Monero’s Riccardo Spagni: “Financial privacy is a basic human right”

Quick Take

  • Riccardo Spagni, the lead maintainer of privacy coin Monero, spoke about why privacy matters to him and why it should matter to everyone 
  • Spagni argues that financial privacy is not desired only by bad actors, but should be desirable to people who value their own personal data
  • Spagni says that the problem with many privacy enhancing systems is optionality, as it turns out that many people don’t opt in to use the privacy layer
  • “Arguing that you don’t care about the right to privacy because you have nothing to hide is no different than saying you don’t care about free speech because you have nothing to say.”

Speaking in Davos at an event co-hosted by The Block and E8 Partners, Riccardo Spagni, the lead maintainer of a privacy project Monero, spoke about why privacy matters to him and why he thinks it should matter to everyone. Spagni is convinced that financial privacy is a basic human right.

“Privacy is not when you want to hide when you plan to overthrow the government, but privacy is the natural state of things,” he says. “As an example, when you go to the bathroom, especially a public bathroom, you typically close the door. And the reason you do that is because you’re not going into the bathroom and planning to overthrow the government. You could be but chances are you aren’t. You’re going to use the bathroom.”

Privacy is really important in the financial context, according to Spagni. As the world moved from cash to IOUs and then to credit cards and other payment solutions, there are tradeoffs. Paying with a smartphone is obviously extremely convenient, but all the digital payments involve a lot of regulation – know your customer (KYC), anti-money laundering (AML) and others. So there is a tradeoff between convenience and privacy.

Spagni continues by arguing that financial privacy is not desirable only by bad actors; everyone should care about the security and privacy of their data.  For example, spending data of individual users can either be stolen from banks or credit card companies or simply sold to third parties.

Spagni gave a few examples of the outcomes resulting from sharing very sensitive information:

  • Advertisements based on spending habits
  • Insurance costs being calculated based on what specific medication was bought or how often a person goes to a fitness center
  • Being able to estimate business insights such as profit margins or what suppliers a company uses
  • Targeted crime based on income or knowing that you were at the ATM recently

Spagni went on to identify five pillars of cryptocurrency privacy:

  1. Unlinkability – hiding where transactions are going
  2. Untraceability – hiding where the transactions are coming from
  3. Cryptographically valueless – no one can figure out the amounts of transactions
  4. Passively hidden – not possible to analyze internet traffic
  5. Optionality – maximize the privacy set while ensuring that anyone can still reveal information

Spagni claimed that the problem with privacy enhancing systems such as Zcash is the idea of optionality, which is when transactions are public by default but they can also be sent privately. According to Spagni, the majority of users are lazy, and they are never going to use the privacy layer. As a result, it becomes much easier to isolate the users who are using the privacy layer.

Spagni says that despite what many regulators think, mandatory privacy is not anti-government or anti-regulation or anti-disclosure. Mandatory privacy simply means that the user is granted the ability to have control over who gets to see that data.

Spagni argues that there is a final sixth pillar that a many people overlook, which is ideology. He says that every contributor in Monero knows that they are responsible for securing people’s money. By extension, each contributors may be responsible for protecting someone’s life savings, an innocent person not going to prison or even protecting someone’s life.

Spagni says, “That’s why it’s incredibly serious to work on the project. And I truly feel that any privacy project that treats it with less care is not only indistinguishable from a scam, but they’re deeply disingenuous and they put people’s lives at risk.”

In conclusion, Spagni says that when people bring up the argument that only bad people protect their privacy since good people have nothing to hide, he tells them to show him the last few months’ of their bank statements. He says that surprisingly, no one has taken him up on that offer yet. As Edward Snowden said, “Arguing that you don’t care about the right to privacy because you have nothing to hide is no different than saying you don’t care about free speech because you have nothing to say.”

Spagni’s full presentation, titled “50 Shades of Privacy,” can be viewed here:

50 Shades of Privacy by on Scribd