Encryption comes standard

What if cryptocurrencies were named open currencies instead?

By leveraging encryption, it is possible for the first time to build data systems at internet scale that can also be customized and tailored to individual users.

Before the advent of modern cryptographic techniques, achieving balance between security, transparency, and individual control was virtually impossible.

Instead, financial transactions and personal data had to pass through centralized intermediaries, which created points of failure, surveillance risks, and barriers to access.

Novel breakthroughs in public key encryption enable Open Money systems by providing the technical foundation needed for decentralized financial autonomy.

Here’s how:

Before public key cryptography, securing digital transactions required trusted third parties. In many cases the whole point of these third-parties is to take the risk out of people interacting with each other or with financial institutions.

But the inclusion of third-parties creates other issues, mainly the impositions of financial, identity, and data autonomy and privacy.

Encryption now enables users to prove ownership and execute transactions without exposing sensitive information, preserving privacy without compromising transparency.

With innovations like elliptic curve cryptography, even low-power devices can securely participate in Open Money networks, ensuring inclusivity without sacrificing security.

Modern cryptography also means that networks can easily grow securely, which creates network effects, basically: more people means more value, more value means more people.

The use of cryptographic also allows users to transact securely and directly, ensuring data authenticity without central oversight.

Advances in areas like zero-knowledge proofs enable advanced financial applications such as anonymous transactions, verifiable credentials, and fraud-resistant systems, all while maintaining full compliance with regulatory standards.

One of the things we keep coming back to with Open Money is that these systems will allow coordination and collaboration on new kinds of levels.

Advanced encryption methods, for example, including multi-party computation and homomorphic encryption, empower smart contracts to process data securely.

This allows for complex financial operations while ensuring privacy, a feat unattainable before these cryptographic breakthroughs. Multi-party computation, for example, allows many machines to jointly compute functions while keeping inputs private, enabling collaborative financial applications without exposing sensitive data.

Prior to modern encryption techniques, digital financial systems were vulnerable to breaches and surveillance. Today, robust cryptographic protocols fortify Open Money systems against adversaries, ensuring long-term security and decentralization.

Encryption doesn’t just secure data; it redefines trust. In legacy financial systems, trust was placed in institutions and centralized authorities.

In Open Money systems, cryptographic proofs replace trust with mathematical certainty. The ability to verify transactions, identities, and contracts without a central authority unlocks new possibilities, which is basically what this entire Open Money project is about.

By leveraging standardized cryptographic primitives, Open Money systems can be interoperable and be built at different scales without sacrificing security or privacy.

This composability fosters innovation and allows for the development of novel financial products and services that were previously impossible.

Encryption is like the special ingredient of Open Money — empowering people, securing transactions, and laying the groundwork for a truly open financial ecosystem that transcends borders, intermediaries, and traditional constraints.

This post is part of the Open Money project, an ongoing series that forms the basis of a longer work. Subscribe to get a weekly update as it unfolds.

Here’s how:

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