Proponents of Bitcoin, myself included, tend to focus on the potential for privacy it offers against increasing government intrusion into our financial affairs. But Bitcoin is not only a tool for those who wish to remain hidden—scofflaws, paranoid conspiracy nuts, crypto-anarchists, and of course the ever-present three-headed bogeyman of terrorists, drug dealers, and child abusers. It is also a tool for those who value transparency. Does that sound like a paradox? Well, it isn’t. A major characteristic of a technology that increases freedom is that it can be used for a widely varying range of choices.

I’ll talk a bit more about how that works in the case of Bitcoin later on, but first I’d like to submit as evidence for the transparency benefits of Bitcoin the recent discovery of extensive corruption on the part of two government agents involved in the Silk Road seizure. The agents—DEA agent Carl Mark Force IV and Shaun W. Bridges of the Secret Service—are allegedly jointly responsible for, amongst other crimes, the misappropriation and laundering of over a million dollars worth of bitcoin (estimated at the price at which they would have sold at the time they were obtained) confiscated from the Silk Road website. Carl Force was also a major investor in, and employee of, Bitcoin exchange CoinMTK while involved in the case, and is accused of having stolen customer funds while there.

The story here isn’t that government agents were corrupt. The story is that they were caught, and that Bitcoin’s public ledger is responsible.

We have no way of knowing how much money is routinely “lost” by the government in the normal process of taking and spending, either through bureaucratic incompetence or intentional malfeasance, but we know that it is in the billions. Criminal and, even more, civil asset forfeiture are another story. The ease with which law enforcement agencies can misuse their confiscatory power is well known, and there are several high-profile cases that have brought attention to the issue (to the point where Attorney General Holder has taken action against it at the Federal level). But the bigger issue is that we don’t know, and more to the point, can’t know, how deep the corruption goes. There is simply no way to track whether a police department has underreported the value of a confiscation and illegally used the proceeds. We know it happens. We just don’t know how often.

Now, imagine how that might change if all of the money seized by a government raid were visible on a public ledger that is impossible to falsify; where once the digital “location” of an amount of money was known publicly, any false reporting of the value of a seizure would be quickly seen by the public. That is exactly what happened to agents Force and Bridges. If they had stolen cash and sent their profits to an offshore account, they might have gotten away with it. But it is obvious that they didn’t understand how Bitcoin works. We might imagine that they were lured by the idea that Bitcoin is “anonymous”—which is not quite true; Bitcoin is pseudonymous, and maintaining the obscurity that fact offers requires a specific kind of behavior. Their actions sent up an obvious signal not only that something had been stolen, but how much. It was only a matter of time before it was discovered by whom.

Bitcoin does offer privacy to those who need it. Pseudonymity is a powerful step in that direction, but one must take steps to protect it by not attaching one’s wallet to one’s real name, physical address, or other identifying information. But it also offers more transparency than physical cash ever could where that is needed. Once a wallet’s owner is publicly known, every transaction into and out of that wallet is also visible to the public on the blockchain. This is an ideal condition for organizations like charities and businesses, for whom public trust is vital. A firm that publishes its wallet addresses can never lie effectively about incomes or expenditures, and would be inherently more trustworthy than a firm that does not.

But for government, the blockchain is a stumbling block. Yes, it might make the prosecution of white-collar crime easier; but it also makes corruption of the sort in which Force and Bridges were involved almost impossible to get away with. It would promote more public accountability than any government has ever had to deal with before. And this is not limited to the financial realm. A blockchain-style protocol could be used to authenticate legal records, or to create a fraud-proof voting system. The government, like a private charity or a business, depends on public trust for its survival. Unlike charities and businesses, however, it is not capable of earning that trust. Trust in government relies on public ignorance of what actually goes on behind the scenes; of how much the political class lives at the expense of the people. A public authentication protocol, applied to government, would shine a bright light into all the deep, dark crevices of public ignorance in which state power grows.

The bad news is that for that reason, we can expect that the state will never accept such a reform. Despite the obvious, and often amusing, inability of politicians to understand Bitcoin, they know enough to fear it. Even the fact that it is controlled by a true public consensus—something that a state can never really control—makes it a threat.

The good news is that we don’t need them to accept it. Political reform is horribly slow and inefficient. But private institutions will adopt Bitcoin and other innovations like it, and it is on that basis that a free and open society can be achieved. Bitcoin offers people the choice to be as private or as open as they need to be, which is empowering to the people. It doesn’t have to become as ubiquitous as cash in order to work. It only has to continue to grow to accommodate those who are marginalized by state intrusion, providing an umbrella of privacy to those who need it. And in the meantime, where government is forced to interact with it, they will find it much more difficult to abuse their power.