Governments throughout the world are restricting cash more and more. Why? It’s not that cash is paper. It’s that cash eliminates state tracking. The purpose of cash in a digital world is to prevent the state from creating a financial panopticon. Cryptocurrency accomplishes the same goal, but far more effectively.
How can I explain to you guys how crucial this is? I guarantee you in 40 years the creation of bitcoin will be seen as a watershed moment in society.
- Speculation on a high volatility, unregulated market
- Money laundering
- Distribution of illegal material
These all seem like things Im fine with the government having visibility into. Perhaps this is ignorance on my part, but all legitimate uses I’ve ever heard of seem like rounding error next to the above. No one is buying pizza with bitcoin in 2020. The uptake for real transactions seems like it’s near zero.
About the best I can come up with is that financial privacy permits low level lawbreaking for laws generally regarded as stupid or unethical (e.g., marijuana). I think it’s safe to say that people who want to feed their drug habits will find other anonymous ways to to pay, e.g. barter or proxy goods.
The types of folks who are deeply affected by large governments having logs of their transactions are not the downtrodden masses. They’re the moderately wealthy engaged in corruption and trafficking. Cry me a river.
Fundamentally financial privacy is just privacy. People desire financial privacy for all the reasons they desire any other kind of privacy. It's certainly fine to make the collectivist argument that individual privacy is not worth the social cost of opacity, but the idea that this is true only in finance seems odd and difficult to justify.
Only two forces prevent taxes from going to ~100%: tax evasion and military risk from other states. As taxes become higher, more people start evading, reducing the real effective tax rate, which reduces real relative power of bureaucrats and politicians. Smart governments reduce taxes in that situation. If evasion becomes impossible, taxes are going to approach 100%: everything over resources needed for survival goes to the ruling class (slavery), which is historically the dominant arrangement (eg. serfdom).
It wouldn't be a fundamentally new situation even in modern times - in the Soviet Union everyone, officially, made roughly the same regardless of what they did, and that amount was barely enough for survival. Which wasn't smart, because tax evasion was enormous (in the form of bribes and black market), which created a new ruling class (now called oligarchs).
Military risk is another force acting against high taxes, as states that kill its economic activity (due to people having weak motivation) risk being conquered eventually by wealthier and stronger states. However, looking at North Korea in particular, it appears as long as some form of MAD is in place (in the case of NK - destruction of Seoul for decades, lately also nuclear missiles) that doesn't matter that much today.
To sum it up: I'm convinced total financial surveillance inevitably means a return to slavery. Physical money is going to disappear in decades. Anonymous crypto appears to be the only force that can prevent this future.
You can argue that tax evasion is one way that may cause a decreasing tax income with the increasing tax rates but it's not the only factor.
Those same masses don't care about cameras everywhere, they don't care about websites tracking them etc; they have no privacy concerns at all outside 'hope they cannot see me naked when in the shower' (which i'm not sure about with all the camera devices either though), so that's not a very good example imho.
I don't want the gov to see every transaction I make, but i'm not into trafficking, corruption or money laundering or whatever. It is not the govs business; it is their business to see how much money I get in and for me to pay taxes over that. They do not need details of anything unless i'm a suspected criminal. But there is the rub, in my opinion, they would need to prove I did something to warrant that, not blanket rules like AML over everything financial.
> The uptake for real transactions seems like it’s near zero.
Not sure, most my work (and many people I know, especially since covid) these days gets paid in crypto because it's international, fast, easy and there are no limits (unlike banks who start AML freezing stuff willy-nilly). I declare everything as income and outgoing business income/expenses. Works fine. It's fast and convenient for non-crime payments; I pay people with it as well. Especially for large amounts.
Also; I do not work in or with blockchain tech generally, but my clients started asking if they could pay in it this year (they also don't work in blockchain, but it's just far more convenient and faster and cheaper than SWIFT payments internationally).
I also see no use for it vs local banks; most banking transactions locally here are instant and simple, but international money is still very annoying and can take a long time (and, as we have seen, often bounces or stalls for no visible reason at all).
Governments have a duty to collect taxes but do not have a duty to know anything about how people use their money.
Governments exist as a need not as something which has “rights”.
Transacting in commerce is equal to freedom. I don’t want the government to instantly know everything I have ever bought in my life. And if you accept that under some threshold ($100? $1000?) the government should not instantly be informed, you’ve opened the door to (insert terrible thing here)! So either we give the government access to everything instantly or we restrict it for some reason. I am in favor of restricting.
Of course this is always immediately labelled terrorism, but at many times in history has been the only means of major social change.
So in essence if you can't secretly buy weapons you can't have an IRA etc...
One might perform an action today that is legal and considered moral or amoral. When the authoritarian regime changes tomorrow, I would not want those legal/(a)moral actions to be retroactively criminalized.
And the vast majority of people have very little to gain from all other kinds of privacy. The government wouldn't find anything interesting in my IM messages either.
Most people who really need it are probably up to no good too.
