Money cannot be followed directly. It has no identity. It is only a number it has no other totally independent attributes that give it an identity other than a number. It has value only in relationship to a controlled account. It is the account that has independent entity attributes that enable associating one account to another as a number representing units of value travel from one account to another.
That is the problem. Digital Money cannot be followed. It cannot be directly traced any more than any arbitrary chosen random number can traced. Trace $583 for me. Trace it to its current ownership and an accounting trail of all its past ownership. Its only traceable value is in relationship to an account. Given all the account information in the world a number of accounts currently having a balance of $583 would be found. It is just probabilities of a match of the amount to the account. Then an audit trail of the account could be done to identify all past transactions in the account that resulted in the current on hand balance.
If the $583 was also identified as a single transaction amount then that is an attribute owned uniquely by the number $583. All accounts in the world could be searched for this transaction value in their account history to learn what account the transaction came from and who owned it. But that gives no real tracing value unless every transaction could be researched. Knowing a date range would narrow the search but reasonably........
It is impossible to trace money, to literally follow the money. Only accounts can be followed. The following does not start with the independent identity attributes of the money in an account.
In our financial system the Account is the dominant super class ruling entity. Forget about physical cash with a serial number. That is 3% or less of all "money" in the USA. Physical money does have specific identifying attributes designed to make each piece of currency unique. Digital money has no identifying counterpart in the current system.
Transactions in digital currency do have unique transaction identity numbers that are keys to associated information like date and time. Credit/debit card system use them for example and transaction ID is associated with an owner/receiver account.
BlockChain currency systems apply a transaction identity directly to the amount of the transaction. The blockchain wallet is in fact a collection of the unique amounts associated with each and every transaction in the blackchain wallet of the owner. It is exactly correct to literally say that the owner is spending their owned transactions when they spend blockchain currency. The first and foremost thing that happens in spending blockchain currency is that a transaction is selected from the owner's wallet to pay the required amount due. The only requirement of the selecting that transaction from the owner's wallet is that it must be exactly equal to or greater than the amount due. Multiple transaction selections may be required to do this. If the transactions selected are greater than the amount due then change is given by the receiver in the form of a "here is your change" transaction from the receivers wallet to settle the transaction.
In the Blockchain system the primary key of tracing remains the Owner Account but the tracing is facilitated by the unchangeable nature of locking in currency transactions to the Blockchain.
Here is the beef:
When the Blockchain control of information is applied to the identity of registered owner of the Blockchain account and all of the beneficial owners of the account and specific owner identity attributes of the the beneficial owners are required then there is a system created where Accounts can be followed.
This is a "halfway there" way to follow money currency by association to its related account. Better than the current system.
A pure system that enables the true ability to follow the Money Currency is to give each and every digital dollar a unique identifier. As a blockchain system establishes the control of ownership based on transactions involving sum total amounts of currency for any given transaction this is the next step that creates a locked and accountable monetary system:
Each and every dollar involved in a transaction exists as a fixed record data base as a uniquely identified unit of value in a collection of all single units of value of "one dollar".
When a block chain transaction is made the additional accounting step is to change ownership in the Total Currency Account of each and every single dollar involved in the account from current owner of the single dollar to new owner of the single dollar.
This establishes a blockchain for transactions and a blockchain for the uniquely identified serial numbered with units of value: one each.
The new balance sheet system:
The sum total of all digital currency in all all owners blockchain currency accounts always equals the sum total of all currency in the Currency Account. The total of owned currency accounts equals the sum of uniquely identified single dollar units in the other.
Any transaction change in one is recorded as a change in the other.
"Following the Money" in the Currency Account can therefore be done directly. "The Money" can be followed on a unit dollar basis in an audit trail back to ever single account that unit dollar has ever been "owned" by. Here is the most important thing: Money in the Currency Account does not move move from account to account. It is a fixed unit record of value. The account that currently "owns" that dollar is what changes. A single unique unit of currency in the Currency Account always knows its current owner and all of its past owners.
What if anyone could pull a paper dollar bill of any denomination out of their pocket today then enter the serial number into google and see the entire history of who "owned" that dollar bill all the way back to the first time it entered the monetary system and date of ownership change.
That is impossible of course. However technology makes the impossible of yesterday possible today.
Transition to a cashless monetary system throws out what remains of the baby with the bath water. It throws out the unique identity object attribute of paper currency with the bath water that is the identity essence of the baby with a unique name attribute that gives it independent stand alone conceptual value.
The digital monetary system design must perpetuate the unique independent granular identity of a single unit of value that currently resides in the disappearing dollar bill of any denomination. Various denominations of dollars are not necessary in a digital world they can all be "One". Denominations of physical cash were only a convenience dictated by physical practicality of dealing in larger payments. Conceptual dollars are free from that.
Back to the what if of pulling out a dollar bill and finding out who every owner was. First link is to an anonymous account number of the previous owner and every owner entity before them. This is based on the rule that every unit dollar in the system is always owned by some entity at any given time. There are no "unowned" or "lost" dollars. Impossible by design. They are all in a related account.
Next step: Who is, what entity is the owner of an given account that the dollar was ever owned by?
The accounting agency responsible for the maintenance of the owning account knows that. Required by law. Laws give legal access to that information when necessary on a case basis. Aggregate analysis of all transactions and ownership however is exactly like existing analytical ability of communications today. Privacy can be anonymized. However when working from anonymized data there is sufficient circumstantial evidence to obtain authority to look at specific identities it can be done.
Data mining of Accounts that are anonymous or anonymized Account to Account transactions and data mining of a separate data base of Single Uniquely Identified Units of Currency as they each record their changes in single dollar ownership is a system that will identify abuses as well as provide in depth economic analysis to manage the economy. For whatever purposes the nation wants to manage it and management by whoever is either chosen or captures the power to manage it.
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