Wendy McElroy: Crypto – Civil Law Versus Common Law

Crypto - Civil Law Versus Common Law

The Satoshi Revolution: A Revolution of Rising Expectations
Section 3: Decentralization
Chapter 8, Part 1.
Crypto: Civil Law Versus Common Law

2018 is the year in which cryptocurrency will be regulated. The questions are by whom and how? The two traditional answers have been civil law or common law. But there is a third alternative. Namely, preventive self-regulation, which can also be called simple decency. This is not a matter of law enforcement but of personal responsibility for your own behavior. It means being the adult in a room of children who are acting out.

Regulation is coming because crypto is being defined as much by its abuses as by the benefits it provides. The problems are real. And that’s a problem because it provides a plausible doorway through which government can walk. The “abuses” to which I refer do not include drug deals or the private stashing of personal cash. Those are not the abuses of crypto; they are benefits. Cryptocurrency allows people to control their own bodies and wealth in a peaceful manner that harms no one else. That is its power and true beauty.

The abuses are the rampant number of scams and hustlers who prey on average people; predators are robbing honest folk who are simply trying to avoid a corrupt financial system in order to leave an inheritance for their children and keep food on the table. The predators convert a vehicle of freedom into a path for theft.

Part of the problem is that too many honest people are standing by, watching it happen. The Irish statesman and philosopher Edmund Burke is credited with saying, “The only thing necessary for the triumph of evil is that good men do nothing.” I’ve never liked that quote; it places responsibility for the triumph of evil on the shoulders of good people who are simply minding their own business. That’s wrong. But there is a point at which focusing on the business of personal life becomes dangerous because there are politicians and other criminals who circle and await the chance to attack those who are not paying attention. Pay attention now.

Crypto will be shoved up against a brick wall of regulation in 2018, and it will occur with the applause of the public. They will applaud for good and bad reasons. One bad reason is that crypto is still an arcane mystery to most people, and they mistrust it. They say “it is vaporware that is based on nothing” as though the pieces of paper they spend every day are somehow different. One good reason for the urge to regulate crypto is that so many people have been fooled and burned by incompetent or unethical parts of the community.

Cynical commentators can yell “caveat emptor!”—let the buyer beware!—all they want. That’s a way of blaming the victims, who certainly bear some responsibility. The words “due diligence” come to mind.  But there is something badly wrong with a system in which honest people are being robbed and scammed on a regular basis. It is wrong when government does it to people, and it is wrong when a financial network does it. Cryptocurrency was designed to empower people, not to impoverish them.

The current abuses mean that the application of law to crypto is inevitable. The pivotal question is whether cryptocurrency will be regulated under civil law or common law. Or a third alternative. The choice is between government control or the private policing of behavior. Which will it be? Government or self-regulation? Of course, government will impose itself to the extent possible. But private actions are giving it the justification to do so.

The ideal solution is common law but the ideal rarely has a clean victory. The reality will probably be a mixture of both.

Civil Law Versus Common Law

Civil law is political law. This is civil law:

“We feel very strongly that we need to have this kind of regulation [on the trading of cryptocurrency] all over the world…The EU, I understand, is moving very quickly in that direction and we think it’s very important that similar regulations are happening in a number of other countries.”

Sigal Mandelker, the U.S. Treasury undersecretary for terrorism and financial intelligence

Civil law is what most people wake up to every morning. It is distinct from criminal law in that it addresses contracts, business arrangements, inheritance, and the other legal matters that average people confront on a daily basis. Civil law is passed by legislatures, and it is codified into established rules that dictate people’s lives. Much of it is valid. It answers real questions–like how do I resolve a property dispute with my neighbor or divide up property in a divorce? But it also expresses the interests of third parties, especially government, in matters that enrich them at the expense of average people. The more law becomes “statute,” the less it reflects the daily needs of people.

Common law offers an alternative legal blueprint. Rooted deeply in the English tradition, it is a body of law that develops from the grassroots upward. It involves  no presence of Parliament. It comes from the decentralized judicial decisions that arise from real legal disputes. Someone did not pay for a chicken he “purchased”; the seller asks a court…how do I receive fair payment? A business deal dissolves; how can the investors fairly split up the remaining assets? These are real-people problems. The answers offered by judges may be right or wrong, but they do not benefit the privileged. This is common law, and it is so named because it benefits the common person.

Happily, average people usually want to live in peace, pure and simple. That makes common law a relatively straightforward thing. Almost every common law and its associated judicial proceedings advance the non-initiation of force, for example. They all embrace standards of evidence, such as published transcripts,  that make people accept the system as just.

Common law is far preferable to civil law. But common law is imperfect. It can substitute the arbitrary opinions of judges for the self-interested opinions of politicians. The best solution for cryptocurrencies is no law at all. It is self-regulation. Don’t allow foreseeable problems of fraud or theft to arise in the first place. As with every healthy community, the standards of conduct are set by normal people who are trying to function and feed their children. The crypto community is no different.

Yes, cryptocurrency needs to be regulated. But it should be private regulation that responds to a fast-moving world of real people, not the needs of bureaucrats. That’s common law. Ideally, it is the private policy of the decent human beings who have always dominated crypto but who need to stand up and shout “ENOUGH!” at those who are treating freedom as a free pass to crime.

[To be continued next week.]

Reprints of this article should credit bitcoin.com and include a link back to the original links to all previous chapters


Wendy McElroy has agreed to ”live-publish” her new book The Satoshi Revolution exclusively with Bitcoin.com. Every Saturday you’ll find another installment in a series of posts planned to conclude after about 18 months. Altogether they’ll make up her new book ”The Satoshi Revolution”. Read it here first.

The post Wendy McElroy: Crypto – Civil Law Versus Common Law appeared first on Bitcoin News.

Wendy McElroy: Are You Part of the Revolution or Part of the War?

Are You Part of the Revolution or Part of the War?

The Satoshi Revolution: A Revolution of Rising Expectations
Section 3: Decentralization
Chapter 7, Part 3. Are You Part of the Revolution or Part of the War?
by Wendy McElroy

What do We mean by the [American] Revolution? The War? That was no part of the Revolution. It was only an Effect and Consequence of it. The Revolution was in the Minds of the People, and this was effected, from 1760 to 1775, in the course of fifteen Years before a drop of blood was drawn at Lexington.

John Adams to Thomas Jefferson

Revolution and war are polar opposites. Revolution is the decentralization of power from a concentrated authority down to the level of individuals who demand control of their own lives. War is the centralization of power into a coerced and coordinated effort by elites who hold individuals in such contempt as to call them cannon fodder.

A war on cryptocurrency has been declared. It comes from government and from those who believe crypto must be made “respectable,” which always translates to regulation, which always translates to people going to prison for making decisions about their own lives. Authorities and those who believe in authority want to control the wealth of other people.

EU Parliament Votes for Closer Regulation of Cryptocurrencies.”

Australian Cryptocurrency Exchanges are Under Regulation, Starting Today.”

South Africa Central Bank Wants to Regulate Cryptocurrency.”

The war is afoot. But the revolution continues. Cryptocurrency, like the printing press, has been a social and political game-changer. A huge window of freedom has opened for the average person who can now avoid the central banking system and the government’s grab for wealth and social control.

A lot of confusion surrounds the issue of revolution because it has been so badly portrayed. Barricaded streets, people rampaging, cars on fire, conflict with the military…that is not revolution. The violence may be the effects and consequences of revolution, but change comes from the hearts and minds of people when they embrace a new idea. Revolution is not rage and despair; it is hope and realization. The decentralization cannot be handed down, like a pretty gift, from those in political power to those who produce and engage in daily life. The power of decentralization rises up from people who understand that basic human rights are never something for which you say “thanks!” They are a birthright.

John Adams explained where the American Revolution could be found. “The Records of thirteen [Colonial] Legislatures, the Pamphlets, Newspapers in all the Colonies ought be consulted, during that Period…” The violence that erupted in 1776 could well be described as a Civil War because about a third of the colonial population backed the British. The War itself was not the revolution; indeed, the War interrupted an intellectual revolution that was slowly winning the loyalty of average people, and might have produced a non-violent societal overthrow. What would America now look like if it had not been born in blood? Fortunately, it was born in newsprint far more than in violence.

The quiet explosion caused by Satoshi in 2008 was every bit as much “a revolution.” Those who call it so are often dismissed as hyperbolic because the cryptocurrency eruption does not conform to the images of barricaded streets and people screaming “Pig of a Government!” The social changes in crypto are largely silent. “Pig of a Government!” remarks are hurled at a computer screen in the wee hours of the morning. The pioneers of cryptocurrency are far from traditional bombastic revolutionaries, like Che Guevara, whose portraits are plastered on the walls of post-revolutionary nations. Satoshi himself remains anonymous. It is an unassuming, unpretentious revolution.

Besides which, the subject in contention is finance—also known as “filthy lucre”–and since when is that idealistic enough to deserve a revolution? Shouldn’t the banner read “FREEDOM, JUSTICE”?

It does. Financial independence is freedom and justice. The ability of people to make and keep the wealth they earn is how people feed their children; it is how they rise from starvation to well-being; wealth allows people to own the land they walk upon; filthy lucre turns an assembly of strangers into a civil society that trades rather than makes war. Money is the engine of civilization itself because there is nothing more important than people being able to feed themselves. Freedom of speech, art, literature and the other amazing human accomplishments follow.

The revolution of cryptocurrency takes the custody and management of wealth away from central authorities, like central banks, and returns it to individuals. This is the return of freedom itself. The revolution is all the more remarkable because it has been so peaceful. Alas, the war is beginning.


Revolution is Decentralization

Satoshi does not mention decentralization in his White Paper, which was pivotal in launching the crypto revolution. That’s odd. Decentralization through the distribution of information over nodes is the key to the freedom offered by cryptocurrency. Gandhi said, “the means are the ends in progress.” Decentralization is the freedom in progress. Decentralization is the revolution.

Every successful revolution must answer, “What is the end point?” If there is no good answer, then a bad system will just be replaced by another bad system. The French Revolution that overturned a corrupt monarchy was replaced by a “Committee of Public Safety” that instituted what was called the “Reign of Terror.” The Satoshi revolution of decentralized personal finance must answer, “What is the end point?”

The question becomes a problem when people try to give one answer. That is, when they try to centralize the answer into a single statement. The key: there is no one answer, and there should be no one answer. Every human being must decide for him or herself. In his magnum opus “Human Action”, Ludwig von Mises described the principle of Methodological Individualism to which all supposed collectives dissolve: “First we must realize that all actions are performed by individuals. A collective operates always through the intermediary of one or several individuals whose actions are related to the collective as the secondary source…The hangman, not the state, executes a criminal. It is the meaning of those concerned that discerns in the hangman’s action an action of the state… If we scrutinize the meaning of the various actions performed by individuals we must necessarily learn everything about the actions of the collective whole. For a social collective has no existence and reality outside of the individual members’ actions.”

