you and the business that you purchased from. It’s a private transaction between two parties. For such a purchase, you only pay with your money but when it comes to paying for things with digital money such as credit/debit cards, payment apps like PayPal, Venmo and The Cash App, you are paying with much more than just your money. You are also paying with your privacy.
Paying With Your Privacy
In an ever-increasing technology-driven world, fewer payments are taking place with cash as digital alternatives provide faster transactions, lower costs, and reduced risk of hijack. One of the many problems with these digital payment networks is the loss of privacy that comes along with these so-called benefits.
In order to have some sort of digital payment card, you need to have a bank account or use some a similar payment service like PayPal, Venmo, WeChat, Cash App, etc. All of these require all sorts of personal information about you commonly known as KYC regulations (Know Your Customer). Banks and governments claim that these sorts of regulations help to combat fraud by verifying your identity to ensure that the one spending your money is you. Although banks claim that this is for your own safety and security, it is actually part of a much larger surveillance network that banks use to monitor your spending and potentially punish you if you spend your money on things that they deem to be undesirable.
In order to make this happen, banks and payment providers are legally required to attach all sorts of identifying information to each and every purchase that you make. Personal info such as the date, time, location, purchase amount, your physical address, email address, phone numbers, and sometimes what you purchased are all stored by your payment provider.
It gets worse though. Some of these payment providers then sell that information to an unknown number of third parties. There’s no way for you to know who has access to your personal spending habits. Your data has become the product of multinational banks, corporations, and governments that they are all in bed with.
So, every time you spend money with a third party payment network, your privacy is eroded, your data is sold off to other companies where it is stored as part of an ever-increasing cache of personal data that is waiting to be compromised by bad actors.
Personal Information Hacks
In just the past decade, a number of prominent banks and corporations have been hacked which have resulted in personal information of hundreds of millions of people being compromised. Things like your name, email address, where you live, credit/debit card numbers, purchase history, and when you made the purchases. Here are just some of the most recent hacks that have resulted in the privacy of hundreds of millions of people being compromised.
The Target Hack – 2013
In late 2013, the U.S. retail giant, Target was the victim of a data breach that resulted in personal financial data about up to 40 million of its Target credit card holders and shopping habits of others who shopped at its store in 2013. To put that in perspective, that is approximately the entire population of Canada or 4 times the population of Sweden. That’s a whole lot of people who paid with more than just their money.
The Home Depot Hack – 2014
A data breach at The Home Depot back in 2014 became the new largest retail credit card breach in U.S. history with 56 million Home Depot credit card owners being compromised. Hackers then used a bunch of that information to launch phishing attacks against Home Depot cardholders.
The Equifax Hack – 2017
The Equifax hack of 2018 is probably the worst hack to date. Personal data such as social security numbers, dates of birth, and home addresses were compromised for as many as 143 million Americans. That’s approximately 44% of the population of the entire U.S.
What makes this hack particularly scary is that the Equifax website says that they operate in 24 countries around the world and has access to financial data for more than 820 million individuals and 91 million businesses around the world. That’s a lot of counterparty risk.
The Capital One Hack – 2019
On March 22nd and 23rd of 2019, the U.S. banking giant, Capital One, joined the list of major corporations that have betrayed the privacy of their customers when personal data for 100 million Capital One users was compromised. According to Capital One and the U.S. Justice Department, 140,000 Social Security numbers, 1 million Canadian Social Insurance numbers, and 80,000 bank account numbers were all compromised, in addition to an undisclosed number of people’s names, addresses, credit scores, credit limits, balances.
We are told that companies like these all have some of the best talent in the industry to protect your money and personal data but it seems that these so-called security experts that are in charge of keeping your data safe are better at detecting security breaches than they are at actually preventing them.
Bitcoin Fixes This
Literally, none of these hacks listed above would have been possible if these payment providers weren’t legally required to collect all of this information about their customers.
Unfortunately, too many people seem to think that there is some sort of political solution to the erosion of privacy but there isn’t. There is only a technological one and in the case of money, bitcoin is the technical solution to these kinds of problems. By not attaching your identity to your money via KYC regulations, your privacy isn’t eroded when businesses are hacked.
Paying with Bitcoin
Paying with Bitcoin is different than paying with legacy payment providers. In order to use bitcoin directly, you don’t need to surrender any of your personal information. In fact, you don’t even need an internet connection to generate a bitcoin address and begin accepting bitcoin payments.
You can use a wallet like The Cold Card to generate a new wallet completely offline and receive digital payments without requiring any of your personal information. Literally none of your personal info. Bitcoin is the first electronic payment network in the world to be capable of doing this.
Since Bitcoin doesn’t collect personal information about its users, more of your privacy is preserved than using a legacy payment network. In order to compromise your personal information using the Bitcoin blockchain, it requires a pretty substantial amount of resources using a method called chain analysis or chainalysis for short. This requires that financial service providers actually expend resources to try to decipher who owns what bitcoin and your spending habits rather than you just giving it right to them on a silver KYC platter.
Use Bitcoin
Each and every time you use your debit or credit card at a brick-n-mortar store or online, you are giving massive amounts of your personal data to your financial service provider.
All of this information is used to create a digital profile and fingerprint of you which is then stored in a database by any number of banks, governments, and corporations where it waits to be compromised by bad actors.
In a world where more and more payments are becoming cashless, bitcoin provides a way to opt-out of such financial surveillance networks. Instead of attaching your identity to each one every one of your digital payments, you have a way to make it more difficult for large centralized institutions to control your money and exploit your privacy.
Here at Reasons To Use Bitcoin, we believe that you should only pay for things with your money; not with your privacy. When you choose to use bitcoin, you are joining a payment network that allows you to control your own money while also taking back control of more of your financial privacy.