I recently blogged about civilization being a good thing within limits… and ended by wondering whether the values of an eventual global society work with our traditional values or not.
It’s relevant to the discussion of cryptocurrencies in terms of whether the world does or does not need a “global ledger.”
By way of explanation, a public blockchain that keeps the history of all transactions is built by the Nakamoto protocol. That is our consensus history. The whole point of agreeing on who actually has current possession of a particular coin, has us developing a consensus history as a byproduct — it is literally a global ledger, where every financial transaction made with a cryptocurrency can be read. Now, no cryptocurrency provides a way to associate those transactions with individual people, but to put it gently, it isn’t hard. Someone who is listening to the network can associate IP addresses with transactions, and someone who does data mining can associate current transactions with past transactions, eventually unmasking most of the actors involved.
So, while it is theoretically possible to use cryptocurrencies in a way that maintains your privacy, it’s not easy. A lot of alternate cryptocurrencies are trying to address people’s desire for privacy by making it harder to link transactions with each other, or by making it harder to tell which IP address originates a transaction – but it’s difficult.
But here is a radical notion. Maybe a global ledger is an inevitable (and beneficial!) part of an eventual global society.
When I think of all the crimes and losses that have been caused by misrepresenting financial information, and all the damage to society it has caused, it’s heartbreaking. And then I think of the possibility that there could one day be a “global ledger” where any such claim could be proved by producing a cryptographic key, and that the failure to do so should amount to abandoning the claim. And I say hell yes.
Bernie Madoff says “I’m making 20% a year on investments!” Possible investors, if they’ve learned nothing else, have learned enough to say “sure, show me the key.”
Jim Leeson says “I’m making risk-free investments and earning 18% in the Asian Markets, with no oversight!” Barents Bank, even if they have been such idiots as to let him operate with no oversight, shouldn’t be such idiots as to NOT say, “sure, show us the key.”
Altcoin developers say “No, we’re not dumping our premine on the market.” Altcoin holders already go look and say, “uhh, the blockchain monitor says you’re spending it on something….” And if the ledger were a global ledger they could go right on and say, ” … and if it’s not going to the exchange, then you should be able to give us a key that demonstrates it isn’t.” But alas, the ledger is not global, so nobody can tell what they’re spending the premine on.
I look at a truly global ledger as at least having the potential to make a decent start on ending financial fraud, and I think that’s a good thing.
But that’s a “global” value, in that I think maybe in a culture with globalized values, the financial markets are properly an open record.
Obviously the powerful or rich spy on everybody’s finances now, easily, pervasively, and routinely, no matter what we do. We can’t make it impossible for them to do so without making it impossible for the police to trace and for the courts to recover assets. If we make it even remotely possible for the law to influence our financial transactions, we’ll create something that powerful people will use to break all pretense at privacy. So, maybe privacy as we have known it is effectively over, and we need to be falling back on another principle which is that if we can’t have secrets then nobody can have secrets. Call it equal access. So by this new standard of what’s right, any attempt to prevent the poor from having the same access to information must be seen as an argument in favor of tyranny.
Welcome to the age of aquarium. If we can’t have privacy from everybody, then at least we shouldn’t allow a select few to unfairly hog the information all to themselves.
The “traditional” view of such things — from back when people actually could somehow keep their financial records private and it required actual human effort and personal risk to discover each one of them — was that such effort was usually applied only by inimical forces and would-be tyrants, and has therefore a very different model of right and wrong w/r/t privacy over individual financial records.