Ultimately, revolutions are not a collective. They can and should be reduced to their most basic unit: the individual. Every individual who refuses to obey must provide his or her own answer as to “why?” and “for what?” The answers cannot be collectivized without destroying the revolution itself. Including cryptocurrency.


The War is Coming

Cryptocurrency reverses the political trend that centralizes financial power over the lives of average people into the hands of the elite. The centralization of power literally kills the average person, for example, through war.

The famed Austrian economist Murray Rothbard depicted the struggle for freedom as being Power versus Liberty. It can be rephrased as a struggle between centralization versus decentralization. It is King versus Commoner.

To some, cryptocurrencies are nothing more than a profit-making scheme. So be it for them. But everyone who values the political aspect of cryptocurrency should ask themselves: are you part of the revolution or part of the war?

[To be continued next week.]

Reprints of this article should credit bitcoin.com and include a link back to the original links to all previous chapters


Wendy McElroy has agreed to ”live-publish” her new book The Satoshi Revolution exclusively with Bitcoin.com. Every Saturday you’ll find another installment in a series of posts planned to conclude after about 18 months. Altogether they’ll make up her new book ”The Satoshi Revolution”. Read it here first.

The post Wendy McElroy: Are You Part of the Revolution or Part of the War? appeared first on Bitcoin News.

Wendy McElroy: Here, There Is No State

Wendy McElroy: Here, There Is No State

The Satoshi Revolution: A Revolution of Rising Expectations
Section 3: Decentralization
Chapter 7, Part 2. Here, there is no State.

The core innovation of cryptocurrency is decentralization—the diffusion of functions or power across a broad network. The decentralization of crypto is what yanked financial control away from concentrated authorities, like central banks, and into the hands of individuals.

Yet some people argue that decentralization does not exist in crypto. The argument comes from a tension between the original vision of Bitcoin and the hundreds of cryptocurrencies, the hundreds of communities that have arisen. On one hand, currencies like Bitcoin have no coordinated authority, no central management, and there is no one point at which they can fail. On the other hand, many vehicles of crypto are businesses run by a small number of people in a specific location, which bow to government dictates. In short, the technology is decentralized but many expressions of it are not. Adding to the confusion: some of the most prominent actors are centralized exchanges, like Coinbase, that resemble nothing so much as regular financial institutions in their reporting requirements and other demands. They are the type of institution that crypto was designed to avoid.

Which is true of crypto?–is it decentralized, a new form of centralized fiat and banking, or a hybrid?

The answer is “yes.” Cryptocurrencies are dividing into two broad camps, which are politically antagonistic. Things are centralizing in the sense that “mom-and-pop” shops for crypto are less frquent; corporations and government involvement are more common. The dividing line between the two camps is whether the centralization is government-mandated or the free market variety. The first is coercive and the death of crypto as a freedom tool. The second is voluntary, and it is usually a matter of nothing but convenience or efficiency. Free market centralization may well be a poor choice—I suspect it is–but it is a choice. This distinction becomes increasingly important as governments attempt to impose their control on crypto and to paint the free market as an enemy of common decency and the average user.

 

Radical individualism and Civil Society.

Two concepts are often depicted as incompatible: rugged individualism, and civil society. The rugged individualist, it is said, is uncooperative, whereas society is nothing more than a swirl of cooperation. In reality, the two concepts require each other.

Individualism is the right of people to say “yes” or “no” to every peaceful decision over their own lives; it is self-determination. “Civil society” is a community of individuals who voluntarily associate with each other for the remarkable advantages that society offers. Civil society is the natural community that evolves when people meet to trade, consume, form personal relationships, and otherwise benefit from the presence of others. It is often contrasted with political structures that are imposed on civil society in the form of regulations and power hierarchies. In short, government. These structures strip away the voluntary aspect of civil society and impose the will of those in power on those who are not. They slowly remove the benefits of society from the individual.

The key to retaining those benefits is not merely voluntaryism but also decentralization. Decentralization occurs when power disperses from a central authority down to a more local level. The most local level possible to power is the individual, from whom all rights derive. Every human being, simply by being human, has proper jurisdiction over his or her own body. Every right that exists—freedom of speech, freedom of religion, freedom of conscience—belong exclusively to individuals. It does not even make sense for a committee or an elected body to have freedom of religion. What would that mean? Would they hold a vote on whether God exists? Would a minority who voted “yes” need to become atheists after the committee adjourned?

The decentralization of power means that everyone decides such peaceful matters for themselves, according to their own conscience and their own perceived self-interest.

The brilliance of Satoshi Nakamoto was to reweave the fabric of financial freedom by offering a decentralized means by which individuals could control their own wealth, the product of their own labor. This means control of their own lives. They had the choice to submit to centralized banking or to avoid it.

Financial well-being is too quickly dismissed or disdained as people “wanting to make a buck” or putting money before morals. The opposite is true. Earned wealth is independence, self-respect, the ability to feed families, and the means by which people advance on merit. The free exchange of wealth, including trade and charity, holds civil society together. Bitcoin was not perfect, but it was an incredibly impressive and successful attempt to decentralize financial power down to the level of individuals.

Those in power are pushing for one thing: the coercive centralization of cryptocurrency—under their own fingers, of course. They want centralized exchanges, government-issued crypto, management by central banks, regulated procedures, tax laws, and the prosecution of rebels. Whether they succeed depends on how strong the spirit of individualism is within crypto; how strong is it within individual users?

 

A Nod to Henry David Thoreau

How does an individual deal with morally intrusive government? The solution is quite simple: throw government out of your life. That’s what Thoreau did.

Thoreau’s most famous political tract is Civil Disobedience. It was his response to a 1846 imprisonment for refusing to pay a tax that violated his conscience. Not that Thoreau was embittered by his brief imprisonment. Near the end of his life, he was asked, “Have you made your peace with God?” Thoreau replied, “I have never quarreled with him.” For him, that would have been the real cost of paying the objectionable tax; it would have meant quarreling with his own conscience, which was akin to quarreling with God.

Civil Disobedience ends on a happy note. After Thoreau’s release, the children of his hometown urged him to join a hunt for huckleberries. Huckleberrying was one of Thoreau’s valued pastimes, and his skill at locating fruit-laden bushes made him a favorite with children. He ended his chronicle of imprisonment with the words, “[I] joined a huckleberry party, who were impatient to put themselves under my conduct; and in half an hour…was in the midst of a huckleberry field, on one of our highest hills, two miles off, and then the State was nowhere to be seen.”

The State was nowhere to be seen. This is the legacy of Thoreau and Satoshi for those who wish to grasp it: the State is nowhere to be seen if you are willing to cast it off. Thoreau, in his joy of running with all the other children, knew that his imprisonment was not real. The huckleberry hunting was real. Indeed, he referred to the joy of everyday life as “the business of living.”

Cryptocurrency is profoundly anarchistic because it allows users not to see the State, if they so wish. Although the preceding may sound like an unacceptably radical statement, most people reading this article already have a deep commitment to anarchism.

 

The Anarchism of Everyday Life

An easy way to grasp how anarchism functions is to realize that it is the principle upon which most people conduct their daily lives. Without realizing it, they live without the state.

When a person wakes up in the morning, it is not the law that makes him feed his children rather than allowing them starve to death. No bureaucrat makes him kiss his wife rather than beat her to a bloody pulp. When he carpools with friends, it is not the presence of a policeman that restrains him from picking their pockets; the theft does not occur to him. As he moves through the day, no regulation is required for him to pay for the cup of coffee he orders. As he walks down the street, he doesn’t punch or rape random strangers. When he drives his car, it is not fear of the State that prevents him from veering onto the sidewalk to mow down children under his wheels.

Two things prevent him from doing so. First and foremost is personal responsiblity, the natural bonds of humanity, and a moral conscience. A strong second reason is the presence of civil society, which offers a daily incentive to act well. It is from civil society that men acquire habits that come from the rewards of cooperation. In short, most people already deal with each other as though they live under anarchy.

 

Conclusion

Cryptocurrency is not an ideal vehicle. It is an evolving tool and the very best currency available for freedom.

Whenever someone uses crypto in a private, decentralized manner, they are saying the same thing as Thoreau: here, there is no state. Here, there is only the personal.

[To be continued next week.]

Reprints of this article should credit bitcoin.com and include a link back to the original links to all previous chapters


Wendy McElroy has agreed to ”live-publish” her new book The Satoshi Revolution exclusively with Bitcoin.com. Every Saturday you’ll find another installment in a series of posts planned to conclude after about 18 months. Altogether they’ll make up her new book ”The Satoshi Revolution”. Read it here first.

The post Wendy McElroy: Here, There Is No State appeared first on Bitcoin News.

Bitcoin in Brief Monday: A Panther’s Moonshot Bet

Bitcoin in Brief Monday: A Panther’s Moonshot Bet

Bitcoin in Brief today is slanted toward a crypto winter slowly thawing, as Pantera Capital bets on a moonshot price point. Also, the world’s most popular decentralized digital asset has been forked more than a plate of good pasta; there’s a growing list of countries who’re less likely to nab your crypto profits; Yahoo! smashes rumors; and a good-hearted wager between bitcoin core and bitcoin cash partisans exemplifies how ecosystem actors should treat one another.

Also read: Bitcoin in Brief Saturday: Hide Your Seed

A Panther’s Moonshot

Bulls have a panther as their advocate to help thaw this crypto winter. We reported this week, “Pantera Capital, an investment firm exclusively operating in the cryptocurrency and distributed ledger technology sectors, has published a letter predicting that bitcoin has established the low for its current bear market. Pantera cites a number of factors as informing its market outlook.”

Bitcoin in Brief Monday: A Panther’s Moonshot Bet

Among those factors are taxes on capital gains, where estimates are in the many, many billions expected from enthusiasts. That in turn, the fund theorizes, dragged prices down, and bitcoin core has found a bottom at $6,500, as holders were forced to sell in order to pay government bills. We continue, “Pantera also states that ‘It’s highly likely’ for the price of bitcoin to exceed its previous record highs of $20,000 ‘within a year,’ asserting that ‘A wall of institutional money will drive’ the growth in price.”

