The Risk to Privacy, Security and Respect; and the need for a better Cash Substitute in the Information Age.
I wrote this piece for several reasons. Most certainly, it was the result of my ongoing personal debate or rather, a series of them, which have plagued my thoughts since I first read the white papers about the CryptoNote cryptocurrencies. No matter how often I have resolved to ignore these privacy based cryptocurrencies, in direct opposition with bitcoin-like altcoins, they have stubbornly refused to dislodge themselves from their permanent quarters in the dark corner of my study, where they brood. They are like dark spirits, warning me of approaching doom while I dedicate my time and money to the more public versions of their brethren. As if these spirits alone have some secret knowledge of the future. Not the promise of unmolested fintech attempting to remove the financial restraints which have burdened individuals for eons, but the opposite. The warning that the digital noose is tightening. That time is growing short.
But let me set the stage, before I describe the next great dilemma that I feel will eventually face all cryptocurrency users in the coming months, should bitcoin survive this latest struggle for its soul. Privacy.
We know it is the desire of bitcoin miners to earn money at an accelerated pace, using known software flaws to secure extra revenues, when and where possible. This has been reported often and if anyone continues ignores it, they have done so at their own peril. To counter this breach of the code and in an attempt to keep bitcoin updated, the lawgivers -- the core developers -- a small group of individuals, must balance the growing need for faster transaction times against a voluntary mining infrastructure willing to jettison their “laws” should their profits be diminished. The threat of a fork. Add to that, the desires of individuals in the bitcoin community who feel that the system must retain the trust, respect and integrity, which is arguably making bitcoin a household word. Unfortunately, the community is blinded by the success of the first-comers. Of multimillion dollar pizzas. Greed is good, as they say. Appeal to it. Make them think bitcoin will grow forever. Ignore financial security.
If bitcoin does implode over the coming weeks or months, the entire cryptocurrency ecosystem could suffer not a drawback, but collapse. I hope this a false assumption, but a warning we cannot not ignore. We cannot shrug our shoulders, hold fast to the promises of the past and do nothing to secure or support the next generation of this technology. We should, however, selectively disregard the mouthpieces screaming at us from internet. Telling us that we are fools for believing that bitcoin could ever die. It can and one day, it will. It is just a matter of when and how. Know that these mouthpieces have a vested interest in keeping bitcoin alive, even at the expense of their own respect. Money buys converts.
But the longer we hold to this moribund dream, the more money will flow into the strongest mining hands. The battle lines are not only drawn between the corporations and governments, between the Chinese miners and the bitcoin community all over the world, but between the Core Team and the near religious fervor some of them have for the alleged purity of bitcoin. The battle lines are also etched within our own beliefs. Our principals.
What do you believe? That is your choice. Make your choice from fear, but also, respect. Fear that your government will destroy the thing which enables your very survival, the ability to save value, to invest, to eat -- your official fiat cash -- which is being eroded in debt. Require respect to be indispensable when you chose a replacement money such as bitcoin, since you should not chose to set aside your privacy and security for the promise of value.
Why do I say this? Why is bitcoin in direct opposition to privacy? Because with bitcoin you are privy to financial details which would otherwise remain undisclosed. Certainly, you can take steps and pay secondary fees to secure your transactional data from everyone, but it is costly. At the most fundamental level, it can also be considered illegal to launder your bitcoin, even for the purposes of legitimate privacy -- in some countries.
With bitcoin your privacy is eliminated in the hopes it will keep everyone honest and everyone -- an auditor. The ultimate “Big Brother Fintech.” Your accounts, your every purchase, are by default, available to me. You are naked before the masses of shame. An open book to every criminal, every government agency, every nosey relative, every jealous boyfriend.
Bitcoin has no respect and that is its undoing. Whether that flaw will translate into the Asian mind, is another argument. Even today, in modern America, in the European founded lands at large, in Russia and its counterparts, the drive away from privacy is all but growing. It is dependency, not a reliance not upon one’s own conscience, but the surrender of privacy for the hollow ring of security, applied with the thinnest chains of fiat debt currency. A currency moving into the digital castle, controlled wholly by bureaucrats and favors. Not unlike what is slowly occurring within bitcoin itself.
What is the next answer? For this dilemma of respect and privacy? Is it the CryptoNote software or is it something like Iota? Do we need to know who the creators of these systems are in order to secure our monies? I would say yes or else some method to resolve disputes between parties when the software appears at be at fault. Bytecoin, permanently mired in obscurity and potential fraud, is not a candidate. Many of the CryptoNote coins are also concerning. We know one developer of Monero and that is fortunate, but what real influence does he have on the coin itself? Who do we call when the transfer does not go through? A man or a pseudonym? Should not this be a fearless sport for humankind? Why do some of our modern heroes don the mask?
What will replace bitcoin and when? Already the burden of the blockchain is pushing the community away and the conglomerates ever inwards. Energy costs are increasing. The big players are circling. Was this the original vision of Satoshi Nakamoto?
The opinions expressed herein are mine alone or those of commenters below. They are simply meant to encourage examination of fintech in general, relay potential flaws as I see them and understand the underpinnings of a technology which shows much promise. Note: this weblog could be updated at any time.
Image: Public Domain