The modern level of financial surveillance – KYC, etc – is only a few decades old, and collects more info for the state than any 'general warrant' could. Even in fairly-free countries, the burdens & murky liabilities created by turning every financial agent into a part-time police informer has the effect of persecuting & impoverishing disfavored individuals & groups – even those who've been convicted of no crime. In unfree states the same surveillance helps quash all kinds of dissent.

A blind faith in authorities' use of financial surveillance ignores history & the current reality of billions living under untrustworthy regimes. Many hardly even pretend to offer "rule of law & democracy".

I do agree that financial surveillance is an issue, but I'm not sure Monero is the best way to curtail it. Why not try passing strong consumer protection laws that ban companies from collecting and selling data on financial transactions as well as tighter restrictions on the access that law enforcement has on this data? If the problem is a government that is abusing its power, it wouldn't be too hard for them to crackdown on any cryptocurrency they consider a threat. Monero feels like a band-aid rather than a long term solution, and one with some pretty significant downsides.

I did not mention Monero at all!

I pointed out that “rule of law & democracy” did OK before the recent modern era of massive, preemptive, general-warrant-like financial surveillance. And that level of surveillance may in fact endanger “rule of law & democracy”.

“Why not try passing strong consumer protection laws that ban companies from collecting and selling data on financial transactions as well as tighter restrictions on the access that law enforcement has on this data?”

You are welcome to try that. Why don’t you start in China, Venezuela, Russia, Saudi Arabia, Cuba, Nicaragua? Or even Egypt, Turkey, Iran, Brazil, or India? Protecting financial privacy in those places would help show if your “pass a strong consumer protection law” plan might work.

Even in a country where such a law might have a chance, it’s a fragile protection, & ineffective against most abuses by the state itself. Much better is: built-in, inherent, classic privacy.

I get your point here, but once someone has already lost trust in the government, having the government regulate itself isn't really a viable counter to that person's concerns.

Technology such as atomic swaps mean privacy coins will never be killed by legislation. The best we can do is outlaw their use by the honest, relegating them only to the blackmarket (which is precisely the place you didn't want them in the first place).

You can argue that some gov/regulator should have access, though good luck finding one country everyone trusts. More realistically, and practically, you could require that, as many jurisdictions do with cash, we should have reporting requirements for when a merchant sells something for large amounts of cryptocurrency.

But its pretty hard to argue everyone should be financially naked and exposed to anyone who wants to look. To fix that, even if you're government surveillance friendly, you first need to make the blockchain zero-knowledge (which Monero actually isn't good at, but thats irrelevant here).

The whole "I don't understand how people can possibly think that identity obfuscation at scale is a good thing for a financial system" can be answered by, "Will you share your entire transaction history and account balances with the entire world? Why not?"

Not people who've done any research on the matter. Regulations on money laundering have been almost completely ineffective at reducing crime (the end goal); the drug market is bigger than ever. What they do achieve is imposing a significant burden on individual and small businesses, while large banks like HSBC can get away with money laundering by paying a nominal fine.

Money laundering regulations are like the financial version of the war on drugs: completely ineffective at what they set out to do, succeeding only at giving the government more power and making life harder for the powerless.

And Venmo => https://www.mic.com/p/matt-gaetz-who-is-definitely-not-a-sex...

You know what makes it really easy to ransom a hospital during a pandemic? Monero. You know what makes it easy to ransom a school, leaking personal information of children in the process? Monero.

But to financial economists, cash is a textbook example of a ‘fungible’ thing.

So a statement like – “Monero is fungible, cash is not.” – implies you’re using peculiar definitions.

I cannot take cash into a bank that came from a heist or a covert drug buy from the authorities for example, I'd go to jail. The term 'marked bills' exist because cash is not fungible, not all bills are equal.

This is the binary quality of fungibility. There are no shades of fungibility, there is no "well this is X's definition of it".

https://www.investopedia.com/terms/f/fungibility.asp

(It is interesting to think of the ways traditional cash might not meet a physicist’s definition, or assumptions under which Monero might somehow be more fungible or less fungible than physical cash, on a spectrum richer than a pure binary. But if you remain oblivious to what the word commonly means to others, you’re failing a bit at communication.)

There is a reason that the scams and ransomware use Bitcoin or other cryptocurrency instead of cash.

Some people say the same things about encryption, but it is a very accurate parallel that it actually makes society safer, and the technology can't be taken from "criminals" so you just have to deal with its existence.