Speaking of Taxes

Until that prediction comes true, readers should pack their bags to save money from the tax man! Start looking for places to stay in Germany, Slovenia, Denmark, Belarus, South Korea, Singapore, as they’re some of the most advantageous.

Bitcoin in Brief Monday: A Panther’s Moonshot Bet

We stressed how many “jurisdictions have yet to update their tax laws to encompass cryptocurrencies. Rules governing taxation are often incoherent and very different even in countries that are part of a common space. In the European Union, for instance, tax rates in member-states vary between 0 and 50%.”

Forking Crazy

Be honest. You’ve never heard of Bitcoin Minor, Bitcoin King, nor Bitcoin Boy. How many times would you guess the Bitcoin network has been forked? During an extensive and really interesting investigation, we revealed nearly 70 times. That’s right, 70.

We summarized findings as how forking “bitcoin used to be a rarity. Then it became the norm. And then it became a meme, with anyone and everyone forking bitcoin on a weekly basis. There have now been a total of 69 bitcoin forks plus another 18 altcoin forks. Holders of bitcoin, monero, ethereum, and litecoin can claim almost 80 additional coins for free. Whether it’s worth their time to do so, however, is another matter.”

The Fork of All Forks Remains a Solid Option

The most famous of forks is, of course, bitcoin cash (BCH). Its being faster, sleeker, younger, and bigger (block wise) has lead those on the bitcoin core (BTC) side to take a stance on BCH’s long term viability. And while each side feels passionate about its coin, and the future that it entails, debate often become rancorous, turning everyone off.

Bitcoin in Brief Monday: A Panther’s Moonshot Bet
A reader responds to a hilarious bet.

We reported how two well-known advocates joked and ribbed one another about Core’s anticipated Lightning Network solution. They bet bragging rights if a demonstration of the solution failed a basic transaction. Loser would have to wear a t-shirt of the winner’s coin. Regardless of which won, the import is how the two men exchanged laughs and good humor, and the ecosystem needs more of both.

Japan Continues to Lead

No laughing matter is how the crypto winter continues its thaw as “Yahoo! Japan has confirmed that it is entering the crypto space by acquiring a stake in a Japanese cryptocurrency exchange that is already licensed by the country’s financial regulator. The company plans to launch a crypto exchange in the fall of this year,” we explained.

Bitcoin in Brief Monday: A Panther’s Moonshot Bet

We Have the Best Readers in All of Crypto

Thanks to our readers liking and sharing, our post on aspects of Islam possibly opening to cryptocurrency was picked up and republished and referenced around the world. Some contend it was the root cause of bitcoin’s recent price rebound. Great job, gang.

The crazy good book by Wendy McElroy we continue to serialize brings in wonderful reader comments and observations. To wit:

Bitcoin in Brief Monday: A Panther’s Moonshot Bet

Do you think bitcoin will continue to rise or to fall to new lows? Let us know in the comments section below.


Images courtesy of Shutterstock.


Need to calculate your bitcoin holdings? Check our tools section.

The post Bitcoin in Brief Monday: A Panther’s Moonshot Bet appeared first on Bitcoin News.

Wendy McElroy on Decentralization: “Give Power Back to the Individual”

Wendy McElroy on Decentralization – "Give Power Back to the Individual"

The Satoshi Revolution: A Revolution of Rising Expectations.
Section 2 : The Moral Imperative of Privacy
Chapter 7: Decentralization

Decentralization (Chapter 7, Part 1)

A lot of people automatically dismiss e-currency as a lost cause because of all the companies that failed since the 1990’s. I hope it’s obvious it was only the centrally controlled nature of those systems that doomed them. I think this is the first time we’re trying a decentralized, non-trust-based system.

–Satoshi Nakamoto

(Note: This article consciously side-steps the question of how decentralized various cryptocurrencies, such as bitcoin and ether, truly are. It assumes as a given that crypto is a paradise of decentralization compared to the central banking system.)

In 2009, Satoshi Nakamoto offered the first digital, decentralized currency that was based on algorithms rather than trust. The decentralization is key. No one person controls the operation of bitcoin; everyone can participate on an equal peer-to-peer basis. The system uses a distributed network of nodes to verify transactions that are publicly visible in an open ledger. It was something new under the sun.

The “non-trust-based system” that Satoshi described has obvious advantages. For one, people do not get screwed over by unscrupulous third parties, such as lawyers, former spouses, or banks. But the advantages of decentralization are less obvious. Centralization can be a purely practical matter, and it can be a good strategy. A business, for example, may be more efficient and profitable if decision making is controlled by one person. There is nothing intrinsically wrong with centralization. Except….

In the political sense. Centralization is disastrous to freedom because it strips choice from individuals and converts personal rights into decisions made by committees. Another term for centralized control is “social engineering.”

Through most of history, society has been viewed as the result of someone’s design. The design may be ascribed to God, a monarch, or a group of people called government. Society as a construct is taken for granted.

In his three-volume work Law, Legislation and Liberty (1973), economist and social theorist Friedrich A. Hayek referred to this position as “constructivist rationalism.” He argued vigorously against it. In a 1974 Nobel Memorial Lecture, entitled “The Pretence of Knowledge“, Hayek expressed a key objection: namely, no committee could predict the evolving needs of the interacting masses of human beings.

“The recognition of the insuperable limits to his knowledge ought indeed to teach the student of society a lesson in humility which should guard him against becoming an accomplice in men’s fatal striving to control society–a striving which makes him not only a tyrant over his fellows, but which may well make him the destroyer of a civilization which no brain has designed but which has grown from the free efforts of millions of individuals.”

Decentralization means the diffusion of power away from a central authority, down to its constituent units. Politically speaking, this usually means passing control from a national unit down to a local one. Instead of Congress or Parliament issuing law, a state or provincial government does so. Or a local council decides what a resident may or may not do with his own property, wealth and body. Local councils may be preferable to more remote authorities because they are susceptible to local influence; that is, the voice of individual constituents who live next door are far more influential than anonymous ballots that are cast in the millions.

But, even at the local level, the essential element of decentralization is lost. The essential element is not a committee or a collective decision. It is the individual. The individual is not only the basic building block of society but also the only source of rights, the only source who can say “yes” or “no” over their own lives. The logical and moral landing point for decentralization is every human being who is responsible for making peaceful choices for themselves.

In his magnum opus Human Action, the Austrian economist Ludwig von Mises described the principle of Methodological Individualism: “First we must realize that all actions are performed by individuals… If we scrutinize the meaning of the various actions performed by individuals we must necessarily learn everything about the actions of the collective whole. A social collective has no existence or reality outside of the individual members’ actions. For example, the individuals who comprised a family interacted with each other within a specific context and sum of those individual interactions was what constituted the abstraction ‘family'”.

Mises used this approach in analyzing that most complex of collective wholes–the state. Everything the state did or was could be reduced to individual actions. Mises explained, “The hangman, not the state, executes a criminal. It is the meaning of those concerned that discerns in the hangman’s action an action of the state.” Individuals who look at the hangman see the state in action only because they have created an abstraction known as ‘the state’ to provide a context for what is an individual’s action.

And yet, if only individuals act, how can collective institutions such as ‘the state’ or any co-operative venture be established within society? Easily. Consider how language evolved through human action but not through human design: this is the concept of ‘spontaneous order.’ One of Mises’ earliest works, Nation, State and Economy (1919), analyzed how complex social phenomena–such as language–were the unintended consequences of individual interactions. No committee or central authority decided to invent human speech and publish a dictionary, let alone to design a specific language like English. Individuals began communicating in order to get what they wanted from each other.

This is decentralization at work. Another classic example is how a path is forged through a forest. Twenty people each decide to take the shortest route from A to B. In doing so, each one contributes to the creation of a crude path that benefits everyone else who uses it afterward. The path becomes less crude as more people use it. They do not walk from A to B as public good; it is in their own self-interest. Yet forging the path benefits everyone else who walks it thereafter. The path is decentralization in action.

The decentralization offered by Satoshi goes farther. It does not envision individual actions that happenstantially benefit the whole. Or, rather, it envisions a decentralization that becomes an integral part of a community in which everything is transparent.

Part of the Satoshi revolution is that it turns the freedom strategy of decentralization on its head. Traditionally, decentralization has given individuals freedom by allowing them to secede from society. That is, people withdraw from the political system by refusing to pay taxes, by declining to provide personal information to the government or by otherwise saying “no.” In the ’80s, this strategy was called Browning-out because many practitioners followed the privacy and freedom recommendations of Harry Browne’s best-selling book How I Found Freedom in an Unfree World: A Handbook for Personal Freedom. Chapter 7, entitled “The Government Traps,” states, “But who is ‘society’ if not the same people who are already expressing their needs and preferences in the marketplace? If they aren’t willing to pay for the service in the free market…, who can say they’re willing to pay for it through government?…. All government actions depend upon one-sided transactions, in which an individual is forced to choose between paying for what he doesn’t want and going to jail.” Those who Browned-out from the Government Trap decentralized the power in their lives down to the personal level where the only authority over their own choices was themselves.

Satoshi’s approach to decentralization offers the solution. Like Hayek, he opposed the centralization of power, which is the theft of power from individuals. Social engineering destroys society, rather than creates it. Both Hayek and Mises witnessed the devastation of classical liberalism that resulted from two world wars, but most particularly by World War I. They watched as the promise of nineteenth century classical liberalism was confiscated by the centralizing machine of statism.

Enough. Cryptocurrency says “enough.” Give power back to the individual. And decentralization is where it all begins.

[To be continued next week.]

Reprints of this article should credit bitcoin.com and include a link back to the original links to all previous chapters


Wendy McElroy has agreed to ”live-publish” her new book The Satoshi Revolution exclusively with Bitcoin.com. Every Saturday you’ll find another installment in a series of posts planned to conclude after about 18 months. Altogether they’ll make up her new book ”The Satoshi Revolution”. Read it here first.

The post Wendy McElroy on Decentralization: “Give Power Back to the Individual” appeared first on Bitcoin News.

Wendy McElroy: Do Not Passively Nationalize Your Privacy

Wendy McElroy: Do Not Passively Nationalize Your Privacy

The Satoshi Revolution: A Revolution of Rising Expectations
Section 2: The Moral Imperative of Privacy
Chapter 6: Privacy is a Prerequisite for Human Rights

Do Not Passively Nationalize Your Privacy. Chapter 6, Part 7

“If I had a world of my own, everything would be nonsense. Nothing would be what it is, because everything would be what it isn’t. And contrary wise, what is, it wouldn’t be. And what it wouldn’t be, it would. You see?”

