Central Banking control over money is an ever-evolving process. Monetary Nationalism from the 1920s managed to gain substantial control over the flow of money in the world that ever increasingly started relying on the power of the dollar.
For centuries, Nation-States have been trying to find ways to shackle its population. The easiest way to do this was through monetary control. Money had multiple inventive evolutions over the millennia that attempted to make it more usable, but governments have always stepped in and found a way to turn it into a tool that controls people and nations.
Today, this control goes all the way down to the individual user of money. If you are able to control who spends state-issued money on what and how, then you can essentially enslave the population
The stock market was a miracle because it allowed central banks to delay the flow of money to the end users. Through the markets, immediate effects of inflation were more controllable. But since nothing lasts forever, the process is not infinitely extendable without burning the savings of the entire population.
To better control money, it has become important to control who spends what and where. Today's digital banking is not fully digitalized since it still relies on a bank's internal ledger system to run the accounts. But as Central Banks take further control with Central Bank Digital Currencies (from now on CBDCs), the more control they will have over inflation.
The next system will have the bank's centralized accounts running on the national central bank's own ledger. This will allow the central bank to directly monitor the flow of money. The smallest spending you make in the future will be permanently recorded by the government and will be open to analysis by third parties. Privacy will not exist in this world because to stop the effects of inflation from being realized, they need to find new creative ways to stop you from spending your money.
Private transactions will be non-existent and everyone who has access to the centralized system's ledger will be able to see your spending, movement and behaviour patterns. Some governments could also go as far as banning all anonymous transactions. In fact, some countries have already banned transactions over a specific size unless performed via bank transfer.
In China, the social credit system is already in full force. It even attempts to control people's movement. The control of money gives direct control over the population and in this way, more power for those in control. A totalitarian system can easily utilize a CBDC system to project its control.
Bitcoin's lack of base layer privacy poses the same risk for its users. When you make a transaction it is viewable by everyone and it is permanently recorded on its ledger. Privacy is not a readily available feature in Bitcoin. Of course, you can use coin control and never reuse addresses, but those can only give you a little privacy. You must manually find the right privacy tools for yourself that make the usage of Bitcoin private and fungible again.
CoinJoin solutions provided by Wasabi Wallet and JoinMarket are the most superior options available today to regain your privacy. With the use of CoinJoin, you can make your transactions private while selectively revealing your coins in case you have to prove that you are in possession of your funds. This kind of privacy also strengthens Bitcoin's fungibility allowing you to use your Bitcoin as you intend without some third party refusing it for any reason.
Within a circular economy, if all members of the economy would engage in CoinJoins, we would have absolute protection against manipulative encroachment on Bitcoin's fungibility claims. When bitcoins move on the blockchain and are not touching any centralized exchange, then those transactions should fairly well remain uncensorable. There will always be a miner who will accept your transaction and include it inside a mined block if you offer a high enough transaction fee.
It is impossible to ban Bitcoin and it is impossible to unplug every node and miner on the network. A Bitcoin ban would affect users who obtained their bitcoins through mining or non-KYC sources just as much as those who obtained them through a KYC exchange. It is important that we start CoinJoining today so as to have strong privacy when the time comes to start spending our money. If everyone would CoinJoin their Bitcoin, then we would never have to deal again with narratives that attempt to portray Bitcoin's fungibility as a problem because nobody will be concerned with where their bitcoin originated or who transacted before you acquired it. Everyone would just have to accept it as it is in circulation. If it is verifiable, it is Bitcoin.
This is why I think that CoinJoining is the future of Bitcoin Privacy. So, don't be afraid to CoinJoin because privacy is for everyone and nobody has the right to take that away from you.
This is a guest post by Karo Zagorus. Opinions expressed are entirely their own and do not necessarily reflect those of Wasabi Wallet or zkSNACKs Ltd.