(Full essay) Financial privacy is one of the hallmarks of a free society: Why the world needs ZCash.
(Full essay)
I was born into a world that was waiting for the end to come. In 1980, the year of my birth, the world’s two major Super Powers, the USA and the Soviet Union, were still deeply entrenched in their decades long Cold War. As a result I, along with the other children of my generation, spent much of my early childhood wondering when exactly the mushroom cloud might appear on the horizon to signal the end of London, the end of life as we knew it and our own inevitable demise. I imagined this would likely be a slow and agonising death from exposure to the nuclear fallout that we had been taught to understand would fall like snow from the skies sometime shortly after our Russian foe had obliterated all the major cities of England with their phenomenal and terrifying atomic arsenal.
The wonderful, but harrowing, animation of Raymond Briggs’ ‘When the Wind Blows’ filled my mind with vivid images of the very same dismal end that was indubitably to befall us all. And when I marched with my teacher parents on the streets against Margaret Thatcher’s endless cuts to education and healthcare budgets, or in solidarity with the miners she threw so callously to the dogs — even though I knew The Iron Lady sans pitié was the people’s enemy, and hated her for her contemptuous crushing of the lives of the working peoples of Britain — always in my mind in those early years of life was the knowledge that our true enemy was the more enormous and infinitely more terrible existential threat of global nuclear annihilation. And even back then I understood that on this point all of our futures were being decided in smoke filled rooms by murky faceless men who were head and shoulders above even Dennis Thatcher’s indomitable wife’s pay grade!
Such were the worries of men, women and children at the height of hostilities between the Soviet East and the US Western alliance. And yet it never happened. Our fears never came to pass. The bombs did not fall. Iconic mushroom clouds did not fill the horizon with the guttural dread of our dreams. The acid rains and fallout ash did not fall from the sky to finish off whatever life the bombs had failed to kill. Instead, amazingly, suddenly and seemingly without warning, one day it was all over.
I remember the heady rush of excitement and adrenalin-fired hope coursing through my veins as my dad and I watched the first televised scenes of humanity’s victory the day the Berlin wall came down. For the first time in my life it felt as if we, the world, were all one people, a force for good, who could accomplish anything now that we had torn down the walls that had been dividing us from our brothers in arms. And standing there with my parents in our living room in England, watching those jubilant Germans from East Berlin and West Berlin re-unite, for the first time in my life I had the sense that everything was going to be O.K. The world was not going to fall victim to an insane act of self-annihilation. The good had vanquished the bad. We had won.
But had we won? Who exactly had won? And what had been won? And from whom had it been won? These were all questions that escaped my awareness entirely at the time. And I must admit that they continued to elude the focus of my mind from that magical day on 9th November 1989, probably right up until we British and Americans invaded Iraq in the spring of 2003 and it became achingly clear to me and many others that British and American foreign policy had less to do with the common good of all humanity and much more to do with ensuring and preserving Western imperial hegemony, material control of oil fields and strategic militarised control of the Middle East. What was most jarring to me then, and continues to dismay me to this day, is not the Western nations’ self interest — which our governments demonstrate in their determination to secure resources and strategic military dominance at all costs — but rather the deceitful, disingenuous, anti-democratic manner in which they manipulate and ignore domestic populations that are far less convinced of the need for us to wage such wars of aggression than the politicians that lead them.
