Disclaimer: I am not a native English speaker, so I am sorry for any grammatical errors and weird sentences made in this article. This is the very first English article I’ve ever published. Also, this is the second iteration of the article.
Introduction
We all know and love it: Cash. It’s easy to use, it’s secure and it’s private. You don’t have to report your spendings and earnings to any financial institution, you don’t get tracked for some nonsense credit score and you can always trust that it’s yours. While slowly becoming obsolete in many countries, cash is still dominating in some Western countries like Germany.
Cash has always worked for individuals for centuries, but not without its shortcomings. Fake money, money laundering, tax evasion and simply the inconvenience of having it on you made banks more compelling over the last decades. Instead of having to pay out every employee individually, documenting every step and printing out receipts for everyone, companies can now automate the entire process, without the need for intermediaries to verify every transaction. Instead of carrying cash and risking theft, you can use a credit card. Hell, you can even get cash-back and you can get a lot of cool bonuses over time.
Using cash simply is not an option for most of us anymore. Banks and credit cards have revolutionized the entire financial sector. Banks have made banking and shopping easier, but they’ve also given governments total control over all transactions. Every transaction you make will be logged somewhere for years and will be fully tied to your identity. Paying with a credit card simply eliminates your financial privacy. In Western countries, this isn’t deemed as too big of a problem, but in many authoritarian regimes, this has led to government agencies spying on possible oppositions and freezing their accounts to make their lives harder.
Have you ever stopped to think about how much personal financial information you share with banks and institutions every day?
Just because your government calls itself democratic does not mean it’s okay to have full control over your money, financial freedom and privacy, which inevitably influences your everyday life. Laws can change very abruptly. What’s legal and constitutional now, might not be in the near future.
2010’s Innovation
In recent years, there’s been significant innovation in the financial system, sparked by Bitcoin’s emergence as the first decentralized, secure, and pseudonymous payment network. Unlike traditional banking, Bitcoin operates independently of fiat currencies, banks or government oversight, running on a decentralized blockchain that enables global transactions without the need for personal information.
However, as cryptocurrencies gained popularity, governments worldwide began regulating exchanges and implementing KYC (Know-Your-Customer) laws to track ownership and transactions. This compromised the privacy and freedom initially associated with cryptocurrencies, prompting the emergence of privacy-focused coins like Monero. These coins prioritize transaction anonymity, making tracing and linking transactions to individuals difficult.
Despite their popularity, Western governments such as the US and Germany are actively opposing privacy coins, aiming to restrict them on major exchanges like Binance. Additionally, they’re investing in technologies to undermine privacy features and track blockchain transactions.
This ongoing struggle represents a cat-and-mouse game between privacy advocates and regulators, and we all know who wins at the end.
The Normalization of Surveillance and Control
In today’s world, many folks brush off concerns about privacy, claiming they have ‘nothing to hide’. But when you ask them about their recent purchases or bank balances, suddenly they hesitate, realizing they value their privacy more than they thought. This expectation of privacy should apply across the board, including dealings with banks, businesses and government bodies. Yet, there’s hardly any talk about the alarming practices, like freezing accounts for vague ‘security reasons’ or rejecting folks for seemingly arbitrary credit scores.
These moves, often justified as measures against money laundering and terrorism, really boil down to one thing: keeping tabs on us.
The Age of CBDCs
Central banks all over the world are trying to use blockchain technology for their own advantage and are trying to sell it to you as innovation. Let’s take the digital euro, for example, which was proposed by the European Commission a while back. It’s meant to exist alongside Euro bank notes. (Though they have mentioned cash could be abandoned when demand becomes low, which will inevitably happen if the current trend is towards a cashless society.) The digital euro should be a digital representation of Euro bills and coins living on a blockchain, like Bitcoin. However, it is not held in your wallet, but rather in your bank’s wallet. The digital euro is not meant to replace the traditional banking system mentioned earlier, it’s meant to provide a more centralized playground for banks to transfer money faster and more cheaply across different jurisdictions. It’s meant to provide a more simplified and unified infrastructure for new banks to enter the market, which can strengthen competition and benefit us individuals.
This concept is called a CBDC, a central bank digital coin. The problem is that the digital euro worsens existing issues in the financial sector. It gives the European Central Bank even more power than before. The European Commission hasn’t mentioned any privacy features at all, and I don’t think they ever will.
CBDCs are meant to strengthen the government’s grip on your financial data and your money. They’re marketed as innovation and are directly targeted towards more unwary and naive politicians to bring them to life as fast as possible.
Possible Solutions
Can I tell you something? It doesn’t have to be like that. You, as an individual, have the power to boost a real revolution in the financial sector.
Privacy coins like Monero shouldn’t face bans or censorship. Regulation in the crypto market is beneficial, but not at the expense of individual privacy and freedom. Traditional currencies aren’t inherently bad. They provide a stable currency that you can rely on. You don’t have to worry about losing 20% of your money the next day.
We need virtual cash for online payments with cash-like attributes. It should be simple to use (like a bank or a PayPal account), it should be anonymous and fully private, it should be fast, decentralized and it should be secure.
One possible implementation would be a CBDC like the digital euro, but fully decentralized, open-source and with privacy features.
Another possible implementation would be a stablecoin with the privacy and security of Monero, which is managed by a decentralized autonomous organization (short: DAO) to control the supply in a decentralized and democratized way to provide a more or less stable currency that people can trust.
Finding the perfect solution is challenging, if not impossible, so we have to put more research into this to further evaluate possible consequences and disadvantages.
Your Call
I hope I could give you a glimpse into what might confront us in the future. It is crucial to stay resilient against such huge invasions into our privacy and freedom.
Tell your friends about this article. Put research into new currencies. Be open to new solutions. Vote for a party that respects your privacy and freedom and has concrete plans to revolutionize the financial system (like the Pirates in most European countries). Tell your favorite political candidates about your concerns to raise awareness.
Beware that most crypto currencies are scams and that none is good for investing at all!
Stop using your credit card and try to use cash as much as you can. Always keep enough cash and/or metals at home to cover yourself for the next 2 months.
It’s important to question everything that governments and banks do, because not everything is done to your advantage. Use common sense. And remember: Freedom isn’t a permanent state. It’s something we have to fight for every day.