Therefore, privacy in an open society requires anonymous transaction systems. Until now, cash has been the primary such system. An anonymous transaction system is not a secret transaction system. An anonymous system empowers individuals to reveal their identity when desired and only when desired; this is the essence of privacy.
This is a fairly straightforward argument, but an important one, seeing that the disappearance of cash and more and more reliance on electronic money has lead us to a situation where all money transfer is in the hands of relatively few authorities and service providers.
That in itself is a security risk, not to mention the problems digital money in itself creates.
To name a few:
- Full traceability of all personal transactions
- Full unit of account control to the monetary sovereign
- Payment blockades and confiscation become easier (Source)
Cash in itself has of course problems of its own: you cannot prove payment with cash, it is rather easy to steal and it can easily be used for “black” transactions.
But it’s a fact that electronic payment systems have significantly eroded our privacy and allow for huge incursions on our private domain that were not possible before.
David Chaum, as early as 1983, already wrote an influential paper on how it would be possible to create an anonymous electronic cash (E Cash) system. In turn this would lead to Digicash, one of the first cryptographic money systems.
It is interesting to note that David Chaum’s ideas became seeds for the later Cypherpunk movement. He also had students who later became influential in the cryptocurrency movement.
It is also interesting to note that the best known cryptocurrency, Bitcoin, is not anonymous. It pseudonymous, which means that in ideal circumstances, it should be possible for people to cloak themselves in anonymity, but also to use it for non-anonymous purposes.
However, due to the fact that if anyone (including services like VPN’s that you trust to keep your identity secret) leaks your info you are revealed and no longer anonymous, it is now virtually impossible to be truly anonymous using Bitcoin.
This theme (privacy as a shared responsibility) will be explored further on in this manifesto.