Nothing to Hide

The Risks and Realities of Transparent Currencies

No freedom is so passionately defended in rhetoric, yet so passively surrendered, as the right to privacy. Rooted in self-sovereignty, it is our natural right. If we own our bodies and are free to do as we wish with our private property, then we can logically derive that we possess the right to conceal our personal information and actions from the prying eyes of others—whether governments, corporations, or simply our fellow man. This ability to step outside public view is fundamental to a flourishing civilization. Beyond censorship, beyond the control of the State, privacy facilitates voluntary exchange. A society without financial privacy is a society where freedom and autonomy are absent.

Money in the Digital Age

As privacy erodes across all facets of life, the financial realm has emerged as a critical battleground—one that could usher in a technocratic nightmare. In this new reality, as societies move toward cashless economies, individuals face an opportunity to reconsider their preferred form of money.

Digital currencies can be viewed as concentric rings of exposure, each representing a different level of transparency. As one moves outward through the model, privacy increases, illustrating the transition from total transparency to complete anonymity.

Personal identity is intrinsically tied to each unit of a transparent currency. While proponents claim transparency reduces illicit activity, the consequences for liberty are catastrophic. Through the eyes of the surveillance state, a central bank digital currency (CBDC) is fully transparent. With the push of a button, authorities can punish non-compliance and confiscate the assets of dissidents. Worse still, CBDCs form the backbone of social credit systems, turning economic self-censorship into the norm. Under constant surveillance, individuals must refrain from “unacceptable” purchases or supporting controversial causes.

Severing direct links to identity, pseudo-anonymous coins such as Bitcoin (BTC) and Ethereum (ETH) use alphanumeric strings for addresses. However, both BTC and ETH operate on transparent ledgers, enabling blockchain surveillance firms to trace transactions. If identity can be linked to an address, these blockchains become fully transparent to such firms. That said, BTC users can send coins privately through CoinJoins and mixing services, while privacy-enhancing tools similarly exist for ETH users. For pseudo-anonymous coins, the categorical boundaries between transparency and privacy can be blurry.

Optional privacy can also be built directly into a protocol. Zcash (ZEC), for example, incorporates two address schemes: t-addresses are reserved for transparent transactions, and z-addresses are used for shielded transactions. ZEC’s two-tier architecture has led to the stigmatization of privacy. For instance, Binance rejects deposits from shielded addresses, while Coinbase only permits withdrawals to transparent addresses. Similar to using mixing services, opting into privacy often results in coins being flagged and rejected by exchanges. In practice, optional privacy tends to devolve into transparency, as restrictions imposed by exchanges and merchants lead to users abandoning privacy features.

Unlike transparent or semi-transparent currencies, anonymous currencies like Monero (XMR) have privacy baked into the protocol. Coins that carry no history are inherently fungible, thus, 1 XMR always equals 1 XMR. Regardless of the use case, XMR transactions are private by default.

Transparent, semi-transparent, or anonymous? When privacy is stripped from a medium of exchange, what are the societal implications and how is commerce affected?

Personal Safety

When privacy vanishes, threats to personal safety become an ever-present and unavoidable reality. Drawing on a 2009 XKCD comic, the term “wrench attack” refers to the physical targeting and extortion of cryptocurrency holders through force or threats. As an asset class, crypto is an ideal target for theft. Not only are major crypto-assets highly liquid, but life-changing fortunes can be accessed in minutes with a private key alone.

The first reported wrench attack occurred in 2014. Hal Finney—the recipient of the historic first BTC transaction from Satoshi Nakamoto—was also its first victim. As of July 15, 2025, at least 239 such attacks have been reported worldwide, though it’s safe to assume that many more have gone unreported. A study of the BitcoinTalk message boards identified 62 posts referencing attacks. Citing concerns about security and privacy, fear of further complications, or a lack of faith in law enforcement, most of the contacted victims chose not to report the incident. This reluctance to report is compounded by a troubling history of corruption when law enforcement enters the picture. During the Silk Road investigation of Ross Ulbricht, two US federal agents were charged with stealing BTC. Similarly, in the UK, a National Crime Agency officer involved in the Silk Road 2.0 investigation was arrested for committing the same crime.