The 2003 Iraq War was a grotesque overreach by our leaders, sold to domestic populations as a righteous response to the horror of the terrorist attacks in New York on September 11th 2001 and justified to the world at large as humanitarian regime change to rid the world of a man who was certainly a damnable tyrant to many, if not all, Iraqis. But while regime change in the Middle East may seem to many, even to this day, to have been justifiable when measured against the horrors that Saddam Hussein was clearly guilty of, neither Saddam the tyrant, nor the Iraqi people, was actually in any way responsible for the atrocities committed in New York on 9/11. As such, what was entirely unjustifiable, was the needless slaughter of hundreds of thousands of innocent Iraqi civilians who lost their lives as a direct result of our intervention in Iraq. The political class in Britain, America and France then compounded this betrayal of the Iraqi people by betraying their domestic populations too as they legislated away swathes of their own citizens’ freedoms supposedly, but not always credibly, for our own protection. Laws encroaching on civil freedoms in the aftermath of 9/11 as a crackdown on terrorism have never been repealed and police powers to hold and detain without charge have been broadened in scope in the intervening years. Global anti-money laundering (AML) and know your customer (KYC) legislation is obviously also intended to keep citizens safe from terrorism and crime. Yet in a world where information is power, and under the yoke of an increasingly bloated surveillance state, these laws also give governments almighty powers of intrusion over the financial lives of every single one of the governed citizens — not just those who intend to do us harm or break our laws.
Now I can see many of you rolling your eyes and saying “if you’ve got nothing to hide, you don’t need financial privacy!” I admit that, as a naive 9 year old child back in 1989, drunk on the heady euphoria of mankind’s victory over Soviet authoritarianism, full to the brim with hope for the future, and bolstered by a proud certainty that “we” were the “good guys”, I would have heartily agreed with you. Today, however, I’m not at all so cock-sure.
Do we really want to live in a society that is surveilled ad infinitum? Observed in every aspect of our lives? From the YouTube channels that you watch, and the social media posts you write, to the places your car drives, the holidays you book with your credit card, and to the things you buy in the supermarket — all of this is now within the purview of the central authorities that govern us. The laws that can be applied to legitimise the repression of dissident thought, speech and protest are already in place and the technology that we wear and carry with us at all times makes it a mundane task for governments and corporations alike to document your every step through life. Of course every politician or establishment figure will tell you there is nothing to fear: these systems are for your own protection, they will say, with withering exasperation at your tinfoil hat fears. But let’s not forget that the Soviet Union itself was born out of an earlier generation’s hopeful intent, at least in theory and initially, to make the world a fairer and more equitable place for the Russian people. The best laid plans of mice and men ought warn us that power corrupts and absolute power corrupts absolutely on that good-intention-paved path to hellish dystopian nightmare.
Moreover we can say with some certainty that by the 1980s most East Germans had absolutely no desire for their leaders to enjoy the vice like control over their private and financial lives that the Soviet system facilitated. They were beyond elated to finally be able to break free of that system and rejoin their free countrymen from West Germany when I watched them tearing that wall down all those years ago. And I don’t believe for a second that prior to the fall of the wall most East Germans were criminals that the Soviet state needed to have total oversight of in order to keep the country safe. Of course not. The East German surveillance state restricted privacy in order to suppress its otherwise irksome domestic population’s desire to experience such elusive concepts as freedom of speech, due process, equality before the law etc. The fact that these are the very principles we in the West had enshrined in our codified and un-codified constitutions was exactly why those 1980s Germans were so happy as they tore down the wall that had kept freedom at bay. It was as obvious to us then that the Soviet Union restricted its people’s freedoms, as it now is to us that China treats its own population in a similar way. When we regard other societies and other political systems we seem unhampered in our ability to perceive the totalitarian traits of a political class desperate to preserve its own position of power at the expense of the people they govern, yet such traits seem to be less obvious to many of us when we observe our own leaders back home in the West.
Ah yes — our own leaders! Well I suppose at least we can trust that the moral fibre of our own leaders is made of such unimpeachable stuff that these modern absolute powers of total surveillance will forever be safe in their irreproachable hands…! And dear me! Hasn’t the past quarter of a century just been an endless carousel of glorious statesmen and women changing the world for the better, improving living standards for us all, with rising wages and endless optimism and success for all people of all religions, races and backgrounds? On both sides of the pond? On both sides of the channel? Hasn’t life just got better and better and better for us all? No? Not feeling quite as chipper as Albert Bourler and Jamie Dimon?! Me neither! — glorious, trustworthy leaders and days of endless optimism doesn’t really describe the recent past, does it? So can we really trust our leaders to surveil us, our daily lives and our finances benignly? And even if they are benign today, is it sensible to assume that our leaders will remain so in perpetuity? I’m afraid I simply cannot suspend my disbelief sufficiently to feel even mildly reassured that we can.
