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Comment by HidyBush | Hacker News Reader

To me the question is very simple: make a digital currency that has both a completely traceable way of exchanging money and a completely anonymous one.

If you send someone money in the traceable way then the state knows exactly the motives of the transaction and can automatically calculate the taxes you ought to pay on it.

If you send someone money anonymously then you get taxed at the highest bracket possible and nobody asks questions. Are you a drug lord paying his cronies? sure, it's untraceable and safe but 40% goes to the state automatically.

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I think governments should create a digital equivalent of cash. They should put strong safeguards in place to make it as anonymous as cash. Maybe even protect access to these records even at a constitutional level.

I think having such a digital cash system could revolutionize online commerce. Right now you need a fair bit of "capital" (know-how) to start a small online business. You can't just set up a street stall or garage sale like you can with cash. I think this makes it harder for people to get a foot in the door for entrepreneurship. A government-run digital cash system would make it possible again. It might also allow a reasonable alternative to the current ad-based economy.

Many governments are working on central bank digital currencies [0]. ERC20 tokens directly issued by the government onto crypto networks (such as Ethereum). Most assume they will be traceable and accounts will be KYC'd but there's hope that some governments will be better.

This will encourage most banks to support these same crypto rails via their apps making sending the currency as easy as cash or you could hold it in your own wallet on your phone for self-custody.

Once they are out there and on-chain it should be fairly easy for anyone to use them for payments if they don't care about privacy, or switch to another more private stablecoin if they do.

Future wallets will allow seamless conversion between any of these coins and automatic bridging between any network.

0: - UK: https://www.bankofengland.co.uk/research/digital-currencies

- Australia: https://www.rba.gov.au/payments-and-infrastructure/central-b...

> You can't just set up a street stall or garage sale like you can with cash.

I noticed in Norway even the people selling cold water on hot days by the side of the road took Vipps. Electronic payment systems really can be that simple if people want. It is of course not anonymous, but that's far less important to most people.

Until it is.

Many people were unconcerned about depending on Russia for energy. Until they were.

Wait til Russia takes over the breadbasket of Ukraine. Then there will be a food dependency too!

Basing these kinds of things on sunny day thinking, such as believing that government will be benevolent (against the backdrop of history where government generally isn't), is foolish.

>It is of course not anonymous, but that's far less important to most people.

But this only works if the powers that be sanction what you're doing. If the banks or card organizations don't like you, your business or even the industry then it becomes very difficult. Governments already manage cash, they could do the same for a digital currency.

It must be legally made anonymous. There needs to be extremely severe penalties for violating that, because people are going to try. And when people try, it will erode trust in the system.

Perhaps, but it's not me you need to convince; you need to advance a popular political and/or legal argument. The legal line of arguing just got significantly harder in the US:

>> It held that the abortion right, which is not mentioned in the Constitution, is part of a right to privacy, which is also not mentioned.

-- DOBBS, STATE HEALTH OFFICER OF THE MISSISSIPPI DEPARTMENT OF HEALTH, ET AL. v. JACKSON WOMEN’S HEALTH ORGANIZATION ET AL

The ECHR does enumerate a right to privacy, but with a big law enforcement caveat.

And the political argument is an extremely difficult one to make: the police must in no circumstances be able to trace transactions?

> this only works if the powers that be sanction what you're doing

Well, yes. But protections are only useful against power if there's broad support for the process. Both policing and anti-terrorism, and the handing of vast powers to those bodies, are very politically popular.

Why not use simply USDT/USDC? It provides what you are asking for now.

don't you think there would still be a problem with govt/corps tracing all the legit purchases?

Not necessarily. It is a difficult problem but people are working on it.

This was posted here before

https://taler.net/

https://news.ycombinator.com/item?id=30514122

it gives you the choice.

do you think the state cares if it sees that you bought a new microwave? no, it's a very normal thing to do and there's no reason to hide it.

do you want to hide buying a house alarm system so nobody would know you have one installed, not even the state? then pay the premium and nobody will know

Why would the state permit anonymity?

They've done everything they could in the last 20 years to detract anonymity and privacy as much as possible, in collusion with the largest companies that exist.

ZCash does this.

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