# REAL world assets

*the mediation of privacy*

By [fantasy on the blockchain](https://paragraph.com/@d00msayer) · 2024-01-18

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As blockchain technology grinds through further technological iterations and proliferation it appears to be approaching a tipping point of legitimacy in the eyes of traditional finance, centralised banking, and government oversight. Interest is on the rise as the likelihood of Exchange-Traded Fund (ETF) approval for Bitcoin (BTC) grows ever and ever closer - legitimizing BTC (and by extension the blockchain ethos) as an asset class worthy of being symbolized into to the traditional finance world (we shall leave aside here the economic returns that BTC has provided in comparison to traditional markets undergoing quantitively tightening – money talks)

![](https://storage.googleapis.com/papyrus_images/0cda2de650a96d68bc7255d88465754a.png)

By way of illustration – the above image highlights a particular issue arising from the growing melting pot of traditional financial systems, blockchain technology, and decentralised finance. To be particularly reductionist for the purpose of argument – here we can see the head on collision between two ideological frameworks for the functioning of economies; decentralised finance built on blockchain technology and its adherence to a “public” ledger of financial transactions versus the “private” functioning of regular financial instruments and their government backed legitimacy.

A brief history – developments in cryptographic technologies have existed all the way back into the 1970s however it was not until the housing collapse and ensuing financial crisis of 2008 that these disparate technologies coalesced into the philosophy of decentralised financial instrument of Bitcoin. Founded by an anonymous developer under the pseudonym of Satoshi Nakamoto – BTC claimed – among other things – to address one of the core unnerving realities faced in 2008; that of the socially backed cloak allowing traditional financial instruments to operate in somewhat secrecy. The fantasy erected here is the reduction in antagonism and anti-social behaviour of financial actors (such as those involved in the GFC) will be due to the transparency of their actions (other important tenets to be addressed in subsequent blogging).\*

A blockchain provides a public ledger – an instrument whereby every transaction - and therefore flow of an asset (like BTC) - is publicly accessible and readable to all. In addition, all users can own their assets such as BTC in a personal wallet accessible only through a unique and encrypted private key (we shall ignore the issues with this model for now). It is trustless and permissionless in that it does not require a trusted central authority to guarantee the legitimacy of its functioning (transactions) and there is no application process to such an authority to gain access to the system. These factors are backed by a consensus mechanism that ensures transactions are legitimate (the approach to consensus being varied across blockchains with BTC using proof-of-work – [more here](https://bitcoin.org/bitcoin.pdf)). Reading the blockchain or “checking the chain” is commonplace and best practice in the decentralized economy whereby any user can gather detailed information regarding the flow of assets. The ledger is a public symbolic system.

Circling back to the above picture – what forces itself upon us here is the eruption of contradiction at this very juncture of public and private. The concept of over-the-counter trading (OTC) is not new in the decentralised economy – many projects in their early stages rely on this method of distribution of their token (think here of speculative “shares”) before being able to offer increased liquidity and ease of trading via a decentralised exchange. It relies on peer-to-peer trading often with an intermediary to ensure the trade goes through at a price set by agreed up supply and demand.

However, in this example, the allure of privacy re-appears as a stain or blotch at the very site whereby its existence has all but been ruled out. It is not that the information regarding the aforementioned OTC trading cannot be found – as ever its occurrence can be verified on chain with some effort; but rather the traumatic re-emergence of the unthinkable mechanisms of traditional centralised finance throw shade over the transparency of the whole operation. The aforementioned non-disclosure agreement (NDA) provides a scaffolding for privacy to attempt to insert \[redacted\] elements into the symbolic world of the blockchain.

For individuals and organisations alike, public life is fraught with difficulties in overcoming contradiction and antagonism involved in the maintenance of identities. Our ability to take up the task of identity – and even have it bend, warp and transform – relies on the groundlessless of our subjectivity (it being the “lack” that we may attempt to make whole). It is only due to this lack of fixed subjectivity that we may take up identities in public life. An allure of privacy is that of maintaining the fiction of a solid and fixed identity over the difficulties that public life brings; namely coming face-to-face with this lack of settled identity (I will expand on this heavily in subsequent posts).\*\*

