Maybe we should heavily regulate cash transactions, limit the sizes of cash deposits, implement strict know-your-customer rules for any entities dealing with cash, and enforce reporting rules for transactions between any accounts involving significant cash-derived balances instead?
That argument doesn't work. In fact yes, the government understands that printed money is untrackable and we have extensive tools to deal with that, up to and including the formal sanction of entities that try to evade these controls.
Haha my goodness. Yes, if you're the state, all that is theoretically true, but the catch is of course the problem of legibility. The state is well aware of that, as you noted, but so many transactions themselves are untrackable, some because of explicit state policies (undocumented immigrants line up to purchase money orders to pay taxes a notable example of a collective and voluntary effort to overcome state obstacles that are put in place, but also the many many unbanked individuals in the country, especially those not on the payroll for various reasons). That argument absolutely works if you simply realize that a) the state is never going to be able to actually capture 100% of cash transactions and b) the state's primary goal is not recordkeeping per se but to collect its perceived share, so the greater punishment it dishes out and the more complex laws get in regards to consumer finance, the more likely that those on the cusp simply opt out of the formal system if they're in a position to do so and disappear from all that heavy enforcement measures, much of which the average consumer do not understand fully anyway.
This viewpoint issue is not limited to financial legibility of course. We do know that the underground economy, because data is only reported by authorities, is inflated or deflated for political purposes, further muddling any potential estimations. Oh, and plenty of what the IRS wish to do is just that - wishful, and only when it's convenient for the other party. You can try to regulate cash transactions domestically in a more heavy handed manner, but you're mostly going to affect those least able to afford it to begin with, and the costs involved may not be worth the effort. Oh, and US currency is commonly used abroad, including in place of native currencies in some countries. When it comes to cash, there are only estimates as to how much the government can reasonably regulate the transacting of, and the government's policies have undermined efforts to do so even when they could. Not everyone is in the cohort that posts on HN.
Having private transactions using a public blockchain ledger.
It's the same as asking "why do people need E2E encrypted chat," because they want to and there's nothing wrong with them not wanting you to read their chats, that's why.
100% this. I use ETH, USDC, etc to pay friends back for a trip, in much the same way that one would use Venmo or cash. I'd love to be able to do this without showing the recipient ALL of my other crypto transactions, and as such have seriously considered using Tornado Cash in the past (but haven't because of fears of exchanges blacklisting my address).
> Having private transactions using a public blockchain ledger.
The question was what other use the tool had. "Private transactions" are 100% isomorphic to money laundering, the only difference is the words you use to explain it.
In fact, "private transactions" are, in fact illegal. You're not allowed to do that in the industrialized world. It's true that small-value cash transactions are de facto private, in the sense that the government decides to look the other way and focus its laundering enforcement on larger players.
But no, that ship sailed decades ago. You're not allowed to have private transactions, because if you have them then the criminals will, and we as a society have made a bargain to give them up to reduce crime and corruption.
And exactly as I said, the words you use to explain it may differ, but the action does not. You can't have "private transactions" in the sense you imagine. They aren't legal. They haven't been legal in the United States for a half century since the Bank Secrecy Act of 1970.
It seems different from end to end encryption in a key way: we need things like TLS because sending a message unavoidably requires network traffic to traverse networks outside of your control. In contrast, using cryptocurrency is a choice to use a system modeled on the wrong data structure for either privacy or efficiency. Trying to kludge privacy on top of that seems like a very expensive and highly risky alternative to acknowledging that the system is incorrectly architected for the problem.
That is a reason to launder money, it's still money laundering. It's valid to believe that this justifies money laundering and to believe that money laundering should be legal, but it is what it is.
Money laundering is the act of hiding the source of funds from *illegal activity*, all my funds that I want to privately transact with are legitimately earned.
What use cases does E2E encryption have besides hiding criminal activities from law enforcement? Exactly the same goes here. As long as you're not doing illegal things and file your taxes, everything should be perfectly fine.