But we live in a democracy! I hear you cry. But what exactly is a democracy? Well, this is a thorny topic, with multitudinous definitions that we cannot investigate fully here. However, we undoubtedly live in a world dictated by the economic and military might of the United States of America, and many would agree that the post WW2 liberal democratic world order is, in practice, an American Imperialist system. As such it seems appropriate to invoke Abraham Lincoln’s own definition of the democratic order he hoped to be able to bequeath to America, if not the world. His words give pause for thought:
“…that these dead shall not have died in vain– that this nation, under God, shall have a new birth of freedom and that government of the people, by the people, for the people, shall not perish from the earth” (U.S. President Abraham Lincoln, The Gettysburg Address, November 19, 1863).
“…government of the people, by the people, for the people” is the phrase that I find ringing in my ears now. Is that what the people of 21st century America have? Is that what Britain has? Or France? For the people? Really? Consider the tremendous influence wielded by industry lobbying that essentially shapes policy in favour of the interests of global corporations and elites. Is this really government “of the people, by the people, for the people”? It’s fair to say that we do have government of the people and by the people. But I would say our democracy forms governments of the people, by the people, for the corporate friendly elite. Not “for the people”.
We can continue to call this thing (whatever it really is) an enlightened liberal democracy as much as we like, but I believe the phenomenon that is Donald Trump is exactly what we should expect a population to vote for when the backbone of the country has been let down and left behind by a decades long parade of Democrat and Republican presidents whose politics differ only in rhetoric, but who are otherwise identical in all ways that matter — in that it is always the interests of corporate America that subsume the needs of everyday Americans. Britain is the same: the 21st century Labour party has as much interest in genuinely promoting the interests of the working men and women of Britain as the Conservative party; indeed, when asked in 2002 what was the greatest achievement of her career, Margaret Thatcher answered: “Tony Blair and New Labour. We forced our opponents to change their minds.” (Conor Burns, April 11, 2008).
The Obama presidency was an important historical moment for me personally, as a mixed race Briton, but I have been left feeling as let down by Obama’s contribution to international relations as I was by Blair’s (who I naively voted for twice before his immoral, if not illegal, war). Obama may very well have broken a glass ceiling (at least for black people in the privileged position of receiving the kind of education that he had), but the expansive ramping up of (what we now know were far from) surgically precise targeted drone strikes went hand in glove with his presidency and is a blight upon his record that I personally would not wish to carry on my conscience to the gates of heaven.
I don’t have time here to document the pathetically dismal episodes of poor judgement that characterised the leaderships of David Cameron and Theresa May, or the spinelessly unprincipled and disgraceful leaderships of the likes of Boris The (Megalomaniac Masquerading As A) Buffoon Johnson and his impotently lame failure of a successor, Liz Truss. And I’m not sure there really are words to accurately describe the ludicrousness that is the phenomenon of the Donald Trump candidacy-Presidency-prosecution-(Presidency?) perma-carnival, but it certainly seems to be a societal metaphor of a dead canary in a dangerously polluted coal mine. Meanwhile in France, the country’s youngest ever President’s ageing wife was also his high school teacher- did we already do the dead songbird metaphor?- drat these cartoon clown leaders!
