We must consider public versus private money to learn how money can either be privately public, as in bank notes, or just publicly private, as in Bitcoin.
Publicly Private Money
In my pocket, I have an old leather wallet. It contains enough bank notes to buy a brand new wallet of a better model I saw in a magazine. This buying power exclusively belongs to me: I am the only one who can use those notes to buy anything. Likewise, if I handle them to another person, then instead of me, that person alone can use them to buy anything.
Still, although handling my bank notes to others can always transfer them their control, it will never transfer them their property: the notes themselves do not exclusively belong to me. For example, I have no right to destroy them: they are public. What exclusively belongs to me or to whoever else controls any such notes is rather their buying power, which hence must be private.
Indeed, if my bank notes were themselves exclusively mine, then I could transfer their control by selling them to others. However, this at least temporarily would prevent those notes from having any actual buying power. Then, by calling such a lost buying power monetary value, and whatever still has it its representation, we can conclude:
1. Monetary value must be private.
2. Its representation must be public.
Privately Public Money
Then, mistaking a representation of money for its represented monetary value makes that representation privately public. So any control of such a representational monetary value,1 whether centralized or decentralized, must also be privately public.
No commodity money can inherently distinguish between itself and its represented monetary value. Hence, all commodity money must be privately public. With directly monetary commodities (like sheer monetary gold), private control of public monetary representations is individual, or decentralized. However, with proxy representations of commodity money (like receipts for deposited gold), private control of public money becomes institutional, or centralized. Hence the privately public nature of central banks: any monetary authority must be as privately public as the monetary representations it depends on controlling. While conversely, any monetary representation controlled by a central authority must be privately public.
Purely Public Monetary Privacy
The Bitcoin monetary system represents any monetary value as a private key, then metarepresents it as the corresponding public key. Never before a monetary representation was inherently distinct from its represented monetary value: for the first time in monetary history, controlling a private monetary value does not require any control of its public representation. With Bitcoin, a public object can represent a private monetary value without ever becoming itself private -- which makes its private control by any central monetary authority not only unnecessary, but also impossible.
Privacy Versus Anonymity
Monetary privacy means monetary control exclusiveness: the exclusive control of a monetary value and possibly of its public representation. It does not necessarily mean anonymity. Anonymous monetary control remains different from exclusive monetary control, even if helping protect it. This way, we can have monetary privacy without having monetary anonymity, despite not conversely.
1. See http://omniequivalence.com/representational-monetary-identity/.
Topic: Monetary Privacy: Public Versus Private Money (Read 2718 times)
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