Author: Carter Feldman, CEO of Psy

For thousands of years, money has circulated privately. A bronze coin passed from a merchant to a customer leaves no transaction record. No government official knows what you bought or from whom you purchased it. No bank tracks your spending habits. This is not a flaw in the system, but rather the way money has operated since ancient times.

Even with the development of the banking system, privacy remains the default option. When you pay for beer with banknotes issued by institutions like the Bank of England, the pub does not need to enforce real identity verification or know your customer (KYC) processes.

When banknotes appeared in medieval China and later in early modern Europe, they served as anonymous, transferable bearer instruments. Ownership was transferred through physical exchange rather than personal identity changes. For centuries, governments did not know how much you spent or where; they could only rely on audits, witnesses, and confessions to understand the situation.

This all changed only recently, and it is still fresh in people's memories. In the mid-20th century, credit cards began to consolidate spending into neat, retrievable records. Since the 1970s, laws in various countries have required banks to verify customer identities and report suspicious transactions. International networks standardized cross-border transaction information. Each of these measures makes sense on its own: preventing fraud, anti-money laundering, and law enforcement needs. But together, they have built an unprecedented financial surveillance infrastructure.

The internet accelerated everything. Online bank accounts, digital cards, and mobile payments not only capture what you purchased but also when, where, and from which device you made the purchase. Payment platforms integrated identity verification and behavioral analysis from the start. They assess your risk status in real-time. Convenience is the bait, and surveillance is built-in.

Now, central banks are moving closer to the source. Central bank digital currencies being developed in China, Europe, and the United States will allow governments to issue currency directly to users in digital form. Unlike cash, these systems are designed to be traceable from the outset. Privacy protections may be promised (as in the case of the EU), but the potential for visibility and control is often structurally embedded in the design.

Today, governments can access your spending history and the entities you transact with. They can also freeze accounts at will. Canada did this in 2022 to protesters of the Freedom Convoy. Georgia froze the bank accounts of five NGOs providing legal and financial assistance to arrested protesters this March, prompting Amnesty International to condemn the action as a "blatant attack on human rights." In Syria, the transitional government ordered banks to freeze accounts associated with figures from the former regime.

In some cases, there are morally defensible and intellectually coherent arguments supporting these actions. However, national security legislation around the world often leaves defendants with little legal space to defend themselves. Their accounts may eventually be unfrozen, but the initial punishment is irreversible.

For most people, bank accounts are a lifeline, and freezing them amounts to coercion. You cannot expect anyone to fight back when their access to basic necessities is cut off. This is not a truly fair fight.

When governments can freeze accounts related to political protests, the importance of alternatives becomes even more apparent. Privacy-focused cryptocurrencies like Monero (XMR) or Zcash (ZEC) offer a way to return to normalcy. They enable direct, permissionless exchanges between individuals without identity checks or centralized oversight. This is essentially a digital return to the functions that coins and cash once provided.

However, in our inverted discussion, privacy-protecting cryptocurrencies are labeled as abnormal. Critics deem them suspicious, radical, and dangerous. A 70-year experiment in financial surveillance is seen as normal. A millennium of private trading tradition is viewed as odd.

Critics often frame privacy coins as tools for illegal finance. This overlooks their broader social utility. Just as cash enables legitimate private purchases, private cryptocurrencies preserve freedom in an increasingly monitored digital environment. In countries with authoritarian regimes or unstable banking systems, private digital cash may be the only way to securely store and transfer value.

Society has tolerated private transactions in cash without criminalizing the medium itself. It does not ban a £50 note because someone might misuse it. The same logic should apply to privacy-protecting digital assets. They should not be seen as a threat but as modern equivalents of physical currency: useful, legal, and consistent with centuries of financial tradition.

While cryptocurrencies can indeed challenge central bankers, their deeper value lies in preserving the private exchanges that existed for thousands of years before our surveillance-based monetary takeover.

The real anomaly is not private cryptocurrencies; it is the assumption that every financial transaction should be visible to third parties, subjected to algorithmic analysis, and vulnerable to political interference. We are not asking for special treatment; we are defending norms that existed before around 1950.

When critics label privacy coins as suspicious, they are saying that the natural essence of human commerce is inherently criminal. They view a millennium of private trading tradition as a deviation while considering a 70-year experiment in financial surveillance as normal. Those defending the status quo should take a longer view of history.

Author: Carter Feldman, CEO of Psy

Related: Bitcoin (BTC) shows bullish reversal signals, "apparent demand" hits a four-month high

Original: “Privacy Coins Are Not Radical; What’s Truly Radical Is Surveillance Currency”

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