Quote from: toknormal on March 07, 2017, 08:12:43 PM

That wasn't the the central point. The central point was that encryption is appropriately applied to either personal records or contractually defined money where ownership is both nominated and distinct from possession. If, on the other hand, you encrypt an un-nominated bearer token, the encryption is redundant.

No, it is not redundant. It is necessary. The only thing that is NEEDED on a block chain, is to know that there was a "right to spend" and that there are no double spends. However, the naive way in which bitcoin's block chain is coded, conveys much, much more information, and this extra information has no monetary function, but is harmful.

It is even monetarily harmful, as it destroys fungibility. All monetary assets are only fungible, if the ONLY thing you know about them, is that they are one of the monetary assets. From the moment you know more than that about a monetary asset, they are distinguishable, and hence, by definition, not fungible any more. This has no monetary consequences, as long as the value of one coin of the asset is not any different from another coin of the asset. But when things like former owners play a role in the value assignation, or the spendability, fungibility is gone.

But on top of that, it propagates partial out-of-chain real world knowledge. The fact that one can trace back the transactions of a given coin back to its creation, makes that whenever a previous owner is known at some point, this knowledge is propagated. If I were to own a coin that was part of Hitler's personal wallet, that would be an unsettling thing, wouldn't it. It means that I did business with someone who did business with ... with Hitler. One could even frown upon me to have indirectly accepted value that came from this horrible man.

This is an ACCIDENT of the bitcoin block chain. This is not needed, and harmful. It is because the bitcoin mechanism is too simplistic and naive, that all this extra knowledge is visible. Yes, we need to know that the right to spend was there, and yes we need to know that there wasn't a double spend. But THAT'S ALL. All the rest is harmful. Bitcoin's mechanism is giving out much more information than just "right to spend" is OK and "no double spend". It gives the god damned history of possession of every coin ! I don't want to know that I hold a coin that came from Hitler's wallet. And I certainly don't want others to know that I hold a coin that came from Hitler's wallet. And I certainly don't want the guy who I'm going to pay with that coin, to know that. But bitcoin fails to hide this.