In January 2010, a 25-year-old Mark Zuckerberg addressed an audience of Silicon Valley luminaries with a bold argument. Privacy, he claimed, was no longer a social norm. Five short years had been enough to make “sharing more information […] more openly and with more people” a widely accepted practice by his account. By presenting it in this way, Zuckerberg made it sound like a natural movement, a social equivalent of continental drift — one that, of course, happened to benefit Facebook’s ambitions massively.

In fact, this was a performative claim, not a descriptive one. It formed part of a concerted effort by Facebook to bring about such a shift in social mores actively. And this effort was largely successful. Twelve years later, the consequences of a privacy-free society are everywhere. Unfortunately for Zuckerberg, these consequences hardly recommend his vision of ubiquitous sharing and inescapable transparency. From deep inside a global data surveillance machine, privacy now seems like an essential feature of any sane and healthy civilisation.

Of course, we can’t lay all the blame on Zuckerberg. The idea that user behaviour could be aggregated and analysed to sell highly targeted advertisements was first introduced by Google. Following its lead, Twitter, TikTok and others have all built multi-billion-dollar empires on the same basic model. As a result, the Web2 era saw users trading privacy to access large-scale, user-friendly platforms.

However, the last few years have seen a great deal of buyer’s remorse over this hastily cut deal. Concerns about online privacy have grown consistently and have led Apple and Google to offer users some semblance of control over tracking. But it’s not necessarily the safest option to expect companies who owe their wealth and influence to mass data surveillance to undo the damage voluntarily.

Thankfully, an alternative has surged into public view over the past two years. Though the underlying concepts are decades old, the growing uptake of blockchain-based innovations indicates an increasing desire for change in how we conduct our online lives. Tired of being tracked and targeted by companies that don’t have our best interests at heart, users are searching for ways to interact online without having to share endless amounts of personal information. And this possibility sits at the heart of Web3, understood as a decentralised, permissionless, and privacy-centred future for the web.

Despite how Web3 is often pitched as a solution to the manifold woes of the Big Tech era, the reality is more complex. On closer examination, it’s not quite so simple as promoting blockchain-based apps and platforms as the alternative to Web2’s relentless capturing of personal data. Indeed, as is often pointed out, public blockchains are, in some respects, significantly less private than the highly centralised platforms of Web2. Moreover, the simplistic idea that mass adoption of blockchain tech will solve the privacy problem will only provide false hope — or give detractors a handy strawman to demolish in their quest to prove Web3 is a fad.

In reality, Web3 fundamentally shifts the terms of existing online privacy debates. The radically public nature of the blockchain is key to its trustless and permissionless nature. It is because everyone can see all the transactions taking place that nobody needs to verify their identity with а central authority to take part. The result of this strange, almost paradoxical feature is that it no longer makes sense to speak in terms of a simple opposition between identity and privacy. Instead, it is a question of giving users a way to interact and communicate online in verifiable ways while allowing them to choose how they will — and will not — be identified.

As a result, the consistent mainstream focus on the anonymous nature of crypto is misplaced. Generally speaking, it only serves to advance the narrative that crypto is mainly of interest to criminals and people with something to hide. Of course, blockchains can facilitate anonymous transactions. But the truly transformative impact of blockchains on the issue of online privacy comes from pseudonymity, not anonymity.

While the two terms are often conflated thanks to their shared association with secrecy, anonymity and pseudonymity are essentially different. Anonymity literally means without a name; an interaction or communication is anonymous if it is not signed and it cannot be otherwise connected with a specific author. Think of comment sections under blogs that don’t require a login or a username to make a post. For anyone viewing the blog, the posts are all independent from one another unless the poster deliberately identifies themselves.

Pseudonymity refers, by contrast, to the use of a fake name — it allows the author to be identified to some degree but within parameters that they can control. Pseudonymity has a long and venerable tradition, allowing people to share ideas and engage in activities without giving up their legal names or identities. Authors and activists working under pseudonyms can still build reputations, establish ongoing relationships, and cultivate trust and respect. But they do so on terms that they set themselves.

Much of the current debate around identity and privacy online has been centred around the question of anonymity. While Zuckerberg’s anti-privacy crusade has long been directed towards closing the gap between an individual’s online persona and their “real life” identity, the alternative has often been framed around the right to be anonymous. The debate over online harassment and trolling, for example, has essentially turned into a discussion on whether it is reasonable to require users to provide their legal names when using social media on the assumption that anonymity encourages abusive behaviour. In fact, evidence suggests that the opposite may be true.

Whatever the merits of this debate, it effectively distorts the privacy implications of Web3 — and it does so by erasing a vital part of web history. While the possibilities for anonymous interaction were undoubtedly exciting for the earliest “netizens”, pseudonymity has been similarly fundamental to web culture since its inception. And it was vital for the emergence of crypto.