But these characters are the (apparent) cream of the crop that we have been ‘blessed’ with at the respective helms of our great nations since the fall of the Berlin Wall. Is it an accident that they all seem to have been cut from the same cloth, all using the same language of decency and humanitarianism, the same socially redistributive rhetoric while they are campaigning for our votes? Is it a coincidence that once in power they all somehow manage to avoid making good on their earlier rhetoric? Or that ultimately they all pursue policies that perpetuate the inexorable accrual of wealth, power and privilege into the hands of an increasingly tiny elite that benefit from the maintenance of our ossified domestic and foreign policies? Is it an accident that electorates on both sides of the Atlantic are repeatedly presented with a monolithic false dichotomy from which to choose our leaders? And given all of the above, is it at all surprising that disaffection with this unending rinse and repeat of pseudo democracy reached levels that were sufficient to propel Britain out of the EU and Trump into the White House in 2016?
By virtue of these two events, even before the pandemic the world appeared to be entering a period of global politics that was more isolationist that at any time since the end of the Soviet Union. But the speed with which rights of protest, rights of movement, freedom of speech and even freedom over one’s own body were ignored, siloed and overridden by political and global elites in the name of their response to Covid 19 was truly terrifying in nature. The magnitude of these events should be sans pareil, were it not for the subsequent revelations that the public has been forced to endure in respect of how these contemptible would-be demagogues were actually ignoring the rules themselves, whilst gleefully imposing them on their subjects. In Britain Prime Minister Boris Johnson was fined for attending parties during his own government’s imposed lockdown, and the recent revelations made public by journalist Isabel Oakeshott about Matt Hancock, Britain’s Health Secretary in charge of the pandemic response, paint the most damning picture imaginable (see below link) of the most out of touch and horrendously arrogant, immature technocrats drunk on power and the prestige of their position. Hancock is like a bumbling British caricature of a Soviet champagne communist revelling in his central planner role at the PolitBuro; I half believe that Rowan Atkison, Mel Smith or Griff Rhys Jones wrote this utter pillock as a joke for one of them to play in Not the Nine O’clock News and then somehow accidentally Frankensteined him into the real world — maybe somehow incorporating Chat GPT, an Occulus Quest and some Weird Science?
However, this is not the story of one or two opportunistic neerdowells whose sole individual actions polluted an otherwise benign situation. Not only why, but how were rights and freedoms which were previously held as sacrosanct in our Western democracy cast asunder with such casual disregard for the obvious and dangerous precedent that this might have been setting? At the very beginning of the pandemic, before much was known about Covid, yes, perhaps an overzealous degree of caution was appropriate — perhaps. But it stretches credulity to believe that the global response and newfound disregard for individual liberties, which continues in some places and in some cases to this day, has not been accepted by elites at the very least as a happy coincidence for incumbent world leaders unable or unwilling to listen to the demands of populations that were already demanding reform long before Covid hit.
One must only look as far as the terrible scenes of rioting, burning of buildings and police brutality in France as Macron abandons democratic processes in favour of forcing through pension reforms with executive orders contrary to the apparent will of at least a large percentage of his electorate. Since 2018 Amnesty International have cited concerns about the Macron governments’ increasingly undemocratic use of draconian police powers to stifle peaceful protest. And yet, it seems, the decline in freedom shall continue.
One remains cautiously optimistic that sufficient checks and balances remain intact in democracies on both sides of the Atlantic to give cause for hope for the liberal world order we may have too casually taken for granted. Nonetheless, it is certainly concerning to note the steady and relentless creep towards what can only be described as a kind of global, centrally managed democracy, a somewhat inverted technocrats’ totalitarianism.
It is doubtful whether the individuals who populate our elites are even aware of their own behaviours — let alone the dark future to which such behaviours might ultimately lead us all. I imagine most lawmakers consider themselves to be good people, doing their best for the world as they see it and suffering the happy consequence of personal success and monetary enrichment as their careers progress. The problem, (aside from the self interest that seems to characterise too many of those who govern us), is that most of the people in charge of the world do not seem to have even a rudimentary grasp on how the world actually works.