–Lewis Carroll, Alice in Wonderland

Lewis Carroll’s world is government, where words express the opposite of their meaning. War brings peace. Diversity means conformity to PC demands. Security requires the rape of privacy and due process, which provide true security for individuals. Subservience is freedom.

Government ‘reality’ inverts the truth. Privacy is dead, government declares with the certainty of a slamming door. Only, it isn’t. Privacy is entering a golden age—or it is for individuals who privatize their own data instead of allowing their identities to be nationalized. Nationalization of identity occurs when the government claims the ownership and use of everyone’s personal information, which individuals have no right to withhold. The government owns birth certificates, medical records, school transcripts, surveillance reports, police and court files, financial  information…It possesses data that individuals themselves cannot access.

The fact that privacy is alive and kicking is demonstrated by the adamance with which bureaucrats and their allies try to convince people of the contrary. Government wants to quash the very possibility of discussion because individuals could realize how much control they have over their own information. Individuals might start privatizing their privacy through the glut of technology that allows individuals to use encryption, pseudonymity, polynymity, anonymous cryptocurrency, decentralized exchanges, scrambling software, and an evolving array of digital tactics.

But what technology gives, technology can take away. Tomorrow, some privacy strategies could be obsolete. Game changers are on the horizon. If quantum computing pans out, for example, then encryption could crack like a walnut. “The quantum computer, following the laws of quantum physics, would gain enormous processing power through the ability to be in multiple states, and to perform tasks using all possible permutations simultaneously.” The out-of-the-box approach to data processing could revolutionize operating protocol and speed.

But what technology takes, technology can give. It is a race between those who use computers for social control and those who use them for freedom. Whatever master technology serves, however, the background politics are remarkably the same.


A Step-to-Step Guide to Nationalizing Privacy

There is a common pattern to how governments nationalize identities and privacy.

A crisis is declared, whether it is real or created. A real crisis may be a war or a foreign attack, like 9/11; a created one may be a school shooting that gins up hysteria, even though school shootings are incredibly rare and infrequent. Sometimes government policies create the crisis, such as the implosion of the Bolivar in Venezuela. Whatever the cause, a message is drummed into the public: it is not the government’s fault. Who is to blame? Hostile nations, deranged individuals, evil groups, the free market run amok—the usual suspects are rounded up. Then government presents itself as the solution.

This is the point at which rights are displaced by privileges.

What is a right? A natural right, like freedom of speech, is an extension of the jurisdiction that individuals have over their own bodies, which they are free to use in any peaceful manner. A right is not earned or granted; it exists because the owner is a human being with the same claim to personal freedom as any one else. Another approach to the same concept: there are only three possibilities on who owns an individual’s body: the individual himself, which is self-ownership; someone else, which is slavery; or, the body is unclaimed property, like luggage in a lost-and-found. The choice that makes sense is self-ownership.

What is a privilege? A privilege is an advantage or immunity that is granted to a particular person or to a group of people, usually small in number, which does not apply to others. Governments confer privileges upon those it favors due to their loyalty, service, or some other trait that authorities find useful. These are the two main differences between a right and a privilege: Rights are universal, whereas privileges are targeted; rights do not require permission to exercise, whereas privileges hinge upon permission.

Gradually, an individual’s use of his or her own body becomes a matter of government privilege and not a matter of rights. The harvesting of personal data is essential to this transition. A database does not matter to individuals who exercise their rights because the individuals decide for themselves how to act. But a database is essential to granting or denying privileges. Government needs to know who to reward for ‘good’ behavior and who to punish for ‘bad’. Who owns guns and may be dangerous? Who sends money abroad or doesn’t report an income stream? Where do these people live? A massive amount of information is required for government to target specific individuals or categories of people to either privilege or punish. Privacy must be taken away from individuals and nationalized.

The adrenaline of a crisis is useful to government in this endeavor because the public becomes receptive to heightened security, including surveillance. When the adrenaline recedes, however, the push for security is often replaced by boiling-frog tactics.

The boiling frog is a false fable that has a valuable lesson attached. A frog is boiled to death because the temperature of water in the pan where it sits is raised so gradually that it does not notice the lethal process; it does not jump out. The boiling frog is a metaphor for people who blithely tolerate a series of incremental changes until the end result becomes deadly.  The process is also called “creeping normality”; a major shift is accepted as “the norm” because it is introduced in small steps, each of which is sanctioned or, at least, not opposed. The end result may be widely viewed as objectionable—or, rather, it would be if it arrived in a single leap—but it comes inch-by-inch. The slow erosion of freedom becomes an everyday event. There is one more blank to fill out on a form; boarding a plane  requires a standardized state-issued card; police stop random cars or pedestrians to demand ID.

And, to make sure as much data as possible is raked in, government recruits crony corporations—such as central banks—that act as centralized points of data collection. Then government eliminates free-market competitors who do not act as bureaucracies. The loop is closed. Anyone who uses a government service, from schools to social security, must give up their data to do so. Anyone who uses a faux free-market service, from air travel  to banking, must give up their data to do so. What the loop closes around is the individual.

When a distorted normality has been established and accepted, the government gloves come off. Society is micromanaged. In China, the process of micromanagement is called the “social credit system” by which citizens are assigned a rating by the state. Those who score high are allowed to access privileges, such as travel and good restaurants. Those who score low, perhaps due to jaywalking or a rebellious attitude, become second-class citizens.

The financial and social commentator Doug Casey calls the system “fiendishly clever” because…”a high social score gives a citizen lots of benefits and privileges. A low score penalizes you in many ways. People will start competing to be good little lambs.” Otherwise stated, this form of social control is “fiendishly clever” because average people become enforcers of government policy out of their own self-interest. High scorers are more desirable employees, spouses, family members, friends, clients, neighbors, university students, and associates. Low scorers are stigmatized and limited in prospects. In short, people will control and censor themselves in order to achieve the high score that leads to status and opportunity. They will shun those with low scores, who are consigned to lower economic rungs.

Western nations are adopting their own rating systems, and the trend will accelerate. Casey predicts, “The TSA will likely subject you to…screening based on your score [or red flags in your file]. The IRS…[will scrutinize] your finances. The same with the police, prosecutors, and what-have-you, right down to your local DMV…It’s the best idea since everyone got a Social Security number—for them.” [Italics added.] Whether in China or the U.S., the total state rests on total access to personal information, especially digital footprints.

Into the walls of this Brave New World, Satoshi Nakamoto carved an EXIT door for those who want to privatize their own data and to decline the nationalization of their identities. It opens to a path around government, central banks, and crony corporations—a path around trusted third parties—because no one should be trusted with the custody of human rights.

It is impossible to predict the future of crypto because the future evolves quickly and in unexpected directions. But, wherever it goes, the principles of the Satoshi vision remain true North: individual control of privacy; peer-to-peer exchanges (or as close as possible on exchanges); and, decentralization.

Conclusion

“When I use a word,’ Humpty Dumpty said in rather a scornful tone, ‘it means just what I choose it to mean — neither more nor less.’
’The question is,’ said Alice, ‘whether you can make words mean so many different things.’
’The question is,’ said Humpty Dumpty, ‘which is to be master — that’s all.”

―Lewis Carroll, Alice Through the Looking Glass

Privacy is not dead; it is enjoying a revival. Governments know this. That’s why they choke off discussion by claiming privacy no longer exists. Nothing to see here, folks. Move along. Believing authorities means allowing your identity to be nationalized and accepting your fate as a number to be ranked by bureaucrats.

Or you can take the EXIT.

[To be continued next week.]

Reprints of this article should credit bitcoin.com and include a link back to the original links to all previous chapters


Wendy McElroy has agreed to ”live-publish” her new book The Satoshi Revolution exclusively with Bitcoin.com. Every Saturday you’ll find another installment in a series of posts planned to conclude after about 18 months. Altogether they’ll make up her new book ”The Satoshi Revolution”. Read it here first.

The post Wendy McElroy: Do Not Passively Nationalize Your Privacy appeared first on Bitcoin News.

Wendy McElroy: How Centralized Exchanges Intend to Devastate You

How Centralized Exchanges Intend to Devastate You

The Satoshi Revolution: A Revolution of Rising Expectations
Section 2: The Moral Imperative of Privacy
Chapter 6: Privacy is a Prerequisite for Human Rights

How Centralized Exchanges Intend to Devastate You. Chapter 6, Part 6.

The root problem with conventional currency is all the trust that’s required to make it work…We have to trust them [third parties] with our privacy, trust them not to let identity thieves [including government] drain our accounts.
Satoshi Nakamoto

Satoshi never envisioned centralized exchanges. The spectacle would have appalled him. Bitcoin was forged to avoid centralized third parties, such as banks and centralized exchanges, that require users to trust them with wealth and privacy. Peer-to-peer transfers based on cryptographic proof were supposed to replace the need for a middleman who demanded trust. They were designed to give financial power back to the individual.

The problem: there is a market demand to speculate, to trade in currencies, and to perform sophisticated financial transactions for which peer-to-peer (as it currently exists) can be ill-equipped. There is also a demand for convenience and access that does not require technical knowledge or effort. Centralized exchanges may be the polar opposite of what Satoshi envisioned, but centralized exchanges fill a niche, or else they would not be popular. They currently dominate much of the crypto world, with a majority of users entrusting exchanges with their wealth and privacy.

The niche of centralized exchanges comes from blending the functions of a stock market and a bank. A centralized exchange is a marketplace for trading or converting assets through a single location or service. In many ways, it is similar to the New York Stock Exchange. Currencies can be traded and shorted, for example; margin trading, stop loss, and lending are also available. Satoshi did not address the stock-market functions of crypto, which he probably did not foresee. In fairness, Satoshi explicitly referred to Bitcoin as a developing and evolving technology, which was in its infancy.

In other ways, centralized exchanges resemble banks. After purchasing crypto from an exchange, many customers choose to leave their coins in an account rather than transfer them to a private wallet on their own hard drive. The reasons vary: convenience, the comforting similarity to a bank, the ease of converting to fiat, quick trading, and discomfort with the technology required to set up a private wallet. Whatever the reason, centralized exchanges become trusted third parties that endanger the wealth and well-being of individuals. Consider one aspect of the problem. Private keys are the crypto. The coins have no physical presence, only algorithmic ones. When an exchange controls the keys, it owns the coins; the customer has nothing more than a promise of access to them upon demand.

Reality often breaks promises. Hackers use software vulnerabilities and human error to loot accounts that are advertised as secure. High volume causes downtime, during which traders lose opportunities and prices can plummet. Then, there are calculated denials of access. Outstanding orders may be canceled, especially if rates disadvantage the exchange; withdrawals and deposits can be halted without notice; exchanges vanish, along with accounts; owners commit fraud or steal from accounts. This returns people to the pre-Bitcoin days, in which trust and betrayal are defining factors of wealth management.

