Sorry for the late response, I was researching cryptonote a little bit today. It's confusing, but i think I know the basics now.
I also want to add that a lot of gold in the world is private
If you're talking about physical gold, the 'privacy' does not derive from the gold itself. It is not 'private' in any sense.
The records of ownership on the other hand are private.
It may be "kept" private by hiding it in a vault, but the privacy is not a property of the monetary media.I give you that. it wasn't really a good example indeed. But I still fail to see how a private blockchain results in fiat...
There is a lot of confusion between 2 things: Privacy and Anonymity.
Cash is anonymous but it is not private. If someone sees a $1000 note lying on the ground, the lack of 'privacy' of that $1000 monetary media is not going to detract from its attractiveness. It might have had an owner, but the owner's name is not 'stamped' on the note (hence it IS anonymous).
The fact that the owner's name isn't stamped on it makes it fungible, not anonymous. Anonymous is something a person can be, not an object.
On the other hand, credit money - which is a record keeping exercise - involves records which are kept out of the public view. They are therefore private but not anonymous.
I agree, when the balance is not publicly known, we are talking about privacy. No one can see how much money I hold, how much i'm sending or receiving.
But is that a bad thing? i think we need privacy when handling our money. This doesn't necessarily result in credit (fiat) money.
Credit money can probably only function as long as it has private accounting, otherwise the "fractional reserve" is exposed. Banks can print money by lending it out, central banks can print money to buy assets or give loans to banks.
But money with private balances doesn't need to always result in fiat, as long as the emission is public. I already pointed out that monero has apparently a public emission.
They are private (as distinct from 'anonymous') for 2 reasons:
[1] - it is 'backed' money and not base money, which means its only any use if a trusted party is prepared to exchange the numbers in my account ultimately for cash. This leads to the need for a counterparty in the 'trust' relationship and therefore point 2...
[2] - accounts are synonymous with persons, since they (unlike cash) have no value on their own. The credit or debit balance is only meaningful when associated with a legal entity who inherits the obligations represented in the account records
Since cryptocurrency is void of a trusted party (backer), it therefore has to adopt the cash model - not the credit model. We cannot think of blockchain addresses as 'accounts', they must be thought of as being independent of people - like gold nuggets. As such one cannot build a privacy model around obscurity, hence the need for a public fungible blockchain so that there's no conflict between transparency and anonymity.
[1] As far as I understand (I didn't actually test monero yet) you can see your balance, and this balance are 'real coins', because the emission is public. It's an asset. Claiming a cryptocurrency isn't an asset, while it has a public emission, seems illogical
[2] I agree that people will associate themselves with monero accounts, but there is inherently no difference with this if you compare it with DASH or BTC. The only difference is that you need only one address because the balances are apparently private. This seems to be a convenience, not some sort of problem.
you can always have multiple 'accounts' I guess, so I really don't get your point.
