Insurance makes MM a radical new currency. However, the electronic wallet (EW) itself is a target for hackers; which is why the EW needs separate insurance for the wallet, perhaps from a competing insurance company (one not insuring the currency itself). Insurance companies will have details of all transactions users make, data currently available only to financial institutions (FI) from payment card transactions or gross real time transactions. The block chain (depending on its contents) also prevents complete anonymity. Worse for those wishing a private environment, a trail of transactions relating to a single transaction have their contents potentially available to any owner of the value while residual value exists in an EW. Once a government implements the full design of MM then the final archive becomes a treasure trove for academic researchers, jealous spouses, and law enforcement personnel. It is possible to make MM transactions completely anonymous which gives government impetus to enact laws to prevent such anonymity especially with large value transactions. Governments, however, cannot force EW holders to add meaningful data to a block chains, and insurance is not a requirement for MM transactions. In the Halcyon days when privacy once existed, and cash was king, concerns of eyes not party to a transaction having an intimate knowledge of the tiniest transactional details only existed in the gleams of treasury executives.
Trust once was the bulwark of any financial transaction. When times between acceptance and settlement of electronic or check transactions could take weeks, trust remained the foundation of commerce. Now, with implementation of the MM 400 microsecond settlement time and insurance guaranteeing the finality of a complete transaction, trust is irrelevant, and anonymity is obsolete. Is it worthwhile to restore these components to MM transactions?
Governments will not willingly allow large value transactions to move anonymously between payer and payee. Trust but verify ensures the camel’s nose will always enter the tent. However, smaller value transactions such as small value retail payments, or consumer-to-consumer payments for unknown purposes, must be assimilated or cash stays in the economy, and the collection of anonymous large cash caches will continue to exert sinister influence on an invisible underground economy. So which situation causes more harm, large underground economies, or, small value transactions sometimes involving purchase of contraband?
Posing the question negates a necessity for answering it. Customizing MM for its issuers and its users will be a service offered by all payment system architectures, after all selling guns to customers lawfully does not prevent the buyer from using guns illegally. A partnership between governments and digital currency is inevitable, but will government use it to build a foundation for the elimination of underground economies or instead will they use such a partnership to create a barrier to a modern society equipped with an advance payment system without the need for cash (or barter)? I very much doubt if this dialectic, regardless of its importance, will enter mainstream political converse soon, but I can only do my part. Let people spend nominal amounts electronically and anonymously.