Public Versus Private Money

We must consider public versus private money to learn how money can either be privately public, as in central banking, or publicly private, as in Bitcoin.

Privately Public Money

The physical object representing money (like a paper note) is public: it belongs to society. While its represented monetary value (like that of ten dollars) is private: it belongs to whoever controls its representing object (that paper note). Then, mistaking a representation of money for its represented monetary value makes that representation privately public. So any control of such a representational monetary value, whether centralized or decentralized, must also be privately public.

No commodity money can inherently distinguish between itself and its represented monetary value. Hence, all commodity money must be privately public. With directly monetary commodities (like sheer monetary gold), private control of public monetary representations is individual, or decentralized. However, with proxy representations of commodity money (like receipts for deposited gold), private control of public money becomes institutional, or centralized. Hence the privately public nature of central banks: any monetary authority must be as privately public as the monetary representations it depends on controlling. While conversely, any monetary representation controlled by a central authority must be privately public.

Publicly Private Money

The Bitcoin monetary system represents any monetary value as a private key, then metarepresents it as the corresponding public key.

Never before a monetary representation was inherently distinct from its represented monetary value: for the first time in monetary history, controlling a private monetary value does not require any control of its public representation. With Bitcoin, a public object can represent a private monetary value without ever becoming itself private—which makes its private control by any central monetary authority not only unnecessary, but also impossible.

Privacy Versus Anonymity

Monetary privacy means monetary control exclusiveness: the exclusive control of a monetary value and possibly of its public representation. It does not necessarily mean anonymity. Anonymous monetary control remains different from exclusive monetary control, even if helping protect it. This way, we can have monetary privacy without having monetary anonymity, despite not conversely.