Recently, the risks associated with centralized exchanges have increased exponentially, and for one reason.

A Forbes article (Feb. 28, 2018) announced the inevitable.

“It’s finally happening: The much-ballyhooed turnover of documents in the battle between the Internal Revenue Service (IRS) and Coinbase, a company which facilitates transactions of digital currencies like Bitcoin and Ethereum, is moving ahead. Coinbase has announced that it has notified affected customers that it will comply with a court order regarding the release of specific data.”

2018 is the year in which tax agencies get serious about cryptocurrency profits and holdings. Governments around the world are watching as Coinbase turns in data on its customers, which will almost certainly lead to audits and high-profile prosecutions. Specifically, Coinbase is reporting all customers with transactions of $20,000 or more in a single year between 2013 and 2015. Taxpayer IDs, real names, dates of birth, street addresses, and all transaction records from whichever period is in question will be delivered. The wealth of data is available because Coinbase, like every other licensed centralized exchange, complies with Know Your Customer and Anti-Money Laundering laws, which destroy financial privacy.

Beyond such requirements, Coinbase is extremely aggressive about gathering information and verifying identities. The exchange uses facial-recognition technology, for example, to compare a real-time face shot from a webcam or smart phone with whatever ID an applicant submits. Coinbase UK adds, “we may collect personal information disclosed by you on our message boards, chat features, blogs and our other services to which you are able to post information and materials.”

Expect such intrusion to become the norm for centralized exchanges that prize their licenses and relationships with government. Expect them to act as data-gathering arms of government. The danger is not only the freezing and confiscation of accounts, but also legal proceedings against and imprisonment of account holders. The IRS states that “anyone convicted of tax evasion is subject to a prison term of up to five years and a fine of up to $250,000. Anyone convicted of filing a false return is subject to a prison term of up to three years and a fine of up to $250,000.”

Fortunately, the market demand for stock market and banking functions can be satisfied (or soon will be) without sacrificing the privacy and safety.

Decentralize for Privacy

A decentralized exchange is a marketplace that does not rely on third party services. Trades are peer-to-peer; they are direct transfers between people who use an automated process to facilitate the exchange. They are trustless. They are transparent, with software and transactions being open source. They are Satoshi. A decentralized exchange allows individuals to hold their own private keys, which makes it a less attractive target for hackers. It also requires a minimal amount of personal or financial data to establish an account and to conduct commerce. Often, only an email address is requested, and it can be one that is generated specifically to register, with no connection to a real identity, to a True Name.

Decentralized exchanges employ a wide variety of strategies to facilitate peer-to-peer transfers. Some create proxy tokens; others employ a multi-signature escrow. Peer-to-peer banking uses an auction-type dynamic to facilitate loans between members of a specific amount and at an agreed-upon rate. Smart contracts can assume the traditional functions of banks. Technology Review (Dec. 7, 2017) explained,

“Switching back and forth between fiat money and cryptocurrency will require a traditional point of exchange for the foreseeable future. But some technologists say an alternative model for trading cryptocurrencies that would give people more control over their wealth is possible. It’s meta: exchanges can be decentralized, they say, using a blockchain. The idea hinges specifically on so-called smart contracts, software code that can be stored in a blockchain and set up to programmatically govern transactions. Imagine, for example, you want to send your friend some cryptocurrency automatically at a specific date and time. You could use a smart contract to do that.”

The point here is not to advocate a particular decentralizing strategy. It is to offer a sense of the rich and evolving alternatives to centralized exchanges.

Many people will still choose a centralized exchange because the platforms are easy to access and use; they are sanctioned by government; and they offer familiar, advanced functions of a stock market. For those who prize privacy, however, this is a poor choice. An analogy illustrates the stark difference in how privacy fares under a decentralized and a centralized system.

The Cautionary Tale of Social Media

’Want To Freak Yourself Out?’ Here Is All The Personal Data That Facebook/Google Collect.” That was a headline in Zero Hedge on March 28, 2018. The types of data collected are too extensive to enumerate. An indication: Android cellphone users who downloaded specific Facebook apps have had data on their personal calls logged by Facebook, sometimes for years.

A relatively undiscussed cause of social media’s privacy hemorrhage, along with its abridgment of free speech, is the centralization of information and discussion that accompany corporate behemoths, like Facebook and Google. An intriguing article in The Federalist (March 28, 2018) asked, “Was Social Media A Mistake?” The author, Robert Tracinski, harkened back to the 2000s-the golden age of blogs, when everyone and their grandmothers expressed themselves through blogging.

Tracinski wrote, “It felt like liberation. The era of blogging offered the promise of a decentralized media. Anybody could publish and comment on the news and find an audience. …We were bypassing the old media gatekeepers. And we had control over it! We posted on our own sites. We had good discussions in our own comment fields, which we moderated.” It was a whirlwind of free speech, but it was also a bastion of privacy because individuals retained control.

Then social media arrived like a juggernaut, and the mom-and-pop blogs migrated their insights and information to Facebook, Google, Twitter and other trusted third parties. Like centralized exchanges, the social media giants were relatively easy to access and use; they offered sophisticated software and functions that individual bloggers lacked the technical knowledge or money to implement; social media also slid seamlessly onto cell phones via apps that seemed to open up the world.

Tracinski noted the result. “A few of the best and most interesting blogs became full-fledged online publications, but a lot of the small, quirky, one-person amateur bloggers moved onto social media. That turned out to be a big mistake, because the era of social media has recentralized the media. Instead of a million blogs—what Glenn Reynolds of Instapundit fame called an “Army of Davids” — we now have a social media economy mostly controlled by three big companies: Twitter, Facebook, and Google.”

Lately, the price tag of centralizing insights and information has become apparent. The left-leaning politics of social media meant they purged (suspended) or punished (throttled) the “wrong” views; this is akin to banks and other financial institutions refusing to deal with porn, pot, or gun industries due to political pressure from government. “The old media gatekeepers” were replaced by the equally intrusive Silicon Valley Puritans. Although both are preferable to direct government intervention, their quasi-monopolies are bolstered by tax privileges, by favorable regulation, and, sometimes, by direct tax funding. Individuals lost control. Perhaps it is more accurate to say they relinquished it.

Nowhere is this more apparent than with personal data. In return for offering convenience, all social media wanted was to know and to market every detail of customers’ lives. The role of centralization in this rape of privacy should not be ignored. It was key to the effectiveness. This is equally true of the centralization of financial data-only with an important difference. The destination of the financial information is a government file, especially a tax one. Social media cooperates with government, to be sure, but its ultimate purpose was and is making a profit.

Conclusion

Privacy is a front-line defense of individual freedom and well-being. Decentralization is the social condition under which privacy thrives. No one can or should tell individuals which strategy to use. But, if you value privacy and safety, decentralize.

[To be continued next week.]

Reprints of this article should credit bitcoin.com and include a link back to the original links to all previous chapters


Wendy McElroy has agreed to ”live-publish” her new book The Satoshi Revolution exclusively with Bitcoin.com. Every Saturday you’ll find another installment in a series of posts planned to conclude after about 18 months. Altogether they’ll make up her new book ”The Satoshi Revolution”. Read it here first.

The post Wendy McElroy: How Centralized Exchanges Intend to Devastate You appeared first on Bitcoin News.

Wendy McElroy: The Satoshi Approach to Privacy

The Satoshi Approach to Privacy

The Satoshi Revolution: A Revolution of Rising Expectations
Section 2: The Moral Imperative of Privacy
Chapter 6: Privacy is a Prerequisite for Human Rights

The Satoshi Approach to Privacy. (Chapter 6, Segment 5)

The traditional banking model achieves a level of privacy by limiting access to information to the parties involved and the trusted third party. The necessity to announce all transactions publicly [the blockchain] precludes this method, but privacy can still be maintained by breaking the flow of information in another place: by keeping public keys anonymous. The public can see that someone is sending an amount to someone else, but without information linking the transaction to anyone. This is similar to the level of information released by stock exchanges, where the time and size of individual trades, the “tape”, is made public, but without telling who the parties were.

Satoshi Nakamoto

The Case For Privacy” is an excellent essay by the Austrian economist and legal scholar David D. Friedman. It opens: “An old science fiction novel features a device that surrounds its bearer with an impenetrable bubble of force.” The novel is Shield (1963) by Poul Anderson. It presents a dystopian world in which a neoconservative, militaristic, and repressive United States dominates the globe, with the exception of China.

Then a game changer occurs. An idealistic astronaut, Peter Koskinen, returns from Mars, with a new technology that has been developed in tandem with indigenous Martians. A portable force field protects the wearer from almost every attack, but it allows light to penetrate freely. It is the ultimate defensive device for individuals. Koskinen wrestles with himself about which political faction to gift with the force field. After a murder attempt, he realizes that no one should have a monopoly on the technology. Friedman sketched Koskinen’s solution. “He writes out an explanation of how the shield works and spends two days distributing the information to people all over the world. By the time Military Security-the most formidable of his pursuers-catches up with him, it is too late. The cat is out of the bag.”

Friedman’s brilliance is to draw an immediate parallel between the force field and privacy. Anderson’s brilliance was to foreshadow Satoshi’s strategy regarding release of the blockchain.

Satoshi’s Solution to the Privacy Problem

The transparency of online communication, according to some, is the death knell of privacy because unwanted others can easily eavesdrop. The government is the biggest snoop of all, of course, especially when it comes to the most demonized personal information of all–financial data.

With apologies to Mark Twain, reports of privacy’s death have been greatly exaggerated. With the possible exception of science designed for global warfare, technology always benefits individuals as much as or more than it benefits government. Digital technology has enhanced the individual’s ability to control his own life, including the flow of information and how to protect sensitive data that could be used against him.

Privacy is stepping into new territory. This is predictable. The concept of privacy exists only because of social relationships, only because people connect with others. Dangers are hidden among the vast advantages of participating in society. One of the dangers is that government or other criminals will use information to harm the person or property of participants. Social interaction has shifted dramatically due to online communication, and it would be amazing if privacy had not done the same.

There is no one path to privacy. The strategies employed depend on variables such as an individual’s personality and the circumstances. But the Satoshi approach should be considered seriously, if not preferred. For Satoshi, the transparency of the blockchain was not only salutary but it also allowed for genuine privacy—a privacy that rested on keeping the public key anonymous and never linking it to a true identity. In other words, protecting a True Name was the privacy. And the first line of protection for a True Name was the use of anonymity, pseudonymity, or polynymity (multiple personas). Past that point, there were and are constantly evolving tools to separate an identity from a transaction, without compromising the transparency of the latter.

