Without cryptocurrency, a cashless society is a surveillance society
A question we often get when talking to policymakers and congressional staff is whether cryptocurrency is anonymous. And if it is, what can be done to address it? The implication is that anonymity is a bad thing.
Given that typically we are being asked about Bitcoin or Ethereum, the simple answer to the question is that no, they are not anonymous and that law enforcement routinely exploits the transparency of these blockchains in prosecutions. That answer, however, avoids addressing the implication that anonymity is bad. It’s not.
What is often referred to disparagingly as “anonymity” is really the ability of individuals to keep information about themselves private. This is an ability that can be put to both good uses and bad. It’s how one uses that power that can be said to be good or bad, however, not the technology that lets one retain one’s privacy. Indeed, not only is privacy-preserving technology like encryption and cryptocurrency neutral in character, in an increasingly surveilled and intermediated world, a case can be made that their use is overwhelmingly socially beneficial.
That’s what we begin to do in a new paper published today, The Case for Electronic Cash: Why Private Peer-to-Peer Payments are Essential to an Open Society. With the advent of privacy-preserving cryptocurrencies like Grin, Monero, and Zcash, and the prospect of privacy-preserving features being added to Bitcoin itself, it’s important that we being to explain why electronic cash is a tool that should not only be tolerated, but fostered and celebrated. From the introduction:In a world without cash (a bearer and peer-to-peer form of money) all transactions must be necessarily intermediated by financial institutions. Intermediated transactions are by their nature subject to surveillance and control. If third-party financial institutions must be part of all transactions, then they will...