As Bitcoin has skyrocketed to new highs in 2025, reported wrench attacks have been on the rise. In May, French authorities charged an organized gang of 26 with carrying out multiple attacks on prominent crypto figures. In June, an Italian tourist was kidnapped and tortured in a New York City townhouse.

Crypto executives and influencers have frequently been the primary targets. Other individuals have been identified through data breaches or by bribing centralized exchanges, which serve as honeypots for personal information.

For thieves, blockchain surveillance software is just another tool that widens the net of potential victims. Advances in AI exacerbate these risks by enabling the construction of elaborate transaction maps from immutable, transparent ledgers—tools that could be used to target the wealthy.

Michael Saylor, CEO of Strategy, sums up the problem of transparency when explaining why his company would not provide proof of BTC reserves:

It actually dilutes the security of the issuer, the custodians, the exchanges, and the investors. It’s not a good idea. It’s a bad idea. It’s like publishing the address and the bank accounts of all your kids and your phone numbers of all your kids, and then thinking somehow that makes your family better.

Saylor’s warning underscores a vital point: privacy is paramount in protecting people and their property. Yet, the consequences of transparency extend far outside security—they seep into the marketplace itself.

The Rippling Effect of Transparency

When financial data becomes visible, it fundamentally reshapes the dynamics of market transactions. Price discrimination—the practice of charging different prices for the same product—becomes even more attractive. Sellers can offer discounts to customers who might otherwise not purchase, while simultaneously raising prices for those with less price sensitivity. Price discrimination itself is neither inherently positive nor negative. However, when money is transparent, sellers are better positioned to capture a greater share of the consumer surplus.

Corporations already predict willingness to pay and engage in price discrimination using the information at their disposal. For example, Target employed geo-fenced price switching on its app when customers entered the parking lots of its brick-and-mortar stores. Orbitz steered Mac users toward pricier rooms. Travel agencies have faced accusations of adjusting fares based on users’ browsing histories.

In an environment where data-driven pricing strategies are commonplace, transparent money deepens the informational asymmetry between buyers and sellers. Public ledgers can expose balances, spending patterns, and transaction histories—fueling more invasive algorithms for personalized pricing.

Aside from pricing, transparency complicates commerce by exposing trade secrets and internal dealings. By monitoring a transparent ledger, corporations can glean insights into the suppliers and strategies of competitors. Along these lines, wallets belonging to founders and whales within the crypto industry are tracked in real time. Markets react sharply when “Satoshi era” Bitcoins awaken after years of dormancy. When Vitalik Buterin, co-founder of Ethereum, sells ETH, he often faces backlash and questions about his commitment to the project.

Privacy-focused coins avoid these pitfalls by concealing personal and financial data. They allow market participants to transact without worrying about price discrimination or exposing sensitive information, ultimately preserving autonomy and laying the foundation for a freer market.

Conclusion

The notion that transparency fosters trust fails to account for the indispensable role of privacy. Privacy is not merely a personal preference—it is the guarantor of fungibility, a cornerstone of sound money. And sound money, in turn, safeguards us against inflation and the creeping shadow of authoritarianism. By preserving personal autonomy, private digital cash removes barriers to voluntary exchange and empowers us to associate, think, and speak without constraint. Visibility stifles; flourishing markets and free societies demand the preservation of privacy.

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XMR: 8BFN1EyJCsqXUg2NxeYvjDJkajCcTjeMx1TCyF3ssyvHM3JhCfCxkLw6Bheo7zCLiZeyXTHHcQTJD5civHEgzwocH13FdSk

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ETH: 0xE404A29Cb1129652dEDeaA6642B668B763d44FD4