The Wall Street Journal, "US cracked Bitcoin's anonymity"

While The Wall Street Journal is spreading myths about Bitcoin's anonymity, investment firms are exploring the possibilities of blockchain for financial markets with Avalanche.

Cracked glass surrounding Bitcoin coin
Despite a popular belief, Bitcoin was never intended to be an anonymous payment method.

After the US federal authorities managed to uncover a fraud scheme that allowed James Zhong to obtain $3.4 billion, The Wall Street Journal published an article titled "The U.S. Cracked a $3.4 Billion Crypto Heist-and Bitcoin's Anonymity."

"James Zhong stole 50,000 Bitcoins and hid them for years. When the trove hit $3 billion, U.S. authorities caught up with him - by cracking crypto's anonymity," the outlet wrote in the description of its new article on Twitter.

Interestingly, Bitcoin's anonymity is one of the most common myths about this cryptocurrency. Actually, it is so popular, that River Financial, a financial institution that provides Bitcoin services, has placed the anonymity of the oldest cryptocurrency on the top of its list of the most popular Bitcoin myths.

As Twitter user Ric Lewis wrote in response to The Wall Street Journal, "Bitcoin makes every single transaction a matter of public record. That's about the least anonymous thing you can do. Bitcoin has never been particularly anonymous. That's always been a myth."

In reality, Bitcoin was never intended to be a network offering complete anonymity. On the contrary, its clear and visible transaction history that allows any user of the network to trace the ownership of the coin back to the creation of the first Bitcoin, combined with the immutability of the network, was designed to maintain the consistency of the network without the involvement of intermediaries and prevent transaction changes. Addresses, transactions, and currency supply are some of the data that can be easily verified by any Bitcoin network participant.

Bitcoin addresses appear as strings of numbers and letters that do not reveal any direct information about the person using them. However, the traceability of the network makes it possible to link transactions to the same pseudonymous identity.

Read also: Authorities take down crypto mixer involved in money laundering

Still, special tools known as Bitcoin mixers can obfuscate the origin of individual coins. Owners can add their cryptocurrency to a shared pool where coins are mixed and redistributed to their owners, making it much more difficult to attribute transactions to a specific individual.

While it is very common for media outlets, even the most reputable, to unintentionally mistake Bitcoin's pseudonymity for of Bitcoin for anonymity, some Twitter users believe that this choice of words was a deliberate attempt to emphasize that the anonymity of cryptocurrencies can be easily compromised and portray this fact as a disadvantage of digital coins.

Considering that the misconception of Bitcoin's anonymity has still not been dispelled, claims similar to those made by The Wall Street Journal may affect Bitcoin's reputation among many people with a poor understanding of the technology, especially those outside the crypto community.

Wall Street firms are turning to Web3 solutions

Meanwhile, Wall Street investment management funds and asset managing companies such as T. Rowe Price Associates, Wellington Management Company, WisdomTree, and Cumberland have partnered with Avalanche to experiment with on-chain trade execution and settlement.

Institutional partners will be given the opportunity to test the capabilities of "Spruce," one of Avalanche's Evergreen Subnets. According to Avalanche's official website, Spruce "offers a suite of blockchain deployments and tooling designed to address company-specific and industry-wide considerations. Evergreen Subnets maintain the benefits of public network development, including interoperability and composability, while enabling particular chain-level features only possible in enterprise blockchains."

Some of the key features of Avalanche Evergreen Subnets are high customizability, including implementation of custom gas tokens and facilitation of gasless transactions, out-of-the-box Ethereum Virtual Machine (EVM) compatibility as well as built-in user and validator permissioning.

At press time, institutional partners can execute foreign exchange and interest rate swaps using DeFi applications powered by Spruce, while Ava Labs, the company that maintains and develops the Avalanche network, plans to expand the functionality of its Evergreen Subnet to support "additional third-party applications, assets, and processes, including the exploration of tokenized equity and credit issuance, trading and fund management."

As per Blue Macellari, Head of Digital Assets Strategy at T. Rowe Price Associations, working with Ava Labs can help financial institutions discover new opportunities powered by smart-contract technology and public permissioned blockchains.

Read also: Shopify App Store welcomes Avalanche-based TYB for customer loyalty programs

"Avalanche Subnets provide a potential settlement solution that enables financial transactions with enhanced operational efficiencies, reduced risks, and regulatory compliance without creating liquidity islands or reduced interoperability. We look forward to experimenting with this technology to determine its suitability for institutional workflows, and its potential to reduce costs thus adding value for our clients," Mark Garabedian, a Director of Digital Assets and Tokenization at Wellington Management told Ava Labs.

The price of Avax, Avalanche's token, has increased from $17.95 to $18.90 after the announcement of the partnership.