Financial Censorship And The Need For Sovereign Money
Back in 2010, Wikileaks experienced a massive financial blockade. Three of the biggest payment platforms - Visa, MasterCard, and Paypal, blocked funding donations to Wikileaks and froze their accounts. Wikileaks instantly lost access to ~95% of their revenue due to this.
They were not charged with any crimes nor had they had done anything legally wrong.
In fact, the blockade was implemented by the payment intermediaries for no stated reason whatsoever. But in the background, it was very evidently spurred by unofficial government pressure.
Due to the kind of content Wikileaks publishes, you can argue for or against this financial blockade. But regardless of your views on the situation, the stage had been set, and the first flagrant instances of curbing freedom of speech using financial censorship had begun.
12 years later we’re seeing even more movements towards restriction.
Now, take a moment to stop. Now imagine this happens to you. Your accounts are frozen. Your access to both your crypto and traditional financial services is denied. Your bank account is frozen. You cannot pay your bills. Your credit cards are locked. You cannot buy food for yourself or your family. Employers cannot even pay you due to your blacklisted accounts.
This is not a dystopian scenario, it’s a reality that we’re now faced with in Western, democratic societies.
This is the world of financial censorship, and it’s coming to crypto. Here’s why it matters, and why your financial sovereignty in crypto is a huge concern.
When Power Defies Logic
Logically, if the regulatory bodies have reason to suspect that your money is being used for criminal activity, money laundering, and tax evasion, they should have preventive policies in place to curb that illegal activity. This makes sense, and is something that exists through due judicial process.
It’s a process that uncovers evidence, puts you through an appropriate trial, and in the event that you are guilty, allows the regulatory bodies to lock or freeze your funds.
However in many circumstances, this process is not followed.
Financial institutions have the power (now backed by governments such as in the case of Canada and the truckers) to make arbitrary decisions to freeze accounts that “look” or are “deemed” suspicious. Delegated to various levels of staff, this means that technical error, poor understanding of policies, bias, judgment error, or any combination of the like can get your account frozen for no genuine fault on your side.
In fact, the financial institutions can do this without even informing you. A quick google search will give you endless horror stories of people who had their accounts frozen unjustly by all types of payment processors and institutions.
Why should an institution that is meant to protect your finances be given the power to censor your finances without judicial process? It is a question that most do not ask until it is too late.
Fundamental Rights Get Blurry
Recently, the Canadian Government asked institutions to block funds to the trucker’s protest in Canada. But this was not where it ended.
The government did not just block the campaign funds, but used hacked data of over +90,000 contributors to share personal information with traditional media, the police, and financial institutions - in an effort to hunt down, destroy, and financially eliminate supporters of the movement.
In simple terms, if you had donated towards a cause that you supported, you could end up with frozen bank accounts, canceled credit cards, and no way of supporting yourself. Your crypto wallet address, stored on your favorite exchange or trading partner, could be frozen as well.
The steps made have cut off supporters' access to financially interact with society, to pay bills, buy food, or have access to the wealth that they had worked so hard to build.
This move shows that fundamental rights, to financial privacy and to financial freedom, can easily be overrun when faced against strong powers. It shows that financial institutions will not stand up to protect your financial interest. On the contrary. They actively work alongside corporations to curb your financial independence if necessary.
Crypto To The Rescue?
Our instinct is to think that blockchains will provide an answer. That they already have in-fact. Twitter is flooded with tweets of “Bitcoin solves this!” or “Use crypto!”
But most of these comments miss, or overlook the complexities of blockchain, for the technology on it’s own does not solve the problem at all. With immutable ledgers of information readily available for all to see, wallet addresses can still be frozen, blacklisted, and locked.
We must remember that centralized exchanges are subject to similar regulations that banks are subject to. The KYC information that you’ve provided can very easily be linked to your wallet address. Yes, your bitcoin (or ethereum or BNB token) - unless completely run through various (and limited) mixers, is in the same precarious state as your bank account. And even then it can often still be traced.