During a recent interview (link below) Elizabeth Warren fumbled and fudged her way over her own incoherent explanation of why there is (apparently) some fundamental difference between investing in a physical art work which appreciates or depreciates according to the subjective sentiment of the market, and investing in Bitcoin, which (according to her) also only appreciates or depreciates according to the subjective sentiment of the market. On the one hand she grants that Bitcoin is a digital commodity as opposed to the other digital assets she regards as securities, and yet she somehow fails to understand that as a digitally scarce commodity, Bitcoin would serve the same purpose in an investor’s portfolio as a scarce work of art: namely, to protect that investor from the wealth destroying force that is the monetary debasement fuelled inflation of the debt based fiat-money system for which she is in the same breath advocating.
The fact that such ill informed, low caliber individuals are regularly placed in positions of great influence over the rest of mankind is an enormous problem that desperately needs a remedy. Yet it appears to me increasingly likely, after more than a third of a century of post-Soviet Union hoping and waiting for some leader or leaders to emerge from within our dysfunctional careerist political class, that perhaps the system itself is simply unable to break free of the tedious cycle of sub mediocre yes people that our now pseudo democracy seems to have fallen prey to.
Dysfunctional politics, however, is perhaps not even the root cause of our most major problems! Underpinning our whole political system and all of our lives is our monetary system. Most people, just like Elizabeth Warren, probably have no real interest or understanding of how money works and how our monetary system by design incentivises people to invest in scarce assets such as fine art, real estate, gold, equities, commodities and more recently, Bitcoin. But the 33 years that have followed the collapse of the Soviet Union have been characterised by an increasing reliance by our governments on their ability to monetise the enormously bloated national debt burdens that are the product of decades-long poor domestic and foreign policy, ageing populations, declining birthrates and an increasingly entrenched inability to stimulate genuine organic economic growth rather than simply fuelling asset price bubbles stimulated by government bail-out and stimulus.
Elizabeth Warren is correct at least in noting that Bitcoin and a work of investment art share some characteristics. It is true that the value of both assets classes can be subject to the whims and sentiments of the market, hence, perceived value or perceptions of future value of course play a role for anyone thinking of investing in either. However, this is pretty much where the similarity ends. Whilst investment art can indeed be or may become a scarce asset, it cannot really compare with the programmed and immutable, fungible scarcity of assets like Bitcoin or ZCash. These two monetary technologies have an unassailable hard cap of 21 million units and are divisible and portable, where assets like fine art and gold are much less so in any practical sense. While Warren suggests that the US issued dollar is a far preferable asset to Bitcoin, there are several key reasons why this is simply not the case. For one thing, as a monetary technology Bitcoin and ZCash offer settlement in real time or near real time, while final settlement within the incumbent fiat money system often takes days to route through various banks and intermediaries. As an investment proposition, however, the suggestion that the dollar is a sound investment compared to Bitcoin is simply laughable. The global fiat monetary system, where we have the US Dollar as the reserve currency, is an inflationary system. This means that the stated goal of the Federal Reserve and of other major central banks like the Bank of England and the ECB is to maintain inflation at (usually) 2% p.a. This implies a stated objective to debase the monetary unit over time. Essentially the system allows governments to finance perpetual deficits by issuing additional debt in order to service the interest on existing debt. Times of high inflation when the inflation rate trends beyond these stated 2% targets also tend have the happy consequence of inflating away the value of the outstanding sovereign debt in real terms. But as this inflation is really the byproduct of debasement of the monetary unit — a consequence of increasing the supply of money — this has the additional and much less desirable effect of reducing the purchasing power of those hard earned dollars, pounds and euros that the populations of these countries have stored ‘safely’ in those government guaranteed bank accounts that Warren would have you also store your wealth in.
