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Bitcoin as Alternative to Privacy-Breaching Covid Health Certificates

The Bitcoin (BTC) blockchain may offer an alternative to the “Orwellian” apps that have been used by governments around the world to limit the spread of the COVID-19 virus, an article from bitcoin-focused financial services company Unchained Capital argues.

According to the article, the main issue with the current solutions is “the type and quantity of data” that is needed for them to work. As an example, the author, Unchained Capital’s engineer Buck Perley, pointed to the system deployed in South Korea, where anyone who has tested positive for the virus will have his or her age range, gender, and places visited made public on a website.

Such systems could even discourage people from getting tested in the first place, “making the system itself less effective,” Perley said.

As a solution to this, Perley argued that the bitcoin network could be used to underpin a new type of health certificate by taking advantage of the ability to do micro-transactions via the Lightning Network.

Using the Lightning Network as the foundation for such a health certificate system means that updates to the system “can be made relatively costlessly,” the article said, while also adding that “another often overlooked benefit of the Lightning Network is that it comes with a pseudo-identity system pre-built in.”

Perley writes:

“In order to make and receive bitcoin payments on Lightning, a user needs to lock up some on-chain bitcoin into a payment channel using a kind of smart contract on bitcoin called a Hash Time Locked Contract. This channel, and therefore the locked up funds, becomes associated with your node’s public key, a cryptographically secure identity.”

Further, the same post argued that the system should be built using a specification on top of Lightning known as “Lightning Service Authentication Tokens” – or LSATs for short – which can be explained as an alternative to the “cookies” we know from various websites.

Using LSATs, a bitcoin-based health certificate and contact tracing system could work as follows, according to the author:

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