Why is transparency salutary? A visible timeline and a public ledger promotes confidence in the honesty of transactions; it provides an immutable reference to arbitrate disputes. But the main reason to value transparency is also the reason it was built into the blockchain to begin with. An open ledger solves the problem of double spending and fraud. Double spending refers to paying for more than one transaction with the same coin, often by using the same coin in rapid succession for different transactions. “Bitcoin Whitepaper: A Beginner’s Guide” observed,

A timeline and public history of all transactions prevents double-spending because later transactions would be considered an invalid, or perhaps fraudulent, payment from the same coin. Each coin has a unique timestamp and the earlier transaction would be accepted as the legitimate payment. One coin, one payment…Here we see the emerging structure of the blockchain. The timestamps are key to preventing double-spending and fraud. It’d be virtually impossible to send duplicate coins because each coin contains different, chronologically-ordered timestamps.

That’s the main advantage of transparency, just as the main advantage of the properly-administered public key is privacy, especially in the face of government. Friedman commented:

Privacy includes the ability to keep things secret from the government….I might be keeping secret my weakness for alcohol, or heroin, or gambling or pornography and so preventing the government from stepping in to protect me from myself….If you view government as a benevolent super being watching over you-a wise and kindly uncle with a long white beard-you will and should reject much of what I am saying. But government is not Uncle Sam or a philosopher king. Government is a set of institutions through which human beings act for human purposes. Its special feature-what differentiates political action from the other ways in which we try to get what we want-is that government is permitted to use force to make people do things.

The human purposes served through government institutions include power-seeking, greed, status, and the imposition of moralistic rules. Crypto users have reason to be particularly private. A recent news story declared, “NSA Has Been Tracking Bitcoin Users Since 2013, New Snowden Documents Reveal.”

An abundance of caution is not paranoia. It is never paranoia when they actually are out to get you.

Data Evolves as a Weapon of Oppression

Governments are developing new ways of using databases to repress average people. A headline in Reuters (March 16, 2018) read, “China to bar people with bad ‘social credit’ from planes, trains.”

Social credit (xinyong) is a long-standing moral concept within the Chinese tradition, which indicates the level of a person’s honesty and trustworthiness. The Chinese government now extends the moral concept to include loyalty to the state and social honesty; it proceeds to assign an official rank to each person. Then, social control is imposed on those with low scores by denying them privileges, such as traveling by plane or train. Other social-credit offenses include using expired tickets to board a train or smoking while on it, buying “too much” alcohol, watching porn, returning a rented bike in a tardy manner, “not showing up to a restaurant without having cancelled the reservation, cheating in online games, leaving false product reviews, and jaywalking.”

The trivial offenses may seem puzzling or even funny. But they serve an important and frightening purpose. The Chinese government is able to isolate anyone it wishes by barring them from travel. The trivial offenses hand the government a blank check.

Social credit is not a uniquely Chinese phenomenon. Governments around the world impose their own forms of it on citizens and foreigners alike. In the U.S., passports are denied to those who are sufficiently behind in child support or tax payments; former felons find it difficult to travel abroad. Foreigners who tell a U.S. border guard that they have smoked marijuana, whether the occasion was legal or not, will be refused entry. Global News, a Canadian outlet, explained, “they’re…told to go back to Canada, and told they are inadmissible for life. This is a lifetime ban.”

In the UK, three activists were recently denied entry, allegedly due to their anti-Islamic views.

Increasingly, social credit is used to deny basic rights to “low scorers,” with the ability to travel being only one example. Government’s voracious appetite for data is growing. For example, the 2,232-page ‘‘Consolidated Appropriations Act, 2018,’’ which is now before the US Congress, contains many “poisoned riders.” On page 2201, there is the Cloud Act, which allows police access to online data without a warrant. Such access happens now in a covert manner, but the bill allows visible and aggressive intrusions as standard and sanctioned procedure. It means the data would be admissible in court.

Many of the reasons used to deny basic rights are financial, such as back taxes, back child support, expired train tickets, unpaid debts, or such “incorrect” purchases as porn and alcohol. No wonder people want to cloak their online financial transactions. Shielding the transactions themselves can be difficult or impossible, however. Once information is released to the wind of the Internet, it becomes vulnerable. Even encrypted data can be broken open, and encryption  draws the suspicion of law enforcement whenever it is used. Various projects are in progress to cloak transactions in an effective manner. They should be applauded as another privacy option, but it is far from clear that they will succeed.

It is far more practical to cloak privacy at the source of the transactions, to break the connection between a True Name and an exchange, however transparent the latter may be. The participant has much more control over his public key than he has over transmitted financial data.

Conclusion: Choose Your Privacy Strategies Wisely

People should choose the approach to privacy with which they are comfortable, and their approach will hinge on circumstances.

A key circumstance: all information is not equal; some information is more equal than others. Everyone has at least three kinds of personal data, each of which demands different treatment. First, there are facts that people want to broadcast widely, such as a new novel or an employment resume. This data requires the opposite of privacy: marketing. Second, there are facts that are harmless to disclose, such as a favorite color or a preference in potato chips. The disclosure may draw unwanted solicitations, but these are minor annoyances that do not jeopardize rights. Third, there are facts that can be vectors of oppression, such as financial data. They can be used to harm people’s rights, wealth, and well-being.

Each type of information may require a different privacy strategy, including the strategy of doing nothing at all. Whenever privacy needs to be shielded, however, the Satoshi solution should be seriously considered.

[To be continued next week.]

Reprints of this article should credit bitcoin.com and include a link back to the original links to all previous chapters


Wendy McElroy has agreed to ”live-publish” her new book The Satoshi Revolution exclusively with Bitcoin.com. Every Saturday you’ll find another installment in a series of posts planned to conclude after about 18 months. Altogether they’ll make up her new book ”The Satoshi Revolution”. Read it here first.

The post Wendy McElroy: The Satoshi Approach to Privacy appeared first on Bitcoin News.

Wendy McElroy: Privacy Is the Virtue That Sparked the American Revolution

Privacy Is the Virtue That Sparked the American Revolution

The Satoshi Revolution: A Revolution of Rising Expectations.
Section 2: The Moral Imperative of Privacy
Chapter 6: Privacy is a Prerequisite of Human Rights

Privacy is the Virtue that Sparked the American Revolution, Chapter 6, Segment 2

A general dissolution of principles and manners will more surely overthrow the liberties of America than the whole force of the common enemy. While the people are virtuous they cannot be subdued; but when once they lose their virtue then will be ready to surrender their liberties to the first external or internal invader.

— Samuel Adams

Many people are under attack from an internal invader: their government. Fortunately, history reveals a powerful weapon against the invasion.

Privacy is the revolutionary virtue that caused American colonists to slam the door in the face of British officials, both literally and figuratively. The Third Amendment of the U.S. Constitution prohibits the then-widespread practice of quartering soldiers in private homes, even during peace time, without the consent of owners. The Amendment sounds antiquated to modern ears. But correction of this travesty’s violation of privacy and property was important enough for revolutionaries to rank third in the list of liberties declared by the Bill of Rights. It follows the First Amendment (freedom of speech and religion) and the Second Amendment (the right to bear arms.)

Why? Because the Third Amendment asserted the right of domestic privacy against government intrusion into the most personal of realms – the home. It is the only language in the Constitution that addresses the relationship of the individual to the military, in both war and peace, and it gives priority to the individual. As outmoded as the Amendment may seem, it takes no great leap to apply its underlying principle to the current wars conducted by militarized law enforcement against terrorism and on “treasonous” crimes, such as money laundering. The individual comes first.

The Fourth Amendment also champions privacy. It opens by defending “[t]he right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures.” In terms of crypto-privacy, the important word is “papers.” The reference can be easily extrapolated into the 21st century to cover emails and other computer data. Moreover, the disparate history of how the law has treated “papers” and “effects” reiterates the message of the Third Amendment. When it comes to “papers,” individual privacy prevails. That is, it has until recently.

The Fifth Amendment also asserts the right to privacy by delineating the right of an individual not to bear “witness against himself” in criminal cases.

Fifty-six colonists signed the Declaration of Independence. They knew it was an act of treason, which was punishable by death. If the revolution failed, they would lose their lives, their fortunes, and endanger their families. Even when it succeeded, some paid a terrible price. “Five signers were captured by the British and brutally tortured as traitors. Nine fought in the War for Independence and died from wounds or from hardships they suffered. Two lost their sons in the Continental Army. Another two had sons captured. At least a dozen of the fifty-six had their homes pillaged and burned.” That’s how important the signatories–now called Founding Fathers–viewed the principles of the revolution, including the virtue of privacy.

Privacy was a revolutionary virtue worth dying for.

[Note: this discussion focuses on the U.S., but the principles expressed easily cross national borders and cultures. Also, I do not whitewash the many abuses of the American Revolution; I do not dispute that Loyalists were also colonists; I mean merely to highlight the pivotal role of privacy in the Revolution’s dynamic.]

What a Difference a Word Makes

When government confiscates or surveils smart phones and computers, the purpose is to snatch private information from those devices. In 18th-century parlance, the government seizes your “papers.” Compliant citizens obediently surrender the information on those devices; some even defend the intrusion on the grounds of “security.” Such people have every right to do so; it is their personal information to share or not. But they have no right whatsoever to require anyone else to comply with invasive laws and bureaucrats; they are morally wrong to demonize those who choose not to share. Yet those who say “no” to the gang rape of their privacy are literally treated as criminals.

Happily, history exists. Its invaluable lesson: things were not always this way, and it does not have to be this way now.

The world is experiencing what has been called a “technological crisis in modern legal doctrine.” Namely, the old rules do not always fit the new situation.  Physical-evidence rules do not cleanly apply to digital evidence, and inconsistent rulings by the courts on cryptocurrency further confuse the situation. No one definitively knows the legal status of your crypto-wallet or your private keys. A solution to the growing legal mess may lie in a word within the Constitution, upon which few people remark — “papers.”

Listen to history.

Again, the Fourth Amendment states, “The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.”

Aspects of the Amendment are clear. The government assumes the burden of proof before it can legally violate an individual’s privacy and property, for example. One aspect is commonly overlooked, however. It is the deliberate distinction between “papers” and “effects,” between personal information/expression and personal goods. The common law, upon which Western jurisprudence is based, has traditionally granted far greater protection to “papers.”

