I think people are getting confused between the optimal properties of base money and the priorities of record keeping on behalf of the holders of such.

If I expand my little example of earlier - where a plumber agrees to do a job for you in exchange for your bike but asks you to keep it for him for a while till he picks it up, then the distinction can be illustrated. So you give him an IOU for the bike. The IOU’s get traded, then a third level emerges where a bank keeps track of all the IOU’s in a set of accounts. This all forms a monetary chain of trust as shown below.



The numbers in the bank account represent something (the ‘value’ is sourced somewhere else), so we don’t need to worry about any adverse impact of keeping the records private, even though we may refer to those account balances as “money”. We trust the IOU 3rd party to honour those numbers.

The IOU’s represent something, so we equally don’t need to worry about impacting adversly on the properties of base money by keeping them private.

The bike, however, is at the end of the chain. It is ultimately the “money” for this particular exchange by definition (because it was agreed at the beginning of the transaction). Different rules apply here because we are at the end of the chain of trust and the bike must be desirable in it’s own right - not because it represents something else. In this case, authenticity is the only criteria - privacy only features in the recording of the transaction.

If we are trying to invent a new form of monetary media (base money, not derivative money as in bank accounts), we already have 2000 years or more of precedent to guide us. The design objectives are already known - simply implement these as faithfully as possible (as Dash is doing) to have the best chance of adoption. Gold got valuable because it exhibited these monetary properties and worked as money, not because it was attractive aesthetically. Klondyke gold rushers didn't say "hey - lets get our hands on some of that, it's really private". They said, "lets get our hands on some of that, it's a publicly understood, valued and recognisable asset".

If people find that hard to understand intuitively, look at it analytically instead. Consider the impact of obfuscation on the accepted base monetary properties (we’re talking here about ‘natural’, commodity base money like precious metals, not backed by a trusted third party). For a start, obfuscation does not feature in any of the core properties - that should ring warning bells with you already. Secondly, obfuscation simply impacts adversly on almost all of them, simply by mitigating the ability to arrive at a public consensus of its veracity.

Cryptonote based currencies are well suited for recording private transactions in a higher order financial layer such as bank accounts and bookkeeping systems where the numbers in the balance represent value that is sourced (backed) elsewhere. But they are a non-starter as a definition of ‘base money’ because they are far too obfuscated.


The relevance is that they both specify monetary systems which use cryptographically obscured transactions and balances. In the first case (the 1996 document) it is an appropriate use of such because we are not talking about unbacked money. Having the bank in the loop supports the value and as long as the bank "honours" the numbers in my cryptographically protected balance, I don't need to worry about public consensus arriving at a definition of it being money in its own right.


You're confusing the base money with the record keeping function for transactions and balances. An easy mistake to make because we live in an economic environment where the two are synonymous. Cryptocurrency, however, portends to replacing the gold / coal / oil itself as money, not the records of ownership and exchange for such.