In 1993, mathematician Eric Hughes published A Cypherpunk’s Manifesto. It began with the assertion that privacy is essential for an open society in the electronic age. Privacy is not secrecy. A private matter is something you do not want everyone to know. A secret is something you do not want anyone to know. Privacy is the power to selectively reveal yourself to the world. This distinction is important because it shapes everything that follows. The cypherpunks were not criminals seeking to hide. They were engineers and cryptographers who believed that digital networks exposed too much by default, and that cryptography could restore the natural boundaries of physical life. You can have a private conversation in a park without it being recorded. Similarly, you should be able to conduct a private transaction online without it being recorded. The cypherpunk project aimed to develop tools that would make this possible — anonymous communication, encrypted storage, and critically, digital money that behaved like physical cash.

Launched in 2009 by the pseudonymous Satoshi Nakamoto, Bitcoin was the first cypherpunk currency to actually work. It solved the double-spending problem without a central authority, using a blockchain based on proof of work that anyone could verify. It was decentralised, permissionless and censorship-resistant. No government could freeze your Bitcoin. No bank could block your transaction. This was revolutionary. But Bitcoin is not private. Every transaction is recorded on a public ledger that anyone can inspect. Your Bitcoin address is a pseudonym — a random string of characters — but it is persistent. Once an address is linked to your real identity — through an exchange withdrawal, a purchase or any connection to the traditional financial system — every transaction you have ever made with that address becomes part of your traceable history. Chain analysis companies have turned Bitcoin de-anonymisation into a profitable industry. They trace funds through the blockchain, cluster addresses belonging to the same entity, and sell this information to governments and corporations. Bitcoin is surveillance money. The ledger sees everything. This was no oversight — Satoshi understood the privacy limitations and discussed them in the original white paper, suggesting that users generate a new address for every transaction as a partial mitigation. But address reuse is commonplace, and even with fresh addresses, the amounts, timing and transaction graph reveal enough information to reconstruct identities.

What Bitcoin promised but failed to deliver, a later project set out to provide at the protocol level. Launched in 2014, Monero uses three cryptographic techniques that render blockchain analysis effectively impossible. Ring signatures hide the sender: when you spend Monero, your transaction is signed by a group of potential senders — your actual output plus several decoys taken from the blockchain. An outside observer can verify that one of these signatures is valid, but cannot determine which one. Stealth addresses hide the receiver: every transaction generates a one-time address that only the recipient can recognise and spend. It is impossible to link multiple payments to the same person by looking at the blockchain. RingCT (Ring Confidential Transactions) hides the amount: the transaction proves that the inputs equal the outputs without revealing the actual values. The result is a blockchain where observers see transactions happening, but learn nothing about who sent what to whom, or how much was transferred. Monero is what people mistakenly believe Bitcoin to be: private, untraceable digital cash. This has made it the currency of choice for privacy advocates and, inevitably, criminals. Darknet markets that once used Bitcoin have largely moved to Monero. Ransomware groups demand payment in Monero. The same properties that protect a dissident receiving donations also protect an extortionist receiving ransoms. There is no way around this.

For Bitcoin holders who still want privacy, there are post-hoc solutions. Mixers, also known as tumblers, pool Bitcoin from many users and redistribute it, breaking the transaction trail. CoinJoin combines multiple transactions into one large transaction, obscuring individual inputs and outputs. Both approaches work in principle, but they face two intractable problems. The first is legal. The US Treasury has sanctioned mixers such as Tornado Cash, making it illegal for Americans to use them. Mixer developers have been arrested. The argument is that mixers facilitate money laundering, which is true — Tornado Cash was used by North Korean hackers to launder stolen funds. But sanctioning code sets a dangerous precedent. Tornado Cash is not a company. It is a set of smart contracts running on Ethereum. Sanctioning it means sanctioning a tool, not a person. If a mixer can be banned simply because criminals use it, the same logic could apply to Tor, encryption and cash itself. The second problem is technical. Mixing leaves patterns that can sometimes be unravelled by sophisticated analysis — amount correlation, timing analysis and network-level surveillance can reduce the anonymity set. Privacy is probabilistic, not absolute. For stronger guarantees, Monero’s protocol-level privacy is inherently superior to any add-on mixing for Bitcoin.

Cryptocurrency exacerbates the encryption paradox to its most uncomfortable extent. With encrypted messaging, the debate is about whether private conversations enable crime. With cryptocurrency, the debate is about whether private money enables crime — and money is, by its very nature, already the medium of crime. Cash has been used for illegal transactions since its invention. It leaves no paper trail. No identity verification is required. It is accepted everywhere. By the standards applied to cryptocurrency, physical cash is arguably the most dangerous financial privacy tool ever created. Yet no serious person proposes abolishing it. The ability to transact privately is widely recognised as essential to a free society. The alternative — a world in which every payment is recorded, traceable and subject to surveillance — would be a surveillance state’s dream. It enables financial censorship, giving the power to cut someone off from the economy entirely based on their political views, associations or personal life. China’s social credit system offers a glimpse into this future: every transaction contributes to a score that determines what you can buy, where you can travel and what jobs you can hold.

The cypherpunks understood this decades before it became a reality. They developed cryptocurrency not to get rich, but to preserve a fundamental human capability in the digital age: the ability to transact without permission or surveillance. Whether this capability is worth protecting despite its inevitable misuse is the central question of financial privacy. Your answer determines which side of the encryption debate you stand on, and whether you see Monero as a tool of liberty or lawlessness. I believe that financial privacy is worth protecting. The cost — that criminals will also use private money — is real, but it is a cost that we already accept through the use of cash, shell companies, offshore accounts and the myriad other ways money has been hidden since its inception. The alternative cost — a world with no private transactions at all — would be far greater. It would be a society in which every economic act is recorded, judged and controllable by those who hold the keys to the database. That is not a society I want to live in.