The Chinese government is attempting to circumvent one of the primary tenets of distributed ledger technology, by eliminating anonymity on the blockchain. Those wishing to continue to use blockchain services would need to provide their names and ID numbers. A draft for the proposed laws eliminating blockchain anonymity has been posted by the Cyberspace Administration of China and comments are open until November 2nd.
Draft regulations to defeat blockchain anonymity
The draft regulations come not long after an activist posted a letter in April concerning a sexual harassment cover-up at a top university. Content regarding the cover-up was censored on WeChat and Weibo. The anonymous poster then attached the letter to an ether transaction to himself. This can be compared to leaving a note in a bank transfer. Since all transaction records are public on Ethereum, the letter can be read by anyone.
Additionally, the immutability of blockchains means that records are permanently located and not alterable. As reported in the South China Morning Post, –
“Chinese users will have to register their real names before they can use online information services based on blockchain, in the first set of rules specifically targeting the technology behind digital currencies like bitcoin that is known for providing anonymity for users.”
The way that the regulation would come in force is that companies providing blockchain services would require users to submit their name and ID. Companies would be further required to monitor and censor content deemed a threat to national security, and they would also be permitted to store user data for inspection by the authorities.
China v blockchain
The Chinese government infrastructure in many ways embodies the opposite values of distributed ledger technology. It is fast becoming known as a surveillance state with cameras on every urban street corner in an attempt to track citizens in real time with facial recognition technology. It was one of the first countries to ban cryptocurrency exchanges and ICOs from operating in the region. Recently, cryptocurrency news accounts on WeChat were shut down by the Chinese internet police, with no solid reasoning given. The proposal is a further representation of an invasion of civil liberties and privacy in the region.
China already has rules in place where social media users need to provide their real names and register to post in forums that are actively monitored. Social media platforms powered by blockchain provides users with the opportunity to post in anonymity, without a centralized entity owning all the data. The most popular example of this is Steemit, and there is no Chinese equivalent. The removal of blockchain anonymity will likely push users towards privacy-based coins and services where privacy is built in, where the networks are designed to be censorship resistant.
Digital Nomad with an interest in Zen and Blockchain technology.
Law graduate with 3 years experience as a consultant in the capital markets industry and 4 years experience freelancing on UpWork as a Creative Writer.