ZacharyZachary
29 November 2021
Nov 2021
21 min

Censorship Resistance

Censorship Resistance has long been espoused as one of blockchain technology’s most powerful attributes. This resistance is made possible by the level of a public blockchain’s permissionless immutability, which refers to something not being able to be changed. 

This unchangeability, when deployed amongst a decentralized network, lends itself towards the idea of a shared truth. Think of a blockchain as a distributed collection of network participants who are validating what is true in regards to a financial transaction. A truth is only valid once the entire network reaches consensus on it. If there was only one network participant who decided what was true, that network would be considered authoritarian.

Blockchain consensus mechanisms are disrupting traditional payment rails and power hierarchies by enabling users to transact in an uncensored, permissionless, and immutable fashion. Proof of Work (PoW) and Proof of Stake (PoS) are two popular forms of blockchain consensus that can be reached by a decentralized network and they each aim to combat authoritarian truths although they are still subject to vulnerabilities.

Permissionless Networks

Blockchains like Bitcoin, Ethereum, and Solana are permissionless networks. 

To open a bank account, you have to ask for permission to do so. This permission effectively enables the bank to become the arbiter of your assets. After making an initial deposit, you are trusting that the bank will maintain access to your funds and agree with you as to how many funds are in your account. To access these funds, you will again need the bank’s permission and often the bank needs the government’s permission.

When you deposit capital into a non-custodial blockchain wallet like Solflare, you are trusting modern cryptography and mathematics to grant you access and prove exactly how much capital you have. You did not need to meet any specific criteria in order to generate the wallet and you have no intermediary between you and what’s in the wallet. 

Permissionless systems may seem unnecessary to people who consider themselves as upstanding citizens. If I’m not breaking any laws, why would I have to worry about asking for permission to my bank account? Unfortunately, this is a naive perspective. Banks and centralized intermediaries can prevent you from accessing your capital for any reason they deem plausible. 

Source: Youtube: China’s Surveillance Cameras can recognize you

For instance, China recently banned and criminalized ​​all transactions and financial holdings involving cryptocurrency. Many suspect this to be a preliminary measure to set the stage for their digital Yuan which is expected to be the pinnacle of financial centralization, enabling unprecedented levels of censorship

China

When China’s CBDC (central bank digital currency) rolls out, the implications are grim. 

Since 2017, China has enforced jay-walking laws using facial recognition technology to send fine notices through text messages as soon as the jaywalker is on the other side of the street. It is not far-fetched to conceive of a future where, instead of a text message alerting you of your fine, the fine will immediately be taken out of your bank account.

How will China build its CBDC? Not on a blockchain. Although their prototype was built using a distributed ledger, they deemed it as unfit for their goals. Everything will be off-chain and private. 

Alongside China’s social credit system and content censorship, the government will soon be the custodian for its citizens’ bank accounts. This opens a pandora’s box of new threats to the individual in the long run. “Such tools present tantalizing opportunities for authoritarian states, financial institutions and corporations in the absence of effective controls.” – Source: ASPI.org

It’s not just China censoring its citizens, it’s Belarus, Russia, Brazil, Indonesia, Venezuela – the list goes on. 

Solana & Anti-Censorship

In 2017, Balaji Srinivasan and Leland Lee published a proposal for a metric known as the Nakamoto Coefficient to quantify a distributed network’s level of decentralization and Solana’s developers have taken heed. The Nakamoto Coefficient, aptly named after the pseudonymous Bitcoin founder – Satoshi Nakamoto, determines the minimum number of entities required to compromise a decentralized system. 

Solana’s co-founder and CEO, Anatoly Yakovenko, has been quoted as saying “If you don’t maximize the Nakamoto Coefficient, then you’re not building decentralization.”

Source

Although Solana’s level of decentralization is not ideal at the moment, it’s hybrid Proof of History (PoH) and PoS protocol, along with its predetermined leadership schedule enables additional security layers not found elsewhere. 

Transactions on Solana are verified by a network of validators whose slot distribution is determined by their stake weight. A slot is ‘a period of time that each leader can ingest transactions and produce a block’ and stake weight refers to the amount of SOL that has been delegated to said validators. PoH requires the validators to prove they computed enough transactions during their allotted slot and prevents previous blocks from being overwritten – effectively censoring validators from censoring other validators. 

These methods of decentralization and Solana’s impetus to improve its Nakamoto Coefficient make it a sustainable and secure network for facilitating all sorts of dApplications.

Myths of Nefarious Activity

Due to the uncensored, permissionless, and immutable transactions brought about by Blockchain technology, regulators have theorized all sorts of estimates of nefarious activities that are continually proven to be overinflated

In 2019, just 2.1% of all cryptocurrency transactions represented illegal activity. In 2020, that number fell to 0.34%. Meanwhile, in 2019, the US Justice Department described Chase bank’s Metal trading desk as a criminal enterprise. Chase has accumulated over $31,000,000,000 in fines for various offenses yet the crypto industry is still described as a haven for “criminal activity and terrorist financing” by the Secretary of the US Treasury’s very own Janet Yellen. Chase has been cited for criminal activity and terrorist financing also.

It’s not just Chase, it’s HSBC, Credit Suisse, Swiss banks, Wells Fargo, Goldman Sachs – this list goes on too. 

Self Custody through Solflare

The first step to becoming uncensorable is to self custody your capital with a non-custodial wallet. Solflare enables you to freely swap SPL tokens, stake SOL, and connect to any dApplication built on Solana. To get started, just click here

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