While crypto has finally filtered into mainstream consciousness over the past two years, its origins lay in the first flowering of internet culture. As early as 1983, the computer scientist David Chaum was proposing a form of electronic money called eCash. Two years later, he described the use of cryptographically signed messages to allow secure interactions between digital pseudonyms. But it was the early 1990s that saw digital transactions and pseudonymous identities become part of a fully-fledged cultural movement. The cypherpunks were a group of Bay Area computer scientists committed to preserving online privacy on an increasingly corporatised web. They formed a mailing list, distributed a manifesto, and a movement was born.

Thirty years on, the cypherpunk manifesto reads as almost impossibly farsighted: “We cannot expect governments, corporations, or other large, faceless organisations to grant us privacy out of their beneficence. […] We must defend our own privacy if we expect to have any.” While the manifesto refers extensively to anonymity, it also highlights the importance of digital cryptographic signatures — which is to say, pseudonyms.

It’s no understatement to say that without the cypherpunks, the crypto space as we know it would not exist. One list member, Adam Back, invented Hashcash, the cryptographic proof-of-work (POW) protocol utilised by Bitcoin. Hal Finney, who refined Hashcash’s POW system further, was also a member, as was Nick Szabo, who wrote an influential proposal for “bit gold” in 2008, just one year before Satoshi Nakamoto’s famous Bitcoin whitepaper.

And, of course, any consideration of the role pseudonymity has played in the emergence of crypto cannot overlook the most famous example: Nakamoto him- or herself. While there have been endless debates, discussions and detective work devoted to identifying the inventor of Bitcoin, to date, their identity remains unknown. Unsurprisingly, Finney, Back, and Szabo have all been at one time or another identified as the person behind the Nakamoto pseudonym; all three have vehemently denied it.

What cannot be denied is how crypto, from its very origins, was envisioned as a way of safeguarding digital privacy through the use of pseudonyms, whether these be fully-fledged names or simply verifiable digital signatures. What was essential was the ability to attribute a particular transaction to a specific user without requiring them to identify themselves. Three decades on from the first flourishing of the cypherpunk movement, it’s clear that this aspect of crypto has the potential for cutting through the increasingly unproductive debates around online privacy. And nowhere is that clearer than in the fast-growing NFT space.

Suppose a single defining image conveys how rapidly NFTs transformed from an obscure and seemingly frivolous enthusiasm to a mainstream cultural trend. In that case, it must surely be Jimmy Fallon and Paris Hilton proudly displaying printouts of their Bored Apes. Bored Ape Yacht Club (BAYC) displays the best or the worst traits of the NFT boom depending on your point of view. A collection of 10,000 jpegs of cartoon apes algorithmically generated from a set of basic features, they initially sold for 0.08ETH each — around $190 at the time of minting. The floor price on OpenSea, at the time of writing, is 88ETH. At the current exchange rate, that’s around $230,000.

It’s easy enough to mock the BAYC phenomenon as representative of the faddish nature of the NFT boom. But whatever you may think of the Bored Apes themselves and the astonishing prices they continue to fetch, BAYC points to something more profound and more significant about the implications of NFTs for the future of the web. Part of the reason BAYC took off so spectacularly, while other similar collections failed to do so, is the specific cultural resonance they had for those who “aped in” — crypto slang for rushing to buy a new coin or token without doing much research first.

BAYC wasn’t just a collection of garish, cartoony NFT characters — it was a collaborative art project, a punk provocation, and a self-referential joke. And this combination spoke very powerfully to self-identifying crypto enthusiasts. Owning a Bored Ape was a way to signal your affinity with everything that the rising tide of the crypto boom symbolised — a freer, more open, perhaps somewhat anarchic revisioning of the web. It also acted as a membership token, giving you access to an exclusive online clubhouse full of like-minded people who you could be assured were willing to put their money where their mouths were.

And most importantly, none of this required you to reveal anything about your offline life. For example, if you owned a Bored Ape, this could serve as a publicly verifiable testament to your involvement in the crypto space, as well as a way of visibly identifying yourself to others through the character you’d purchased. The BAYC founders utilised suitably irreverent pseudonyms — Gordon Goner, No Sass, Gargamel, and Emperor Tomato Ketchup — with their own Bored Ape characters as avatars.

BAYC is, in some ways, just a continuation of the ethos that spurred the cypherpunks and Satoshi Nakamoto — a commitment to the possibility of taking part in a community while remaining in complete control of how you appear and what others know about you. And this possibility will only become more significant as the still-nascent metaverse begins to take shape. Depending on how it is constructed and the imperatives that guide it, the metaverse could either be the next step in totalising web surveillance or a liberating moment for the construction of our digital selves.