Cryptocurrency isn't a bank. It's a virtual mattress to stuff your money into, and one that lends itself very well to torturing you until you unlock the wallet.

Further, many people live in countries where the people simply cannot trust their institutions or the value of their currencies, to the point where they are better off storing USD under their mattress, so the technology should be there for those people

The government tends to go after lower and middle class people when enforcing laws. I think the benefits of preserving privacy outweigh the IRS collecting the $600 someone who makes $30k owes.

Easily - I value my ability to remain private more than I do your ability to enforce laws.

The beauty of that particular accusation is that you can't really defend against it - as any disagreement can simply be used to infer an even higher degree of privilege.

That is an anomaly in human history. Much of the world still lives under governments that are hostile to many of their people, and we can easily slide back to that condition.

I also have to point out that cash is largely opaque and we have used cash for centuries. Laws were still be enforced. While cash can be exchanged with no knowledge of anyone but the participants, large scale movements and usage of money requires interactions that are very noticeable and traceable. It’s easy to move money anonymously but very hard to use it that way. Monero doesn’t change this very much.

[1] https://freakonomics.com/podcast/still-using-cash/

[2]https://www.nytimes.com/2016/02/22/opinion/getting-rid-of-bi...

Monero as a financial system is not as you say "completely opaque" - that's laughable. All the code that runs every Monero client is completely open source.

Now some more savvy people will still complain: "If we can't see any of the balances then how do we know """they""" aren't minting coins out of thin air or defrauding other users?"

The truth is that you can simply read the code and determine that that is impossible. Or more accurately, someone very smart can (I for example can't give that guarantee first hand). But that's why open source software is beautiful - the code is not obfuscated or unclear, if there were any flaws in the system a single white hat could easily sound the alarm.

Long story short, you are confusing transaction privacy with protocol obscurity, the genius of Monero is that its protocol is completely in the open but it retains privacy for its users - that's the genius your ignorance is taking for granted.

Almost all governments throughout history except for now would have abused that privilege.

There's an important side-effect to an anonymous financial system which doesn't get much attention, but is worth noting.

An anonymous financial system is a debt-less financial system, since without identity you can't do credit ratings or other means of enforcement of repayment. Everything is either a commodity or equity/security, not a debt instrument. And there is no debt-financing, only equity-financing (similar to the VC industry).

No debt means no leverage, or in the case of the Global Financial Crisis, no over-leverage [1]. Without debt and leverage you can't have a systemic credit collapse, the most destructive type of financial crisis (GFC, Great Depression).

I've seen one estimate that if central banks and govts hadn't bailed out the financial system in 2007/2008 GFC, there was so much leverage that the collapse would have lost the banking system more money than it had cumulatively made over its entire ~300yr modern history. That would have been Mad Max time for sure, and why the bailouts were the lesser evil.

By eliminating identity from the financial system you've deterministically eliminated the worst possible outcome that system could incur, and materially changed the expectation value for the system (and society) over time.

In the short-term, a highly leveraged, debt-based financial system will likely outperform an equity/commodity-only financial system. But over the medium to long term, when periodic credit collapses are factored in to the former, probably not.

In blockchain financial systems, any activity that requires collateral must be over-collateralized [2], resulting in significantly increased systemic robustness and reliability. If we care about deterministically eliminating the most destructive type of financial crisis from the table of possible outcomes, then we must acknowledge this is a useful side-effect of an anonymous financial system.

Finally, the comparative damage to society of a GFC-style collapse is greater than things that are enabled by untraceable money, like money laundering and sex-trafficking. The latter can be horrible, but the former is potentially a different order of magnitude, if bailouts are not possible (which may be the case next time).

* Notes & Clarifications:

1. High volatility due to price discovery activities is not the same as systemic collapse. Bitcoin and other cryptocurrencies are highly volatile, losing and gaining ~80% of their value multiple times over their first decade of existence. But such volatility is not the same as a systemic collapse.

2. Atomic debt like flash loans are still possible, where the loan is atomically made, invested, liquidated, and repaid all in the same smart contract. If any part of that contract fails, or the loan can't be repaid, then the entire thing is rolled back and the loan never even happened. But that can't result in a collapse in the same way the traditional banking system can.

[1]:https://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80...

[2]:https://www.investopedia.com/terms/o/overcollateralization.a...

Rich people already have that advantage, why not give the same advantage to the little guy?

The system is already that for everyone rich enough.

I just want to have the same privilege as the Clintons and Trumps when it comes to ~~bribes~~ voluntary contributions.