In this three-part series, adapted from Resistance Money, BPI Fellows Andrew Bailey, Bradley Rettler, and Craig Warmke explain what privacy is, why financial privacy matters, and the challenges bitcoin faces in providing users with financial privacy.
Most already value privacy about sexual partnerships, medical conditions, religious practices, dietary needs, and peculiar preferences. We grasp the value and morally transformative power of consent. And much has been written on these matters.
Yet financial privacy – the ability to selectively disclose purchases, sales, or stored value – receives comparatively little attention. And it deserves much more. For what we do with our money shows, rather than tells, who we really are. You may claim to be a men’s rights activist; but that assertion lacks bite without giving up something of value for the cause – a sizable donation to a suicide prevention hotline for men, say. You may say you care for your own children; but that claim means little if you’re behind on child support payments despite having a healthy savings account. In short: if you want to know what someone values, observe not what they say but what they give up. Money, as a medium of exchange, is an altar upon which our sacrifices reveal our values.
Indeed, our monetary behavior doesn’t merely express our deepest priorities and desires. It also unearths preferences we didn’t even know we had, and may well disclose other facts that are otherwise hidden from our own view. Amazon knows when you’re depressed long before you go to therapy. The hormones you take, the political books you read, your sex toys and religious icons, and diapers – these say more about us than we might guess. And buying them says even more. Someone who knows that you bought something also knows that you believed the thing to be worth its price. And if they know what the price is, as well as when you paid it and where, they can know how much you wanted it, when you wanted it that much, and where.
Money is not just a medium of exchange but a medium of revelation.
Some distinguish various realms of privacy: privacy of the person (e.g., genetics), their behaviors (e.g., sexual preferences), communication, images and data, thoughts and feelings, location, and association. What we do with our money discloses who we are along all of these dimensions. Buying medicine typically used for a congenital condition suggests that you have that condition. Buying coffee at a given café suggests that you were there and when – and so, potentially, who was there with you. Your bank deposits can even reveal hidden conflicts of interest or bias. And so on.
Money talks. Without financial privacy, every transaction is an entry, not just in a ledger, but in a potentially public diary.
Unfortunately, we face an uneasy dilemma between convenience and financial privacy. On the one hand, credit cards offer convenience. But leaks and hacks from these services expose our personal information to the whole world. On the other hand, sticking to privacy-enhancing physical cash means forsaking quicker and simpler payment tools, access to credit, and other financial instruments. We would also have to transact in person or through the postal service. Choosing cash is tough in an ever-digitizing world.
Cash has its friends, to be sure. Cash defender, Brett Scott, claims that we must protect the use of cash not only for practical and political purposes, but for “the right to be dirty and physical.” But Scott acknowledges the inconveniences and says that in our world, using cash amounts to something like “a meditative practice.” We admire the passion. But few will take this vow of monetary monasticism. For financial privacy at scale, the privacy of cash must accompany the convenience of credit cards. We need digital cash.
We’ve seen the importance of financial privacy. In Part 3, we’ll explain how physical cash helps us achieve this privacy, and some difficulties bitcoin faces in taking on the digital cash role.
