What is the point of private currency?

Let’s take a step back and consider a few things in general. Is Grin cool? Undoubtedly. It is one of the coolest, technically interesting projects in the blockchain space, and it is sticking to its cypherpunk philosophy. Will it succeed? It entirely depends on what the definition of success is. If success means that Grin can be used as a basis for testing possible changes to the Bitcoin network, then it can certainly succeed. If it wants to become the coin of commerce, it will fail, just like Beam.

Both Grin and Beam agree on one thing: true privacy and scalability are incredibly important. But, neither Grin nor Beam will ever be adopted on a meaningful scale, because no one will ever use a non-stable currency for commercial purposes. We already have Bitcoin if you want to invest in a crypto asset, or transfer large chunks of money around the world. But no-one is using Bitcoin to buy a coffee, because that would be silly (And don’t get me started on the lightning network, which is essentially a cool solution to a problem that no one was having). What we need is a stablecoin: completely anonymous, private, stable, and globally decentralized. Over my years working in the crypto-space, I have become convinced that this is the only thing that matters in cryptocurrency; the holy grail. A truly stateless, global currency.

Aside from the major technical problems of this, like every attempted type-3 (non-asset backed) algorithmic stablecoin having failed so far, there are also fundamental structural difficulties, which are exemplified by both Grin and Beam. You can have cypherpunk, open-source, part-time development, but it will be incredibly slow and won’t produce anything user-friendly anytime soon. Or you can have venture-capital-backed, efficient, organized development like Beam, and be completely shut down by regulators and anti-money laundering organizations who will see a decentralized private stablecoin as the ultimate money laundering tool. The only reason Beam hasn’t gotten in trouble yet is because nobody is using it.

Facebook Libra is already being shut down by major countries because of “KYC concerns” and Libra isn’t even attempting to be private, so if you think Beam stands a chance, don’t kid yourself.

And this is the paradox of the holy grail: you can’t really do it subversively, because you lack the resources, and you can’t do it corporately because you’ll go to jail.

Don’t be fooled by the current compatibilist talk that is floating about the blockchain industry. Cryptocurrency can be used only in two ways: to completely control and monitor everyone, or to completely privatize and hide everyone. There is no middle ground, as any such attempt will be swallowed by the authorities, or will decay into total control or censorship.

I’m not talking about other uses of blockchain here. Sure, you can have decentralized assets, real estate, supply chain management, document verification, smart contract gambling, and an internet of value, etc. But that isn’t about currency. Cryptocurrency can only go one of two ways: a private, decentralized stablecoin, or a currency that is either directly state-controlled (state-issued crypto), or is easily monitored and regulated (like Bitcoin is beginning to look). While we can try to make Bitcoin more resilient to censorship and analysis, it remains more of a commodity than a currency, and fluctuates too wildly to ever be the basis of the world economy.

Everything is heading towards less privacy, more control, and more surveillance, and we need to cherish and build the only technology that has even the slightest chance to go the other way, and protect the freedoms we are so willingly giving away ‘for free’.