Meaning that crypto, on its own, does not solve the problem. More is needed to protect your finances and keep your transactions private.
Decentralized Private Finance (PriFi) tools just happen to be the answer. A current solution that has been evolving over the past few years. PriFi is really the only way to protect your transaction history, your accounts, and your privacy, and there are only a handful of coins out there that fit the bill.
Take Haven, for example, one of a select few privacy coins in existence. Built with the code from the world's most secure cryptocurrency - Monero, Haven takes privacy to an entirely new level altogether, allowing users to shield both their transactions and their wallet addresses from outside (or inside) view.
Allowing you to store your wealth in a private stable coin or in the cryptocurrency itself, it is quite simply the only private stable coin in the world. Other privacy coins offer similar security features as well, but lack the stability aspect.
Knowing that it is technically impossible for regulatory agencies, corporations, or internal team members to view accounts is what builds trust in the system. Knowing that your address cannot be locked or frozen and that your data cannot be tapped into allows you to have financial sovereignty and control over your wealth.
Even without the regulatory bodies influencing our relationship with money, we have other institutions that can easily eliminate your ability to transact. The challenge with our current system (and the blockchain one we’re building) lies in centralization.
The Syndicated Monopolies in Our System - A Web 3.0 Problem?
If you look at the payment processors, some of the major players like Visa, AmEx, and Mastercards run a syndicated monopoly. Even though they are different entities, they converge at many points.
Mastercard created a system called Match. This essentially screens merchants who accept Mastercard, blacklisting those who have excessive chargebacks, ID theft, collusion, or are suspected of fraud.- Many major banks have access to this list.
Once you are on this list, you could be denied services altogether or charged much higher interest rates. There are very few ways to get off the list, and none of them easy.
The problem is how you get on the list in the first place, can be arbitrary - as mistakes, and the interpretation of “suspected fraud” can be quite a broad brush to paint with.
This problem is likely to be carried over to blockchains. We’re seeing the dominance of a few key players in the smart contract space (Ethereum, Binance, Solana, etc.) where apps and bright-eyed companies look to build their businesses.
But as is the case with most centralized forms of power, it may only be a matter of time before we even have an equivalent blacklist for crypto companies and wallet addresses, the larger chains holding the power to arbitrarily block or blacklist wallet addresses at will.
How then, does one protect themselves? Private wallet addresses, private transaction records, and military-grade encryption that is not even crackable by the teams that created them is the answer. Again, Haven, Monero and others are just a few examples.
But we also need smart adoption of private blockchain tools in the crypto world, so as not to replicate the mistakes we are currently making.
Financial Privacy Is Essential To Thriving Ecosystems
It has been quite clear to see that financial censorship is gaining momentum. The dystopian situations we once feared are becoming more of a reality every day. The overreach has targeted cryptocurrency as well, and will continue to do so the more crypto gains popularity.
Crypto is not the safe protected space we might have once believed it to be. The convenience that centralization brings is rampant with the potential for abuse of data and power.
Yet we already have protocols and tools to help us protect our financial privacy, to safeguard us from misuse of regulatory or institutional power, both now and in the future.
PriFi solutions exist that you can use to help you protect your data, financial history, and wealth in the crypto space. The question is will you seek a safe Haven, or will you stand out in the coming storm of data violations and overreaching powers?
The choice as always, is yours to make. But there are Haven’s for you to take.
Author bio:
Rarecommons fell down the rabbit hole of blockchain technology in 2017, quickly realizing that the privacy aspects of the technology are still in its infancy. After looking into available alternatives, Rarecommons chose to support the Haven Protocol project and community, to help its Monero-based private stablecoin ecosystem develop and reach a broader audience. Convinced that innovations like Haven Protocol help us all to see what is possible and set the stage for a brighter future, Rarecommons helps push the Haven technology to new heights. Take a look and join the community by going here: https://havenprotocol.org/
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