§7. Privacy as Private Money

Jason St George. "§7. Privacy as Private Money" in Next‑Gen Store of Value: Privacy, Proofs, Compute. Version v1.0. /v/1.0/read/part-ii/7-privacy-as-private-money/

§7. Privacy as Private Money

Cash used to be default private money: anonymous, bearer, final on receipt. In a world of KYC’d banks, programmable payments, and networked surveillance, that role has decayed. At the same time, the repression playbook (negative real rates + capital controls) makes bearer‑like savings economically necessary, not ideologically optional.

“Privacy” in this thesis is not romantic opacity; it is the ability to hold and move value without chokepoints, plus the option to disclose on your own terms.

Concretely:

• Bearer‑like holding: Keys, not accounts, define control. Custodians may exist, but custody is an optional service, not a mandatory choke point.

• Non‑custodial settlement: Cross‑asset flows (e.g., BTC↔ZEC/XMR) execute as atomic swaps or corridor protocols; neither side needs to trust a centralized intermediary with both principal and privacy.

• Auditable by consent: Viewing keys and structured receipts allow specific flows to be disclosed to auditors or regulators without exposing the entire graph.

When these properties hold, private settlement capacity itself starts to behave like a monetary asset:

• A treasurer facing capital controls is not just asking “what’s the yield?” but rather, “can I still get value to my people next year if on‑/off‑ramps are throttled?”
• A dissident journalist or NGO cares less about upside and more about “will this still be here and spendable if my local banks freeze?”

Blockchain may be waiting for its SSL moment. The analogy is suggestive: in 1994, putting credit card information on the Web seemed reckless until SSL made encrypted commerce viable. E-commerce grew into a multi-trillion-dollar industry once confidentiality became default. Today, Bitcoin, Ethereum, and most public blockchains are “public by default” the way HTTP was—every transaction visible, every address linkable. Privacy is plausibly the bottleneck for mass institutional adoption.

The analogy has limits. SSL solved confidentiality for client-server commerce; privacy blockchains face a broader set of challenges: key management UX, compliance integration, throughput constraints, MEV resistance, and cross-chain composability. The “SSL moment” is not guaranteed—it is conditional on solving these problems.

Testable condition: If privacy corridors achieve VerifySettle targets (≥95% swap success, 100% refund safety, p95 finality <15 min), shielded pool churn stays above healthy thresholds (anonymity sets >10,000 active notes), and UX reaches “one-click” simplicity for non-custodial settlement, then institutional adoption becomes economically rational. These metrics are trackable; the thesis predicts they will be met within 3–5 years for at least one major corridor.

The institutional version is straightforward: no enterprise wants payroll, vendor rates, or treasury operations visible by default. The unlock is one-click, non-custodial BTC↔XMR/ZEC with refund-safe UX and clear settlement analytics—privacy as a product, not a promise.

The institutional version is simple: no one wants their payroll, vendor rates, or treasury ops visible by default. The unlock looks like one‑click, non‑custodial BTC↔XMR/ZEC with refund‑safe UX and clear settlement analytics; privacy as a product, not a promise.

In that environment:

• The rails (privacy corridors, shielded pools) earn fees for providing unseizable, auditable settlement capacity.
• The claims on those rails (e.g., corridor LP positions, Work Credits that entitle the holder to a slice of future private settlement throughput) can be held as a store of value.

You can think of Private Money as:

“Rights to future, censorship‑resistant, auditable settlement capacity.”

The SoV properties from §3 map naturally:

• Credible scarcity. The capacity of a corridor or shielded system is constrained by bandwidth, cryptographic verification costs, and capital at risk. Issuance of claims (e.g., Work Credits) is bound to real capacity and/or verified usage, not to foundation whim.

• Cheap public verification. Anyone can verify that a transaction was correctly formed, swapped, or refunded, and that aggregate anonymity‑set metrics are healthy. VerifySettle and basic proof systems make settlement correctness auditable, even if contents are encrypted.

• Censorship‑resistance & portability. Flows ride over non‑custodial corridors; exit options include multiple assets and jurisdictions. Layer‑1 reachability and Layer‑5 design mean no single country or bank can shut down the rail.

• Neutrality & permissionlessness. Adversarially diverse relays, routers, and LPs; public metrics on concentration; proofs that settlement logic doesn’t privilege “house” flow.

• Native demand. Demand for Private Money is created by repression itself: every basis point of real‑yield suppression and every additional KYC choke point increases willingness to pay for neutral, private rails.

• Lawful privacy. Viewing keys + PIDL receipts mean regulated entities can prove “we paid X to Y for Z under policy P” without deanonymizing entire networks.

• Duration‑neutrality. Claims on private settlement capacity don’t promise fixed coupons; they participate in fee flows and scarcity premiums that respond to repression intensity, not to policy‑set rates.

On a balance sheet, Private Money can coexist with BTC and fiat, but it plays a different role:

• BTC: thermodynamic base, global risk asset, macro hedge.
• Fiat: near‑term unit of account, legal tender, credit medium.
• Private Money: repression‑hedged rail, a way to ensure that, regardless of what happens to yields or platforms, you can still pay and be paid without being fully seen.

Tip: hover a heading to reveal its permalink symbol for copying.