Can Crypto Deliver on Private Transactions in Cashless World?

Yes, absolutely, crypto payments can provide a similar level of privacy to cash – if certain conditions are met. One way or another, cryptographically based digital money will replace cash in consumer transactions. This is a foregone conclusion.

First, cryptocurrencies must be as easy to use as identifier-linked, noncash instruments (like debit cards) or their phone app equivalents. This ease-of-use includes time to transaction finality and being universally accepted. Currently, cryptocurrencies are not able to meet these fundamental requirements.

Second, crypto must be at least as private as paper banknotes (bearing in mind that banknotes can be traced via their serial numbers). Techniques like eCash in the 1990s were created to provide this level of privacy. (They allow an encrypted number to be modified “through” the encryption so as to assign monetary value to it, such that when the encryption is removed, it retains the modification and can be spent anonymously.)

Third, crypto must – obviously – be resistant to “double spending.” Payees need to be able to check instantly at time of payment that the currency they’re using has not been already spent elsewhere. This can be done privately without any more personal or financial details being revealed to them.