In this sense – the guarantee of governments with respect to traditional finance forms the foundation of this “settled” identity. Governments, and by extension their mechanisms of power - act to guarantee the concrete identity of financial systems as not only a public necessity – but a good. We can see attempts at restoration of identity in the aftermath of the 2008 financial crisis as numerous banks were bailed out through tax-payer dollars; the identity of the institution as solid and antagonism free must be maintained. We may even be permitted a ‘Zizekianism’ here in the form of fetishistic disavowal – we know very well that it was the hubris and dubious activities of banks, governments, and other centralised financial instruments that caused the collapse; but in the aftermath we have been implored to act “as if” this was not the case. It was merely a mistake and these organisations and institutions really do have the publics best interests at heart.\*\*\*

Returning to our example – what strikes us here is the manifestation of a private blank spot in the otherwise public symbolic world of the blockchain. Privacy, from the perspective of decentralized financial transactions, in this form seems _impossible_. Impossible here does not mean that it cannot happen – the point is that the impossible happens - but always at the wrong time and in the wrong place. This impossibility alludes to the eruption of what in Lacanian Psychoanalysis is referred to as the REAL. Embedded in a tripartite structure with the Symbolic and the Imaginary, the Real signifies the inability of these two structures to adequately account for some (usually traumatic) kernel in experience – it forces itself upon us at the very point where it should not be possible. The Real as impossible is often camouflaged in some empirical obstacle that functions to allow its continuation as undetected – repeated attempts to delegitimize blockchain technology due to lack of knowledge of its users identities being one example.\*\*\*\*

Traditional finance cleaves itself to privacy as a refusal to enter the public world signified by the blockchain. By doing so, it hopes to avoid uprooting its identity and exposing it as fictional and contingent – as evidenced by the ways in which the traditional financial system has been restored Symbolically into culture as somewhat antagonism free following the GFC. When this antagonism becomes altogether obvious and unavoidable the Imaginary register enters the fray to smooth over any disparities in regular functioning. [The Big Short](https://www.youtube.com/watch?v=xbiDrzTd8fE) offers up one such thoroughly enjoyable soundtrack to the cynicism prevalent following the GFC. Even if the system is exposed in a very public and obscene way you don’t need to fear - you too can get one over it if you are marginalised due to a physical abnormality and listen to [Darkest Hour](https://www.youtube.com/watch?v=vvePeOrcVTc) (or more accurately – escape antagonism through knowledge).

Applying this logic more generally – we can see a battle ground emerging at the juncture of traditional and decentralised ideologies. It is in the best interest of traditional finance to maintain the allure of privacy which will become progressively more difficult as it increasingly interacts with blockchain technology. It is easy to see how it may attempt to subsume this new technology in service of its aims – in fact, JP Morgan has already developed a blockchain that it uses to transact with major banks in India that is not accessible to the public\*\*\*\*\*. Furthermore, work to bring “Real World Assets” such as government bonds on-chain has led some developers to give ground to closed private systems such as out example above.

More interestingly, if we move **from institutions to individuals** \- how do we see this mediation between privacy and public manifest? What immediately strikes us is the inverse relationships between the public nature of the blockchain and that of individual privacy. As economic activity moves to the blockchain the need for personal identity fades into obscurity due to the trustless nature of its mechanism. No central authority requires me to prove my existence and status within society and I do not need to trust that they will protect my wealth. What results is the proliferation of private actors functioning in a public symbolic system – it is as if the public symbolic nature of the blockchain stands in for our need for public identity within decentralized economies.

And this begs the question – how does this mediation between public and private influence our subjectivity?  **Who are the subjects of the blockchain?**

![](https://storage.googleapis.com/papyrus_images/ccbffb5995840e4fbb2e0e0bf66c8f13.jpg)

\*[Bitcoin whitepaper](https://bitcoin.org/bitcoin.pdf)

\*\*Much of my thinking around privacy is stolen form [this video](https://www.youtube.com/watch?v=p0558u_5B5M) by Todd McGowan

\*\*\* [Fetishistic Disavowal in brief](https://youtube.com/shorts/b9_xUTCFzKE?si=gaDjLFK7rRsdDKSx)

\*\*\*\*Alenka Zupancic addresses the idea of impossibility as the real in [this talk](https://www.youtube.com/watch?v=Bj8WZpYOC2M) as well as in this [article](https://terada.ca/discourse/wp-content/uploads/2013/03/Zupancic_On-Love-as-Comedy.pdf) and many other places

\*\*\*\*\* [https://cointelegraph.com/news/jpmorgan-uses-blockchain-for-24-7-dollar-transfers-with-indian-banks](https://substackcdn.com/image/fetch/f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Fcea9767e-acb2-4cd2-ab13-f04e3401c36e_904x184.png)

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*Originally published on [fantasy on the blockchain](https://paragraph.com/@d00msayer/real-world-assets)*