I'm on both sides of this debate. I think most privacy issues are overblown by a small set of zealots. But at the same time I don't see much difference between financial privacy and whichever other kind.
Drug smuggling cartels are experts in transporting and accounting for cash across long distances and national borders. However even they have an issue with physical storage of cash - to the point where they had too much cash to even store, leading to piles of cash buried underground, getting eaten by rodents etc. this would not be an issue with cryptocurrency.
Cash is still traceable in a crude fashion- unique serial numbers on each bill. This enables some level of oversight while keeping most transactions essentially private. It also enables replacement of damaged currency, something not possible with crypto currencies.
Transacting in cash has a real economic and logistical cost, whereas crypto currencies essentially have none. You have to physically meet to exchange cash- imagine the difference between paying a ransomware in cash versus cryptocurrency from the perspective of the attacker. Same as above, you have a literal physical limitation on the amount of cash you can transact due to weight and volume of the bills themselves. You may also have to enlist (and trust and pay off) intermediaries to transport the cash, representing a real economic cost to transact privately in cash. Not to mention the possibility of surveillance.
Honestly the best yet still flawed analogy I can come up with when thinking about the differences between cryptocurrency and cash is remembering back to why I hated high school physics so much. Who cares about a perfectly spherical cow on a frictionless surface? Cows aren’t perfectly round and there’s friction everywhere. I feel like cryptocurrency solves the spherical cow problem but doesn’t address the real messy world.
I suspect that as with so many other matters of privacy, most of the solution is legal and political rather than technical.
The problem is that in purely a private, zero-knowledge cryptocurrency, it’s difficult or impossible to inspect the actual currency issuance rate and ensure that some Byzantine miner/validator hasn’t found a way to hack the issuance algorithm and issue more currency (to themselves) than the system is designed to. For example, ZCash had a famous bug regarding this issue a few years ago, that they patched before disclosing it.
That’s an ongoing technical challenge the industry is working on.
Satoshi could have made mining reward increase at 2% per year, but very deliberately decided on hard cap on how many will exist. This decision made early adopters literally and metaphorically invested in bitcoin's success.
Are you saying that some detail of zk-Snark makes that not possible for cryptocurrencies based on this technology?
Zk-snarks don’t change that. It’s still a choice by the developers based on the economic objectives they’re trying to achieve, and snarks don’t prevent that.
But problem is that in a fully-shielded, 100% private, snark-based blockchain, it’s difficult or impossible to verify that the actual coin supply is what the whitepaper says it should be. Since all the tx’s are hidden, you can’t inspect the blockchain data and just count all the coins in UTXOs or account holdings to see what the total money supply is at any given time and reconcile it with what the issuance algorithm says it should be.
Especially this part:
>Upon detecting this condition, the Zcash Company would begin its investigation into the possible source of the vulnerability as well as which pool, or pools, are affected. If we are able to identify that the bug affects only a single shielded pool, we might choose to effectively deactivate that pool by invalidating any of its outgoing transactions. A necessary consequence of this action is that any legitimate funds would also be lost forever in the affected pool.
The mechanisms for this remote disabling are not mentioned in detail, and I don’t really mind, but this feature seems difficult to square with their desire for transparency. It’s an anti-feature perhaps serving a justifiable goal, but if this feature is possible to be abused, how would we even know if it had been?
It sounds like that plan has been codified in recent clients, so they should automatically reject transactions that would cause a pool's balance to go negative.
Most is an understatement. Last I checked, it was all countries, except the US and the two bastions of freedom that are Eritrea and the Soviet Union (when it existed).
> The US doesn’t have such a system, but the way it works most expats won’t end up paying any taxes if they leave the states. Though they’ll still need to file a return.
Won't end up paying any taxes on earned income you mean. For any other income, it's a damn nightmare.
You can have any any predetermined mild inflation you want.
Unless you magically change the government, get rid of all influence by special interests and create a shadow economy at the same time.
The old system will not go easily and not without a fight.
Already gov organizations are readying their significant sources to track all of this, distributed ledger or not.
How can I explain to you guys, that nothing you do on the internet is private. Nothing.
It’s not the only example and it hasn’t launched just yet but checkout the Hermez Network.
So journal publication is not the only means of recognition.
Speaking of which, computer science is a bit weird in that conference papers tend to have higher visibility than journals, even though the latter still has some of its grandfathered glory. Not all conferences are equal, obviously. Some have a more rigorous submission process than others. But our field definitely carries a bit of skepticism about the value added by journal publishers.
If your paper is good, on eprint and you spread the word a bit, then it will get citations - often more than if you publish in a 2nd tier conference - and when it's popular enough then eventually one of the main conferences (journals are less popular in crypto) will accept it in some form. This happened among other things to several of Dan Bernstein's papers (the guy who invented curve25519 among other things).
On the other hands there are a number of such "tutorials" being published on eprint, so I think if it's sort of random on a pre-print, then it must be pretty hard to publish this sort of papers in serious journals.