You touch upon a very …touchy subject
It seems to me that some trade-offs must exist between a person’s desire for absolute, Monero-like privacy, and the government’s desire to be able to stick its big snout into everyone’s business.
The way it is now, at least in the USA, unless you’re dealing -strictly- in cash for everything, you are leaving a paper trail that can be traced back to you, if push came to shove, for evidentiary purposes in case of an investigation. Most people, and by most I mean those who aren’t breaking the law on purpose, do not deal in cash and use credit cards, e-bank/e-pay systems, automated EFT/ACH, paper checks at the worst - all of it 100% traceable and mappable to a person or a legal entity (corporation, e.g.).
The question then becomes - as far as Ada is concerned - assuming we all can agree on what is right and what should be done, which is to aim for accountability, transparency, traceability/auditability - should we permit a cash-like, untraceable, fully anonymous system to exist within or be attached to Ada via side-chains if we want to shoot for maximum adoption because of Ada’s unprecedented, intrinsic security guarantees/provable security benefits?
My personal opinion - and that’s all it is, influenced by some libertarian thinking/views - is that yes, such systems should be able to exist as part of a wider Ada eco-system, if for no other purpose, to merely be able to absorb such transactions via Cardano SL would be a boon to proving the network’s flexibility/stability. Before Bernard Madoff was caught, real banks hosted his money. Does this mean they were all necessarily complicit only because they handled the transactions of a money-whoring criminal who will die in jail?
You could make the case either way I suppose, depending on whom you ask, but my answer is that banks can’t be held responsible, unless you can establish they had prior knowledge, of the actions of criminals who use them to conduct their dirty business.
In the same vein, Ada and Cardano SL, the lowermost layer that is currently active and will settle all transactions between parties, cannot be held liable, or rather, its stakeholders (me and thee) cannot be held liable because someone chooses to use it for conducting transactions that aid some criminal enterprise.
This is a well known moral dilemma - privacy vs security, or at least, it strikes us as a moral dilemma, and quick and easy answers aren’t really forthcoming. One has to identify as many trade-offs as possible between these two seemingly opposing goals and hopefully implement the protocol(s) in such a way where this can be “tweaked” - ideally speaking, depending on the use cases of actors in a widely heterogeneous, distributed network. Not everything that will hang off Cardano SL is going to be constructed in the same spirit as Ada. Banks may not want a permissionless ledger, in fact, they would probably demand a permissioned ledger. Cardano SL isn’t it and they’ll want to either run on another or brew their own. On the flipside, criminals will prefer Monero like currencies and coin mixers galore to be able to rinse their ill gotten gains.
My idea of how it might pan out is that a currency like Monero can exist as part of Cardano SL via some side-chain. Now, depending on who the target recipient is, a Monero sender may or may not be able to complete a transaction via Cardano SL only because the recipient will preclude transactions where metadata about the sender’s identity isn’t present, such as first/last name, location, citizenship/jurisdiction, etc. Thus, Monero’s benefits as part of Cardano may be obviated depending on the recipient’s criteria for acceptance of payments.
The converse - USD from a US bank to Monero, might be easier to complete. Would the bank allow it tho? Depends on laws. Can I withdraw some cash right now and give it to a drug dealer or a prostitute? Yes. Should it be possible via Cardano SL? If you’re going to imitate reality, and I don’t think we should deviate from our known reality/moral constraints, then you should be able to go US bank/USD->Cardano SL->Monero recipient. If you don’t allow it, criminals don’t give a s*it - they will find another way. So you might as well allow it, and hope they trip up on something else where you can catch them.
This is dialectics at its finest… and I don’t really know what the ‘right’ answer is. All I’m hoping is Cardano SL stays robust and true to its mathematical promises/proofs, that this year and next we catch up w/Ethereum’s capabilities, and eventually we tackle scalability in a BitTorrent-like manner…where it can scale and be sharded infinitely. I’m gonna leave the details to IOHK on how :).
Damn…your post got me going :). Thanks for sharing.