At present, the struggle over the metaverse is just beginning. Facebook’s rebranding as Meta has been much discussed — and rightly so — as a significant danger for those who would like Web3 to be something more than just a VR version of Web2. And unsurprisingly, Meta’s earliest steps in this direction are continuing Zuckerberg’s long-running battle against pseudonymity. Despite indications that this will change in the future, Meta’s Oculus VR headsets still require a Facebook account to use. This ultimately means that they must be associated with your real name and other personally identifiable information (PII) required by Facebook. Similarly, Meta has generally been committed to a one-account-per-device policy, only temporarily relaxing this until adoption grows.

But as we’ve discussed elsewhere, experiments with gaming metaverses point in a different direction. The role of avatars that users can extensively customise, which do not necessarily reflect their physical appearance, alongside usernames, clan tags, and other forms of pseudonymous identification, is already revealing just how powerful they can be. Of course, such pseudonymous identities are generally still associated with a user account regulated and controlled by the game’s publisher, acting as a central authority to whom one must give certain information. But the rise of blockchain-based gaming stands to change this dynamic, offering players the ability to craft their avatars over which they will retain complete control.

The same trend toward pseudonymity can be seen in the creator economy. While many prominent creators have built brands based on their personal identities, trading on the authenticity of sharing the reality of their day-to-day lives with their followers and fans, others have taken a very different approach. The last few years have been marked by the rise of the Vtuber — that is, streamers and vloggers who use digitally generated avatars to interact with viewers. When popular Twitch streamer Imane “Pokimane” Anys experimented with using a virtual avatar on her streams, she cited the potential privacy benefits as part of her motivation, highlighting the extreme scrutiny and criticism that female streamers, in particular, are subjected to.

Online pseudonymity has long been understood as a way for individuals from marginalised groups to avoid long-standing biases or for those from more restrictive social environments to evade the scrutiny of their families or local communities. With the rise of the digital avatar, these possibilities are being drawn into a broader shift toward malleable, mobile self-identification. As a crypto advisor and former Twitter employee Holyn Kanake puts it, “Online shouldn’t have to mimic offline life because identity is so much more than a driver’s license. Identity is complex, dynamic, and liberating; a pseudonymous existence online would help us manifest this premise.” And it is this pseudonymous existence that crypto, with its focus on open and permissionless connections between individuals, could serve to enable.

Pseudonymity is not a simple, one-step solution to online discrimination. As we’ve discussed, crypto remains a heavily male-dominated space despite offering, in principle, a level playing field. Further, basing inclusivity on people’s ability and willingness to conceal aspects of their identity is deeply limiting. Moreover, the fact that blockchain transactions do not require people to disclose their gender or ethnicity should not mean that people feel unable to do so. As a result, we must continue to work on other fronts toward building a truly equitable future for Web3.

Core to such work is ensuring that Web3 is decentralised all the way down. As we’ve discussed recently, Moxie Marlinspike’s trenchant critique of the existing Web3 infrastructure reveals tendencies toward centralisation that will potentially undermine the privacy benefits of pseudonymity. Further, many blockchain-based applications continue to rely on centralised cloud providers for their computing needs — a problem that will continue to grow as the metaverse becomes a reality. Given the data-hungry ambitions of the dominant cloud providers at present, this should give those optimistic about the potential for blockchain-based pseudonyms pause. Unless you can determine how much of your identity you are willing to share and in what circumstances, the reality of Web3 may not be that much different from what came before it.

This is why Cudos is striving to offer a truly decentralised infrastructure for the future of the web. The Cudos network is highly interoperable and solves the sustainability and scalability issues of the most popular blockchains — but this is just the first step. With Cudo Compute, the Cudos network will offer access to decentralised cloud computing. As a result, dApps and metaverse-ready platforms will not need to rely on centralised providers for their ever-growing computing needs but instead be able to access scalable, sustainable cloud resources across a vast decentralised network. So for those hoping for a privacy-focused future for the web, this will be an essential step.

If you’d like to support the launch of the Cudos network, there are plenty of ways to get involved. If you’re a developer, you can still join the final phase of our incentivised testnet and have a go at our outstanding tasks. Participating in these tasks could earn you substantial rewards.

Beyond participating in our testnet, there are a variety of other ways to get involved and show your support:

Cudos is powering the metaverse bringing together DeFi, NFTs, and gaming experiences to realise the vision of a decentralised Web3, enabling all users to benefit from the growth of the network. We’re an interoperable, open platform launchpad that will provide the infrastructure required to meet the 1000x higher computing needs to create fully immersive, gamified digital realities. Cudos is a Layer 1 blockchain and Layer 2 community-governed compute network designed to ensure decentralised, permissionless access to high-performance computing at scale. Our native utility token CUDOS is the lifeblood of our network and offers an attractive annual yield and liquidity for stakers and holders.

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