In this article I want to reflect on a paradox in the design of Bitcoin: that at the same time possesses the qualities of being incense and transparent. As Bitcoin enters more and more in the traditional financial world, who try to promote this asset are at a crossroads: if Bitcoin is incense, it scares investors and users the possibility of being involved in a system without control or regulation; If transparency is what allows control and regulate that system, what is the point of censorship resistance?
Why of these two characteristics
When Nakamoto created Bitcoin in 2008, the problem to be solved was not so much incense or anonymity, not even the long -term value. The problem was to achieve a digital cash system that works. For that, to solve the problem of double expense without a privileged actor, it is that he managed what we know today as a block chain: a combination of P2P shared database with a succession transactions secured by cryptographic firms. For this base to be verifiable, it had to be public. Nowadays we have technologies such as ZKP and confidential transactions such as Monero’s that allow transaction information and maintain them verifiable, but in 2008 the challenge was simply to achieve a system that works.
Thus, Bitcoin was constituted as a transparent system, exposing all transactions openly, but incensurable. Those responsible for processing block transactions are miners. A miner can build a block with the transactions you want, so you can arbitrarily leave some outside. However, a miner cannot force other miners to accept or reject certain transactions in particular. The miner that gets the valid hash for your block wins.
Even if a miner manages to draw a block censoring a transaction before others, nothing prevents others from including it in one of the following. The criteria that miners have to accept transactions is in general economic: they first accept the transactions that pay the greatest rate. That is to say, While there is the possibility that some miners do not admit certain transactions, economic logic is imposed and those transactions end up happening. This balance between transparency and incensurability is beginning to stagger as BTC mining and possession are institutionalized.
The awkward conversation
With the rise of the BTC treasureries that we are seeing for 2025, more and more corporate voices appear explaining to companies Bitcoin’s benefits. Since this audience is especially concerned about legality and regulatory compliance, the speech presented to them is very different than that addressed to Cypherpunks (or simply to the third world savers). However, some of Bitcoin’s Cypherpunk bases always sneak (since their value proposition is closely linked to them).
Let’s take this promotional video of Swan Bitcoin as an example, which addresses several common places of the Nocoers. First they talk about decentralization, the impossibility of prohibiting currency, and just mention regulation. By minute 10 they refer to criminal activity and money laundering. From the perspective of the video, everything is fine because on the one hand the government cannot effectively prohibit the use of Bitcoin; But on the other, being a transparent system it turns out that it is not appropriate for criminals, because they can be easily identified. As a second example, let’s see this note of Alex Gladstein, human rights activist. The Spanish title is something like «How to make your money tested by dictators», and digging in these two speeches is that we can find the contradictions between these Bitcoin qualities.
Gadstein’s text talks about How human rights activists can be financed through Bitcoin to skip the controls imposed by authoritarian governments. Now, the earliest example of this financing, mentioned by Gladstein himself, is that of Wikileaks using BTC when payment processors froze their accounts. In this case, it was not any dictator but of the US government wanting to silence the organization.
This first historical case already showed all the tension between these two qualities. Who decides what a crime is and who is a criminal? The government, whether democratic or authoritarian; Does it make sense that a government cannot block Bitcoin transactions if it can also go looking and locking the natural persons who execute them? Not really, freedom looks just as alibi; Why could a «good» government analyze the block chain to chase the «bad» and a «bad» government could not do the same to chase the «good»? Nothing guarantees this; And what objectively decides who are the good ones and who the bad? Of course nothing.
Here is the dilemma: as Bitcoin is an open system with equal rules for all, Transparency and incensurability cannot be administered in a discretionary way. Giving transparency so that «criminals» can be caught in «free» countries is also given to catch «activists» in «authoritarian» countries, and vice versa. On the other side, Incensurability will also be both for «activists fighting oppressive regimes» and for «criminals acting in bad faith in free countries.» All this was already clear in the case of Wikileaks and during all the years in which the US pursued Assange for showing his war crimes, claiming that he harmed his national security.
This dilemma is becoming more important in this year in which many companies began to put BTC in their balance sheets and US regulators decided to boost the entire Crypto industry. All these companies do not manage their BTC as an individual user would, but almost exclusively through financial entities and wallets declared to official agencies. That is to say, These companies do not have self -ustody and if they had it, they also presented their wallets to complete traceability.
Now there is not much talk about the subject, but this can give rise to a schism between «legal» bitcoins and «gray» bitcoins in unknown wallets. The cases of platforms that reject transactions or block accounts for having coinjoins or other forms of anonymization in their records are already quite common.
In parallel to this, we are also seeing Bitcoin developers worried about filtering or censoring information stored in BTC transactions. Although at first this filter would be applied only by the nodes, that is, each node would save the information that it considered relevant, without prejudice to others, in recent days certain proposals were leaked to also involve miners in this type of filters.
The questions are similar: who decides whether inscriptions are «spam» or «illegal»? If the address pays an X Sats/Vbyte fee, what does it matter what information in the transaction? This is not how the model works? If the door opens to the arbitrariness of blocking a transaction, or part of it, for containing «illegal» or «spam» information, it will easily be used to Block transactions or even directions for being «suspects» or «not verified.»
At some point we will have to choose
This tension between transparency (lack of privacy) and incensurability will not be able to remain indefinitely. There are going to be social forces and actors by pulling towards either side. As is attributed, for example, the community of Monero, it is true that the transparency of Bitcoin helped to enter the institutional world easier (in addition to the fact that Monero’s privacy functions also limit their scalability at the technical level). However, I think that having so much capital inside, default privacy can be improved without this fleeing.
If we are on the path of transparency, we will end where we startwith a completely available to the authorities of the authorities already mercy of arbitrary decisions by these. A digital panoptic where all our financial activity is exposed and controlled. It may first be external only, with forensic transaction and research analysis tools. Then they may get a majority of nodes to cooperate with control blocking transactions; And finally, they will surely press developers to modify the protocol and let it centralize it in the hands of political authorities.
Not that this is easy to do. Both the decentralized structure of Bitcoin and the global distribution of nodes, miners, users and developers in non -aligned countries entered if it makes it difficult. However, as we have international standards for communications and finance, it is dangerously real to establish international standards for Bitcoin that attempt to regulate and bureaucratize a system in pursuit of «security», «the fight against terrorism», «money laundering», «tax evasion» and other pretexts for intervention and surveillance
On the other hand, what I think is the ethos that led Bitcoin to exist, is to continue on the path of privacy and supply the shortcomings he had for being the first cryptocurrency. That is to say, I don’t think transparency has been a feature The Bitcoinbut only a requirement to make it work in the first instance. Similar to how ECDSA signatures began because Schnorr were not yet available openly.
Today there are multiple proposals to improve Bitcoin’s privacy. Second layers such as the Lightning and RGB network already provide a large privacy capacity since their transactions are not public such as those of the base layer, in addition to implementing zero knowledge tests (RGB) or onion routing (Lightning). In the base layer, coinjoins are the most popular, and more refined proposals such as Snicker, Coinjoinxt and Payjoin (BIP 78) are also appearing, the BIP 352 of silent payments is also under discussion. Anyway, to be really effective these technologies must be implemented in most default wallets, not only in specific wallets such as Samourai. Do not only increase the value of BTC by increasing its privacy, but would make the most efficient transactions When brings together them.
In conclusion, increasing Bitcoin’s transparency will take us back to the beginning and possibly limit or destroy the value of the first cryptocurrency. On the contrary, fixing your privacy deficiencies and reducing your transparency will give you greater value, minimize the possibility of censorship and make this digital system of payments the most efficient and robust.