Law professor Donald A. Dripps opens his pioneering 2013 essay, “Dearest Property”: Digital Evidence and the History of Private “Papers” as Special Objects of Search and Seizure , with two  questions. “Why does the Fourth Amendment distinctly refer to ‘papers’ prior to ‘effects’? Why should we care?”

Dripps asks because he wishes “to ground special Fourth Amendment rules for digital evidence” within statute law in order to protect “the volume of innocent and intimate information that must be exposed [or demanded] before the criminal material is discovered.” Fortunately, a path forward can be found in the past. In the 1760s, the American colonies reflected “a great controversy over general warrants, libels, and seizure of papers that erupted in England.” The controversy resulted in a complex analysis of privacy.

Returning to the Revolutionary Role of “Papers” in America’s Birth

In 1761, the lawyer James Otis Jr. represented several dozen colonial merchants before the Massachusetts Superior Court. The case challenged the Writs of Assistance used by customs officials. The hated Writs were indiscriminate search and seizure warrants that instructed all local law enforcement to assist customs officials in searching private property for contraband or smuggled goods. The warrants expired only upon the death of the issuing authority, and they were often transferrable.

Otis took the case pro bono. Before a packed crowd, he rose in the Massachussetts State Court House to denounce King George III, the British parliament, and the entire English nation for oppressing American colonists. An impressionable young man in the audience was galvanized by Otis’ five-hour oration and by its passionate message. According to future President John Adams, Otis’ courtroom performance sparked the American Revolution:

“Otis was a flame of Fire!….American Independance was then and there born…. Every man of [the]…crowded Audience appeared to me to go away, as I did, ready to take up Arms against Writts of Assistants [sic]. Then and there was the first scene of the first Act of Opposition to the arbitrary Claims of Great Britain. Then and there the child Independance [SIC] was born. In fifteen years, i.e. in 1776, he grew up  to manhood, declared himself free.”

But colonial politics did not focus upon “papers”–letters, diaries, business records–which were not taxable items under customs law. English politics did.

In the 1760s, warrants for “papers” began to issue in Britain against authors and publishers who were suspected of “libel”–that is, sedition. Entick v. Carrington (1765) was, perhaps, the most influential legal case of the day. The presiding judge, Lord Camden, offered the famous dictim: “If it is law, it will be found in our books. If it is not to be found there, it is not law.” The government’s “right” to seize papers was not in the statutes. Therefore, it was not law.

The bare facts of the case: John Entick was the publisher of a paper that vigorously opposed the Crown. In 1762, the King’s Chief Messenger, Nathan Carrington, and three other officers broke into Entick’s home. They stole hundreds of papers in a search for evidence of sedition. Entick sued. Entick won.

Subsequent analysis of the Entick case revealed four aspects of the government’s action to be legally obnoxious. The warrant was indiscriminate, both in terms of the premises to be searched and the papers to be seized; the seizure expropriated the papers and denied use of them to the plaintiff; the warrant was unregulated because there was no neutral oversight or avenue of appeal; the seizure was inquisitorial because it gave the government information about the private workings of Entick’s mind. The latter point had special weight. Serjeant Glynn, counsel for Entick, declared: “[N]o power can lawfully break into a man’s house and study to search for evidence against him; this would be worse than the Spanish inquisition; for ransacking a man’s secret drawers and boxes to come at evidence against him, is like racking his body to come at his secret thoughts.”

American colonists paid close attention to Entick and to similar lawsuits in Britian. Penning the Fourth Amendment was not far behind.

“Papers” Versus “Effects” Plays Out in Law

Dripps explains, “Although the reception of English law in the newly independent American states was not automatic or uniform, a basic pattern emerged. The Americans adopted the English common law together with statutes in force at the time of Independence, unless the English rule conflicted with a natural right or a state constitution’s declaration of rights.” In short, any judge who considered issuing a warrant for papers ran up against the previously quoted principle of Entick‘s presiding judge; if it wasn’t in the statute books, it didn’t exist under law. Moreover, warrants on “papers” ran afoul of an increasing number of state constitutions.

Dripps continues, “America inherited the common law ban on searches for papers, adopted constitutional provisions that mentioned papers distinctly, and refused to modify the common law ban by statute until the Civil War.” The Civil War cost money, and the excise tax became the federal government’s major source of funding; tax evasion ran rampant. A unique statute was passed. An  opinion in the ensuing Boyd v. United States lawsuit stated, “[This] act of 1863 was the first act in this country, and we might say, either in this country or in England, so far as we have been able to ascertain, which authorized the search and seizure of a man’s private papers, or the compulsory production of them, for the purpose of using them in evidence against him in a criminal case, or in a proceeding to enforce the forfeiture of his property.” Seizure of “papers,” or compelled discovery, was now embedded in statute law.  Apparently, war was not the proper time to debate Constitutional protections.

The issue of “papers” versus “effects” legally zigzagged since the end of the Civil War. Arguably, the most important zig came in 1886, when Boyd was decided by the United States Supreme Court. “The story of the Boyd case,” Drips writes, “properly begins with a statute authorizing customs officers to seize the books and papers of importers suspected of evading taxes.”

Fast forward to an incident at the Port of New York. Customs officials seized 35 cases of plate glass for non-payment of import tax. The government required E.A. Boyd & Sons to produce the relevant invoice in order to fortify its case against the company. Boyd did so under protest, saying the involuntary disclosure was a form of self-incrimination that was prohibited by the Constitution; it also constituted unreasonable search and seizure. In short, the violation of “papers” denied due process. When a lower court backed the government, the case went to the Supreme Court.

The Supreme Court ruled in Boyd’s favor. It stated:

“The principles laid down in this opinion affect the very essence of constitutional liberty and security. They reach farther than the concrete form of the case then before the court…; they apply to all invasions on the part of the government and its employees of the sanctity of a man’s home and the privacies of life. It is not the breaking of his doors and the rummaging of his drawers that constitutes the essence of the offense; but it is the invasion of his indefeasible right of personal security, personal liberty, and private property, where that right has never been forfeited by his conviction of some public offense, it is the invasion of this sacred right which underlies and constitutes the essence of Lord Camden’s  judgment.”

The Boyd ruling reinstated greater Constitutional protection to “papers” than to “effects.” It also bears directly upon digital “papers” or information. The protection was never absolute, however, and it has been severely eroded in the last several decades.  Dripps explains, “[D]uring the last quarter of the twentieth century, the Supreme Court began effectively to equate ‘papers’ and ‘effects’. Another line of modern cases established ‘bright-line rules’ that  gave the same constitutional treatment to all ‘effects’.” In short, “papers” not only lost their special status under common and Constitutional law, they also became legally interchangeable with every other “effects.” Nevertheless, the precedent of Boyd prevailed for almost a century, and it is not toothless now.

Conclusion

Digital information was born into a new age of inquisition, in which privacy is viewed as guilt. Dripps observes, “Today, federal agents may obtain warrants to seize and carry away entire troves of digitally stored private papers and peruse those files at remote locations, one by one….[What] the common law condemned as a relic of the Star Chamber, and what no American legislature authorized for the first eighty years of Independence, has become standard law enforcement procedure.” Extracting private information used to require torture or other flexing of muscle. Today, the violation is so politically sanitized that it can be invisible and easy to ignore.

Don’t.

It has not always been this way, and it does not have to be this way.

Government wants people to believe that privacy is the antechamber of crime, a refuge for miscreants, and a danger to the innocent. The opposite is true. Privacy is a virtue upon which due process, freedom, and personal lives are built. Privacy is at the core of what it means to be human, because the essence of privacy is the individual mind as it assesses and experiences life.

The surest protection of privacy is to do exactly what government fears. Assert it; celebrate it; understand its pivotal importance to freedom. Do not respond to the spine-chilling demand — “Your papers!”

[To be continued next week.]

Reprints of this article should credit bitcoin.com and include a link back to the original links to all previous chapters


Wendy McElroy has agreed to ”live-publish” her new book The Satoshi Revolution exclusively with Bitcoin.com. Every Saturday you’ll find another installment in a series of posts planned to conclude after about 18 months. Altogether they’ll make up her new book ”The Satoshi Revolution”. Read it here first.

The post Wendy McElroy: Privacy Is the Virtue That Sparked the American Revolution appeared first on Bitcoin News.

Wendy McElroy: Privacy Prevents Violence and Crime

(Crypto) Privacy Prevents Violence and Crime

The Satoshi Revolution: A Revolution of Rising Expectations.
Section 2 : The Moral Imperative of Privacy
Chapter 6: Privacy is a Prerequisite of Human Rights
by Wendy McElroy

(Crypto) Privacy Prevents Violence and Crime (Chapter 6, Segment 1)

Unlike the communities traditionally associated with the word “anarchy”, in a crypto-anarchy the government is not temporarily destroyed but permanently forbidden and permanently unnecessary. It’s a community where the threat of violence is impotent because violence is impossible, and violence is impossible because its participants cannot be linked to their true names or physical locations.

Wei Dai

A February 6, 2018 headline in Reason magazine warned, “Governments Hate Bitcoin and Cash for the Same Reason: They Protect People’s Privacy.” The ensuing article spun off a quote from U.S. Treasury Secretary, Steve Mnuchin, “One of the things we will be working very closely with the G-20 on is making sure that this doesn’t become the Swiss numbered bank accounts.” Mnuchin rejects decentralized crypto as payment, investment, or savings systems because it cannot be easily tracked by government.

Privacy is the battleground upon which cryptocurrency will ultimately rise or fall.  The engine of crypto, the blockchain, is founded on the premise of anonymity or pseudonymity. The blockchain was specifically designed to obsolete “trusted third parties,” such as central banks, which act as data-collection centers for government.

Wei Dai and Mnuchin may seem to be polar opposites on privacy, but they are saying much the same thing, although their conclusions are antithetical. Privacy prevents violence.

For Wei Dai, this is a good thing. Privacy is overwhelmingly positive for individuals because it empowers and protects them against government. Privacy can cloak genuine acts of violence or fraud, of course, just as free speech can promote lies; every tool can be a weapon. More often than not, however, the violence prevented is wielded by government against those who flaunt authority: tax evaders, dissenters, regulation breakers, gray or black marketeers, drug dealers and users. Government punishes scofflaws, whether or not the laws are just or despite the fact that participants consented. To cryptoanarchists, like Wei Dai, no crime has occurred unless a person is injured or property is damaged. The violence occurs when a third party forcibly intervenes between consenting adults or people minding their own business.

For Mnuchin, privacy’s role in preventing violence is a bad thing because he administers government coercion against peaceful individuals. Of course, he does not call it violence; he calls it law enforcement. That doesn’t change the fact that government agents are pointing guns at peaceful scofflaws, not at the behest of any participant, but over their objections.

