The fallacy in @dan's Radical Transparency and a nifty Scaling solution for Cryptocurrencies that can also create heightened Privacy at zero extra cost/effort

Most people who are into cryptos love anonymity. Some people (including @dan) are calling calling for radical transparency. Some things like STEEM having radical transparency is a great asset. A property registry being transparent is extremely valuable. Transparency in organizations where our money is spent by other people (like governments and charities) is a must. But as the PIVX teams puts it, Privacy is non negotiable. Why?

Asymmetry in information processing

@dan wrote a great article few months ago with some great pints. You can read it here. It's totally worth your time. But the entire idea is only sustainable under a massive fallacy of symmetrical information processing skills and intellect of all parties. You can talk about how much greatness a benevolent government/king could do. There are even many instances to prove that point. But that's as good as "investing " all your retirement savings in Powerball because look at all that price money!

Ask yourself when did you decide to invest in crypto or any specific coin. Ask yourself how much knowledge about the subject you possessed at the time. How many people do you know that had the same amount of information and didn't invest? I talked to a friend of mine who wanted to change the world and after many events he settled on investing in bank bonds (after going to work in a bank.....) and he probably didn't even touched that relic called Bitcoin. (I think he's earning 13.5% a year in fiat)

Different people with different intellectual capabilities will create a new shadow class system under radical transparency. Those who have better understanding about human mind/ psychology/ behavior will be able to exploit those who are less resistant to psychological manipulation while being undetected even under a system of radical transparency making things hidden in plain sight.

If you know anything about spy movies, psychological thrillers, proper anime or at least black hat hackers you know that not all gifted/talented people are benevolent. Even the good ones may cross the line once or twice. Digital databases can be hacked and exploited by talented programmers. Other talented programmers can be used to prevent that. But that's for servers etc. You can't use another person's help to watch over your own individual consciousness. Your mind is yours and you can improve it through understanding and meditation. But you can't get a call to Lao Tzu and have your mind guarded against psychological manipulation tricks (especially the subtle ones that you wouldn't even notice.

An excellent illustration of how much of a powerful thing this asymmetry in information processing is, I'd like to suggest you Gankutsuou: The Count of Monte Cristo which is 24 episodes of awe inspiring artistic extravagance packed with an intense story with twists and turns.

Another great example would be Naoki Urasawa's Monster. The last 11 episode arc was pretty much a nose dive. But the rest was just perfect 10 masterpiece.

Unintended Privacy via Scaling

In my post The central points of failure in both macro-economics and Privacy Tech: Hiding information vs Obscuring Information I discussed about the existing privacy tech. Mainly there are 2 kind of privacy tech. One hides information through encryption which is a trusted setup like the Zerocoin protocol which lead to projects like Zcash and zPIV (PIVX) and there is also Dash which obscure information through a trusteless mixing resulting in a more fungible coin supply.

But in all of these events it looks like Privacy is getting in the way of scaling. I mean you not only have to deal with information but also hiding or obscuring that information. But what if there is a scaling solution that may or may not give airtight privacy.

What if we get rid of the information altogether?

The entire immutability of the blockchain is built upon this idea of having a perfect record of everything. That is also the reason anyone can know every single transaction of your STEEM or most other crypto wallets. The scaling solution (idea) I came up in 2017 wasn't even about creating privacy. I was simply having a conversation with someone on steemit where I discussed about doing an FPS multiplayer game on blockchain. I got laughed at for the idea. I'm not a programmer. But I'm going to leave my concept anyways.

The idea was a hierarchical system of discarded blockchains. It was only today I realized how this concept can create some unprecedented level of privacy without any extra cost. Imagine there is a blockchain with 10 second blocks. This is more than sufficient for daily transactions and to get rid of credit cards. It's nothing new or big. What's new is what if this blockchain is discarded after 60 blocks (10 minutes). We could have 400 MB blocks and it'd still only require ~24GB. After 60 blocks the final results gets into a higher level blockchain that has 10 minute block times. Then we can purge that blockchain after 36 blocks (6 hours), then after 28 blocks (7 weeks) and things could go on up or down in the hierarchy.

On chain Scaling > Off chain scaling

From the very beginning I've considered the Lightning Network to be a joke that was just taken too seriously. LN is nothing but a joke. Currently it only sits as a random unfulfilled promise where BTC fees are finally gone as low as $1.28 USD because it's doing less transaction per day than what used to be the number of unconfirmed Tx which went up above 230,000 Tx while we currently only have 167,977 Tx for the day. That's just tragic. If you want to fix something, fix it at the roots. A tree with strong roots won't fall when a storm comes.

LN is just an inefficient way of doing pretty much what described. If you use any centralized exchange (Binance is the best one at the moment. You can use https://www.binance.com/?ref=10102736 if you don't have an account yet) you'll be exchanging Bitcoin a lot. But those transactions don't happen on the "Blockchain". If that did happen, you'll have to sell your car to cover up the fees to for sending money to http://anon.steem.network to make a new STEEM account.

When someone withdraw BTC or when the exchange moving their funds, BTC transfers get recorded in the Blockchain. Whatever happened in the exchange is a mystery to anybody who's looking. It's as good as something that didn't happen because when it comes to the blockchain, It really didn't happen.

This kind of privacy cannot be retroactively de-anonymized and there is really no encryption to be cracked. The only 2 problems is that you don't know whether your Tx would get purge during the process and individuals/ organizations could still keep copies of the full blockchain. Eventually over the days you are bound to get your Tx wiped out. But without encryption tech that could slow down scaling, you have no guarantees that a government didn't keep tabs. But at least it's better than any non-privacy coin. Everything gets faster, cheaper and easier while creating accidental anonymity. Even if anybody kept tabs, those tabs are not going to be considered immutable. They are going to be as good as lie detectors in a court room.