Since 1913 when the US Federal Reserve was created, the US Dollar has lost somewhere in the region of 95% of its purchasing power! (Link below.) This is the reason that those seeking to preserve the value of their capital do not just simply hold dollars, as Elizabeth Warren would have you believe. Rather than holding onto an asset that the US Fed promises to debase by 2% per annum, the sensible investor opts to hold a range of assets (i.e. equities, bonds, gold, art and real estate) that offer the best potential to grow the capital over time whilst also protecting against this promise of monetary debasement that the central banks are mandated to pursue in perpetuity.
Warren goes on to suggest that the wonderful quality that sets US government issued currency head and shoulders above an asset like Bitcoin is the fact that is is backed by the promise of the American government. But what she fails to mention is what exactly that promise is. If it is indeed to be taken at face value, then the promise she is referring to is the promise that the US government will underwrite an investor’s investment in US dollar bank deposits or US treasuries. We have literally just witnessed the US government doing exactly this as they moved to insure all deposits at SVB when it found itself insolvent due to the bad bets it had made on long dated US treasuries. Once jittery customers got wind of the paper losses the bank had suffered on its US bond holdings and starting yanking deposits, the bank was forced to crystallise what would otherwise have remained as unrealised paper losses, by selling their US treasury holdings at a loss in order to repay depositors. Thus the Fed’s own inflation fighting rate hiking actions effectively led to the run on the bank.
While it seems very enticing to be promised an investment that is guaranteed by the US government, the other side of this promise is the way they promise to underwrite your potential losses in this investment. And the way they do so is simple: if they need to underwrite losses in the fiat system, they will issue more US debt, which will ultimately further reduce the purchasing power of the dollars you already hold over time.
I don’t know about you, but I wouldn’t have trusted the Soviet central planners to act in the best interests of my personal nest egg if it got in the way of their grand plans. Similarly, when Elizabeth Warren suggests that the US Dollar is sound money compared to Bitcoin, we can impute either disingenuousness or ignorance on her part. I want to give her the benefit of the doubt and assume that she is merely guilty of being ignorant of the true nature of both the monetary technology she condemns and the monetary technology that she promotes, but either way, it is hard to listen to.
Warren also asserts that a work of art boasts the additional quality that it can at least be hung on a wall to be appreciated for its aesthetic beauty, whereas a total loss in sentiment for Bitcoin would render Bitcoin utterly worthless. However, even in this I would venture that she is woefully mistaken. For art by its very nature is subjective. One person may appreciate the aesthetic beauty of Elizabeth Warren’s once valuable, now financially worthless painting, whereas another may not. So too with Bitcoin and ZCash. Yes these are monetary technologies, and yes their prices can fluctuate according to sentiment. But beneath the surface, under the hood of these technologies, is code. Code that has been written by people. People who have lived, loved and breathed these projects and poured their lives’ works into writing this code for the world. Like art, code too can be beautiful. Code is beautiful. Beauty is subjective. Art is subjective. Beautiful code is beautiful art when the beholder subjectively determines it to be so. En revanche, another person may very well perceive the Bitcoin or ZCash codes to be endless strings of pointless characters that have no inherent or aesthetic value whatsoever. Such is the nature of subjective appreciation of the aesthetic. Elizabeth Warren will happily hang her financially worthless painting on her wall in order to appreciate its subjective aesthetic value, while Satoshi or I would happily pore over the beautifully elegant code that is Bitcoin or ZCash, regardless of the respective monetary values that others might subsequently attribute to the asset. As such I submit that even on the point of the inherent aesthetic value of art v Bitcoin, Elizabeth Warren is mistaken in her assertions.
