Balancing Privacy with the Need to Limit Bad Activity

Anders Brownworth
3 min readNov 3, 2023

The hardest problem to solve when implementing money is striking proper balance between a person’s need for privacy with society’s need to limit bad activity.

I have chosen my words very carefully here. A person has a fundamental interest in maintaining their privacy. In liberal democracies, privacy can rise to the level of a human right.

I also say LIMIT bad activity, not BLOCK it because the only way to block all bad activity is to shut the system down altogether.

I also seek to limit bad ACTIVITY, not limit bad ACTORS because limiting an actor implies identity, imposing a solution. Maybe you limit bad activity by limiting bad actors, but maybe you do it another way.

These two poles seem diametrically opposed — you want both privacy and limited bad activity but you must choose a balance of the two. Cryptography enables extreme nuance here.

With digital money, specifically with transactions that settle online in realtime, your options are myriad, although not well understood.

Let’s look at the balance struck by digital dollars in a traditional bank account. To open an account at a bank you must provide your personal information in a process known as Know Your Customer. (KYC)

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Anders Brownworth
Anders Brownworth

Written by Anders Brownworth

Radius & MIT DCI — formerly Federal Reserve, USDC @ Circle.com, Bandwidth.com. MIT / Podcaster / Runner / Helicopter Pilot https://andersbrownworth.com

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