I'm preparing to record the Generational Wealth with Cryptocurrency podcast tonight. One of the news stories of this week is that zkSNACKs (the company primarily behind the Wasabi wallet development) is going to block certain UTXOs. Reading up on this has really got me thinking about the importance of decentralized services. So let's jump on into the fray. From their twitter feed:
The zkSNACKs coordinator will start refusing certain UTXOs from registering to coinjoins.
While not explicitly said the implication is that this is being done help keep Russians from evading sanctions on their country. While I'm quite certain that the invasion of the Ukraine by Russia is not a good thing, is it ok to ban every citizen? Many of these citizens don't support the actions of their government. The national currency of Russia is in a free-fall. If I where a Russian citizen I would want to shovel every little bit of value I could into bitcoin right now to keep it from depreciating. Why would it be ok to deny them the right to this? Bitcoin isn't communist or capitalist, Democratic or Republican. It is simply the most stable, secure form of currency ever invented.
I will presume to say that this is being done to keep zkSNACKs from being caught up in legal trouble. Given that they are a company in Gibraltar I doubt that would ever happen but I'm sure that is the reasoning.
One of the core tenants of Bitcoin is that it is decentralized. This is very much a centralized service (even if the wallet code is open source). And with that centralization comes a price. In this case the price is that whomever is deemed bad can be blacklisted.
Interestingly just recently the Treasury Department of the US released a report refuting one of the primary FUD pieces that has been brought up MANY times over the years. They determined that there was very little illicit activity actually occurring on Bitcoin. Surprise, surprise. We are not all drug dealers and money launderers..something about that transparent blockchain.
I will leave you with a few thoughts. When choosing your services keep in mind that any centralized service is a single point of failure. And while today's evil might appear cut and dried, censoring is just not an answer in the vast majority of cases. And remember that some services that don't appear centralized actually can be. I bet that alone caught many people by surprise with Wasabi.