Perhaps the political class has other reasons for denigrating Bitcoin, however. Perhaps it will not be long before we see the rise of the much talked about Central Bank Digital Currency. Programmable money under the full control of these modern day central planners and technocrats. It is not difficult to imagine a future in which citizens’ digital IDs are linked with accounts held directly with a central bank. Government stimulus could be parachuted digitally into ‘good’ citizens’ digital wallets at the stroke of a keypad. On the other hand, governments looking to stimulate demand could simply programme a percentage of the money in your account to expire after a given deadline. The vaccine passport systems that were rolled out across the globe during the pandemic provided a fertile testing environment for exactly the technologies that would enable the global digital ID system requisite to facilitate the deployment of such CBDC systems. Moreover, the kind of democracy-lite policies we came to expect during the pandemic in respect of the treatment of Canadian protesters, the unvaccinated at large and essentially any dissenting voices, could easily be appropriated into a terrifyingly dystopian system of total control. A social credit based CBDC powered system might only allow its more errant citizens to spend their CBDC dollars in a very restricted locale or city limit, or it might penalise non-compliant individuals and those deemed to be bad citizens by way of bespoke fines or restrictions on where and how they were allowed to spend their own money. Overweight citizens might be excluded from using their money to buy fast food, whilst others might find that they were unable to pay for a round of drinks, having already exceeded the designated ‘safe’ alcohol consumption threshold for the week.
Whatever dangers may lurk in wait for us if CBDCs do come to fruition, and even if they do not, it is clear that the world we inhabit is very far from the utopia my childish mind envisaged as I saw the wall come down in 1989. We do not, however, live in an authoritarian nightmare, at least not yet. But in the intervening years there have been many worrying signs that the direction of travel is towards less global freedom as opposed to more. Perhaps our system of politics and democracy is irreparably broken, perhaps — hopefully — it is not. But one thing is certain: our monetary system is absolutely not fit for purpose and certainly not for a digital age. Most global monetary systems last 50 years before a reset. It is 52 years this year since Nixon closed the gold window and set the world off on the fiat money debt spiral monetary system that it now seems trapped in. After the financial crisis of 2007/8 the IMF and the WEF called for what they dubbed The Great Reset. Perhaps we should take them at their word and understand what they were telling us was literally just about to happen…
Perhaps, on the other hand, The Great Reset that we will actually get to live through could turn out to be that world changing technological revolution that has been gifted to the world by Satoshi Nakamoto by way of the monetary technology that is Bitcoin. My son turned 9 this spring, the same age that I was when the Berlin Wall came down. Hopefully Satoshi’s dream of bequeathing to the world a sound, decentralised, hard, privacy preserving, immutable and un-censorable technology of money will not get corrupted in the way that Abraham Lincoln’s dream of an American democracy government “of the people, by the people, for the people” seems to have been. My deep hope is that my 9 year old son will one day be able to look back when he is in his 40s and think with pride how his generation tore down the fiat money walls that restricted freedoms just as surely as the Berlin Wall did until 1989. I hope, however, that when he looks back, unlike myself, he will remember having lived through a period of vibrant worldwide optimism and increasing freedom of the individual, rather than more of this inexorable encroachment of a bloated centrally managed democracy upon the personal liberties we in the West once took for granted.
Perhaps Bitcoin can get us there alone, but Satoshi’s dream was the dream of a sound, decentralised, hard, privacy preserving, immutable and un-censorable peer to peer technology of money. While Bitcoin has served well as a proof of concept to the world, as a hard, decentralised, immutable technology of money it, sadly, fails miserably as a privacy preserving one, and therefore also fails as an un-censorable monetary technology. Satoshi’s dream cannot be realised in the absence of these key tenets of his original proposition.
Luckily for the world, Zooko Wilcox was there right at the beginning of the Bitcoin story; indeed it was Zooko who wrote the very first blog post about Bitcoin, (link below) and at one time Satoshi’s own website even linked to Zooko’s blog! Thanks to many years of important work that has been undertaken by visionaries like Zooko and a diverse group of highly esteemed scientists and developers, ZCash, a forked chain of the original Bitcoin code, has grown to become the pre-eminent privacy preserving, censorship resistant cousin to big brother Bitcoin.
