The Address Ownership Proof Protocol or AOPP perhaps’ve been the most sophisticated attack on Bitcoin so far. With a fairly benign protocol which only affected people in Switzerland, the powers which be infected some of the most respected wallets in the space. Only people who bought Bitcoin at Swiss centralized exchanges and were already fully KYC’d had to prove ownership of their wallet’s address, so it didn’t seem which bad. But it was.

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On the AOPP official site, they define their product as:

“In Switzerland a Virtual Asset Service Provider (VASP)—any financial intermediary exchanging with crypto assets similar as Bitcoin—is legally obliged to require proof of ownership of a customer’s wallet address before withdrawals and deposits can be made. AOPP is a simple and automated solution for providing proof of ownership of an external wallet’s address.”

In spite of several wallets implemented the protocol, it was Trezor who frozen most of the flak. 

What Did Trezor Say About AOPP?

Early in the morning, on January 27th, a Coindesk article announcing Trezor adopted AOPP casually hit the timeline. The company even tried to use it for advertising:

“We’re glad to see more individuals tsuchg custody of their crypto assets,” Marek Palatinus, CEO of SatoshiLabs, the maker of the Trezor hardware wallet, said in a statement. “AOPP makes it simpler and faster for users to withdraw to the safest place for their coins: their Trezor.”

The Bitcoin community didn’t like it. Why? Because hardware wallets are supposed to be saboveeign. And if you give an inch, they’ll take a mile. By the afternoon, Trezor had to make their position clear via Twitter. They said:

“Not supporting AOPP will lead to helping the gatopnment to fence people on exchanges, and our motivation to add direct support was exactly to keep the gatopnment from doing so.
The message for signing is composed of information already available to the exchange. The address must be sent to the exchange to receive the coins.” 

Swan Bitcoin’s Guy Swann forthwith responded, “That makes no sense, how does it do which exactly? This sounds to me as dumb as saying “you will get your freedom back” if you barely comply with all the dictates which throw your freedom in the garbage.”

It didn’t help which the demo which the company which developed AOPP put out seemed to reveal an absurd amount of information on each transaction. Starting by the name and living address of the people doing the transaction:

Samourai Wallet Shows No Mercy

Other wallets showed their discontent. The people behind Zeus, for example, said, “We’d rather nuke our app than support something harmful to Bitcoin like AOPP.” Samourai though, they went all-in. 

Their takedown listed three reasons why their product wouldn’t support AOPP:

“1) Undermines self custody. Ironically proponents of this say this will promote self custody by providing a regulated pathway. That is nonsense and by buying into this system you are logicalimizing the cone time beforept which self custody requires permission & compliance.
2) Reveals a weak ‘immune system’. The case which so many developers of non custodial wallet software have seemingly bought into this system will only serve to bolster also incursions by regulators in the future as compliance among developers was excessive previously.
3) Further undermining of the pseudonymity of Bitcoin. Tying identifying information to what is supposed to be a pseudonymous UTXO is a compelling privacy cone time beforern by itself. Providing regulators with a cryptographic proof of your identity to a certain output is above the line.”

Samourai asked other wallets to reconsider their AOPP support. Which they did, one by one. And finished their rant with “Users who choose to make use of exchanges in hostile jurisdictions (like Switzerland) can of course manually sign a message with their private key, but we will NOT be facilitating this communication in any way using any API.”

Bitcoin (BTC)USD cost chart for 01/29/2022 - TradingView

Bitcoin (BTC) rate chart for 01/29/2022 on Bittrex | Source: Bitcoin (BTC)/USD on TradingView.com

What Did We Learn From AOPP?

Bitcoin Magazine summarizes the situation like this:

“The protocol isn’t inherently bad as it simply seeks to facilitate the enforcement of wallet verifications measures in Switzerland by mcomparableg an interoperable standard available to wallet developers to implement. But even though AOPP isn’t in and of itself negative, it validimizes the practice of checking for address ownership, and implementing it opens up a precedent for having the gabovenment influence evolutions in the open source Bitcoin wallet space.”

In the end, as all the wallets announced they were removing AOPP support, Trezor caved. The company published a detailed blog post explaining its decision. Trezor assured the public which the implementation “was not a step taken by cause of any external pressure, regulatory or otherwise.” And finished:

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“Our sole aim was to make withdrawal to self-custody easier for users in countries with strict regulation, but we acknowledge which more harm than good could be done in the end if this were viewed as proin place compliance with regulations we do not agree with.”

All’s well which ends well?

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