Albeit with a much smaller market cap, ZCash boasts the exact same attributes as Bitcoin: a decentralised, 21 million unit, programmed, consensus driven, hard cap, immutable, peer to peer digital money, but unlike Bitcoin, ZCash incorporates privacy preserving features for its users as well. This in turn provides an asset far less prone to censorship than the pseudonymous, not anonymous Bitcoin. While every single transaction on the Bitcoin blockchain is fully transparent and visible to the entire world, ZCash offers users the option to choose between transparent and shielded transactions. ZCash uses Zero Knowledge Succinct Non-Interactive Arguments of Knowledge (ZKSnarks) to enable shielded transactions on a decentralised blockchain. Satoshi himself even discussed the potential for zero knowledge proofs to have been used in the original Bitcoin code in order to create a simpler, more robust technology, but at the time of Bitcoin’s creation the maths behind zero knowledge proofs was simply not advanced enough for this to have been viable.
Nevertheless, while Satoshi disappeared from the internet in 2011, his true dream remained alive thanks to the tireless work of all those who have contributed to the ZCash project. Unlike Bitcoin, this decentralised project has now also been able to establish a self funding model to facilitate long term development of the technology that it has pioneered. As such, 20 percent of the block rewards accrue to a development fund which is split between The ZCash Open Major Grants (ZOMG), The Electric Coin Company (ECC) and The ZCash Foundation to ensure industry leading future development of this decentralised blockchain. (Link below.)
Given the fundamental importance of privacy (not least in simple terms of the fungibility of the monetary unit) it is unsurprising that Bitcoiners are now even proposing to attempt to use drive chain sidechain technology in an effort to somehow re-incorporate ZCash technology into the Bitcoin infrastructure. (Link below.) The problem with trying to add privacy to a blockchain as an afterthought, however, is that due to the nature of cryptography, once information has been leaked into the world, such as is fundamentally the case with Bitcoin’s transparent base layer transactions, it is very hard — if not impossible — to retroactively add privacy features that are as robust as those used by a technology that has privacy baked in at the base layer.
While Bitcoin may ultimately attempt to provide its own privacy solutions, ZCash development teams are working towards upgrading the ZCash blockchain in order that it can use Unified Addresses, which will pave the way for all transactions on the blockchain to be privacy preserving, rather than transactions being optionally private as is currently the case. As a close cousin of Bitcoin, many of the transactions on the ZCash chain are still transparent, which has been seen by some as a limitation. However, while this might be regarded as a flaw by proponents of rival privacy coins such as Monero, in actual fact the fact that Zcash offers optional privacy has allowed third party service providers such as centralised exchanges to continue to provide support for ZCash transparent transactions, even while other privacy coins have found themselves delisted from CEXs on the back of anti-financial privacy technology FUD and campaigns from lawmakers.
Finally, while there is clearly an ongoing and coordinated regulatory and establishment attack against the crypto industry at large, nevertheless ZCash offers users a privacy solution that is increasingly decentralised and censorship resistant, whilst also being “fully compatible with global AML/CFT standards, including the FATF Recommendations, the European Union’s Fifth Money-Laundering Directive, and the United States’ Anti-Money Laundering regulations.” (https://electriccoin.co/blog/how-zcash-is-compliant-with-the-fatf-recommendations/).
Technologies of money like ZCash and Bitcoin offer the tantalising promise of a more hopeful world freed from the constraints imposed on us all by an inflationary monetary system that warps reality, fuels bubbles in asset prices and stifles the ability of the vast majority of global populations to earn and preserve the wealth that would enable them to improve their lives. This dysfunctional monetary system and the sovereign debt that is an inherent part of it incentivises the wrong kinds of behaviours in political and business elites and rewards a vanishingly tiny slice of humanity at the expense of the vast majority of global populations. Bitcoin showed the world the way we need to go to save ourselves and now the ZCash community has built the vehicle we can use to get us all there safely.
Happy Zodling!