Otherwise stated: Wei Dai praises privacy for promoting a society of “anything that’s peaceful.” Mnuchin excoriates privacy for the same reason.

The ongoing crack-down on privacy is legitimized to the public by the faux claim that only criminals want “concealment.” (The Satoshi Revolution debunks this claim in the segment entitled “What Do You Have to Hide? Everything!”

Defenders of privacy usually give weak-tea arguments. Instead, they should straighten their spines, stand tall, and argue from high ground. The high ground: privacy and human rights are, and always have been, intimately connected concepts that enable individual freedom. Government wants people to abandon privacy because they would be abandoning a powerful threat to its authority.

Privacy, qua privacy, is so essential to human rights that it is indistinguishable from them.

The History of Privacy and Rights

(Here, privacy means “an individual’s right to control unrevealed personal data.” If someone voluntarily fills out a government form or otherwise broadcasts personal information, then he loses the right and the power to control its future distribution. But unrevealed data can be externally demanded only through violence; people can be coerced into revealing the contents of their mind; homes can be ransacked and computers can be hacked. Crypto-privacy, as epitomized by private keys, is unrevealed information, after which the government hungers.)

History can be viewed as a long social and intellectual experiment.

Pretend you are God. You perch attentively above the time-space continuum in order to watch the flow and impact of concepts upon human development through the centuries. The American Revolution feeds into and inspires the French one. The British Empire begins in the 16th century as Britain establishes its first colonies that, in turn, encourage mercantilism; after World War II, what remains of the Empire collapses in the face of independence movements based on an anti-colonialism that favors communism. From the mid-16th century, the British drove the Transatlantic Slave Trade until confronted by anti-slavery voices that said “every human being is a self-owner.” History is a laboratory in which the social and political affect of concepts can be charted, including the effect of privacy. Admittedly, the results are not as measurable as those produced by science, but broad outlines and conclusions are clear.

Arguing from history provides powerful advantages. To those who value facts, concrete examples can be compelling and persuasive. Moreover, drawing on history allows the cryptocurrency community to correct a fatal mistake; namely, it is defensive about privacy, when it should be on the offense because crypto stands on the moral high ground.

Financial independence is not the place to begin to demonstrate the link between privacy and human rights because anything to do with money arouses immediate cynicism. Money produced by work and through merit is the root of all good; it feeds families, fuels invention, and raises prosperity for all. Wealth from honest effort is to be celebrated, emulated, and protected from looters.

But money has been demonized as “the root of all evil” by those who never seem reluctant to accept it as donations, payment, taxes, or other forms of theft. The pervasiveness of plunder is a testament to the incredible power of wealth. But  plunder must be justified, or else it will be seen to be the outright money-grab it is. Thus, money and anyone who resists the theft of it are demonized as criminals or otherwise morally corrupt.

A better place to begin to link privacy and human rights is freedom of religion and due process. A pivotal insurrection in the 16th century defined the evolution of both within Western society. It revolved around a person’s right to keep his religious beliefs private so they could not be used against him in a court of law. A current version of this right is called “taking the fifth” — invoking the due process right against self-incrimination. Although this mainstay of due process is often portrayed as the last legal recourse of a guilty man, the intended and overwhelming beneficiary is the man in the street who, whether he realizes it or not, is protected against the exercise of arbitrary power.

The insurrection has background. In 1534, Henry VIII denied papal authority and established the Church of England, which maintained most of the traditional Catholic rites. Thus Protestants, called dissenters, were often tried for heresy; torture commonly accompanied trial. In the late 1530s the Protestant John Lambert was burnt alive for heresy. During his trial Lambert became the first known Englishman to proclaim it was illegal under God and the common law to compel a man to accuse himself. He appealed to the privacy of conscience.

The right to not bear witness against oneself had precedent in common law, but it was not enforced in English courts until in the late sixteenth and early seventeenth century. Its roots are deep in the history of religious persecution. Courts of the day required a defendant to answer a barrage of questions based on evidence gleaned from witnesses or informants, without informing the accused of the charges being brought. The interrogation aimed at trapping a defendant into a confession. People were tried on mere suspicion and, if found guilty, they were required to name other heretics. Silence was deemed a confession.

In 1563, John Foxe published the immensely influential Book of Martyrs, which has been called a “libertarian primer” on procedural rights. He argued for the right to remain silent. The right to keep personal information private.

Famously, the Leveller and libertarian John Lilburne employed Foxe’s procedures in 1637, when he was brought before the Court of Star Chamber for circulating Puritan books. Rather than being charged, Lilburne was asked how he pled. Refusing to take the customary oath, he declined to answer questions that bore witness against himself. Lilburne was fined, whipped, pilloried, and sentenced to prison until he complied. While in prison he penned an account of his brutal treatment entitled The Work of the Beast. In 1641, when the much-hated Star Chamber was abolished and the right to remain silent established in religious courts, Lilburne was widely credited.

Puritans who escaped religious prosecution to the New World carried Lilburne’s ideals, even though various colonial courts used torture to elicit confessions and required defendants to testify against themselves. By the time the colonies were states, however, six had clauses in their Constitutions against self-incrimination, and several others verged on including them. The right of a defendant against physical compulsion to speak was established at the national level in the Bill of Rights’ Fifth Amendment: “No person … shall be compelled in any criminal case to be a witness against himself….”

The right against self-incrimination – the privacy of personal information —  lies at the core of due process. It is historically anchored in the quest for religious freedom. It served as the strongest single protection against the use of torture by state authorities.

Privacy Under Attack Means Rights Are Under Attack

The human right against self-incrimination is currently under concerted attack by those who pit it against “security” or other governement interests, such as preventing tax evasion. The shrill demand for encryption keys and private crypto keys are two examples of government’s onslaught against privacy.

Privacy – the right to shut your front door, the right to be silent — has been protected for so long that it is taken for granted. People forget; privacy was established by those willing to be tortured and killed rather than to surrender  intimate information to enemies. The great wrongs of past governments were corrected and prevented by the blood of stubborn dissenters. The great wrongs are destined to be repeated unless privacy, like wealth, is celebrated, not demonized.

[To be continued next week, with how privacy was a core concept of the American Revolution.]

Reprints of this article should credit bitcoin.com and include a link back to the original.


Wendy McElroy has agreed to ”live-publish” her new book The Satoshi Revolution exclusively with Bitcoin.com. Every Saturday you’ll find another installment in a series of posts planned to conclude after about 18 months. Altogether they’ll make up her new book ”The Satoshi Revolution”. Read it here first.

The post Wendy McElroy: Privacy Prevents Violence and Crime appeared first on Bitcoin News.

The Satoshi Revolution – Chapter 5: Privacy, Anonymity, and Pseudonymity (Part 1)

Privacy, Anonymity, and Pseudonymity

The Satoshi Revolution: A Revolution of Rising Expectations.
Section 2 : The Moral Imperative of Privacy
Chapter 5: Implementing Crypto Privacy
by Wendy McElroy

Privacy, Anonymity, and Pseudonymity (Chapter 5, Part 1)

It is often said that there is a tradeoff between privacy and security…. Security is defined as the state of being free from danger or threat. One threat is assault. How is one made free from assault by being assaulted at an airport?…. How is one made free from the threat of being harassed or charged with a crime by the State by the State’s knowing every move you make, every statement you make, and every financial transaction you make? I say that your security is going DOWN, not up. The State can fend off terrorists by the ordinary methods of policing if it had a mind to. It doesn’t. It prefers to expand into a totalitarian monster.
Mike Rozeff

Privacy will determine the future of cryptocurrencies. Will they continue to enhance individual freedom, or will they become a government tool of social control?

Privacy is a human need, which is why the battle over its control is so intense. Constant surveillance makes it difficult or impossible for individuals to forge intimate family and romantic bonds, to create, to vote their conscience, to sexually explore, to discover who they are politically and religiously, to experiment with drugs, or to dissent without danger. Personal privacy is also the greatest barrier to government power, which rests on government knowledge.

“Only criminals need to fear government surveillance” is a common response to the defense of privacy. But every peaceful person is a criminal with something to hide. Why? They have exceeded the speed limit, taken an illegal drug, smuggled cheap booze or cigarettes across a border, made “unauthorized” additions to a house, fibbed to a customs official, understated their income on a tax form, or violated one of the tens of thousands of other laws that criminalize harmless behavior. Government makes criminals of us all. As Ayn Rand explained, “The only power any government has is the power to crack down on criminals. Well, when there aren’t enough criminals, one makes them. One declares so many things to be a crime that it becomes impossible for men to live without breaking laws.” Thus, all individuals are under control.

The assault on privacy also harms society as a whole. Consider freedom of speech. I remember being in a restaurant when a relative went on a post-9/11 rant about how the U.S. was beginning to feel like Cuba, from which he escaped. His wife tried to silence him, declaring in an adamant whisper, “You can’t say those things in public.” She was nervous as she glanced around to see who could have heard. Surveillance and informants make people reluctant to express opinions that could be used against them in a legal or political manner. Property can be seized, families destroyed, and prison ensue. Why would anyone speak out if his children could lose a parent as a result?

The killing of free speech is one of many political repercussions of destroying privacy. Privacy is a key characteristic that distinguishes a totalitarian, Kafka-esque society from a free one. Can you shut your front door and be safe from invasion? Everyone agrees that criminals should not break through your locks and treat your body and possessions as their own. Why are government agents entitled to do the same thing? They are nothing more than the for-hire workers of an employer whose authority comes because enough people give the employer a thumbs up to invade and steal. They are criminals sanctioned by consensus.

Until recently, many incursions on privacy have been prevented for no other reason than they were difficult to enforce. And, then, technology arrived. Even with its notorious incompetence, government is now able to surveil as never before, and many people have grown afraid or complacent, as the mass frisking at airports proves.

The government assault on privacy benefits from a Big Lie: namely, privacy is now impossible because government surveillance is omnipotent, omniscient. Resistance is futile. Privacy is so last century. Balderdash. First of all, technology has always empowered the individual more than it has the government. Second, there is a world of difference between “difficult” and “impossible.” Privacy is  certainly more difficult in the 21st century, which only means it takes work. Individuals need to assert actively what they once could take for granted in order to end the ongoing rape of their data.


What Should You Do?

No one answer exists. How to handle personal information is up to the lifestyle and goals of each individual.

Before answering, however, some distinctions are useful: privacy versus anonymity, for example. Privacy is the ability to keep personal data or activities to yourself; you close the door while using the washroom, for example; the activity is not shameful but neither is it for the world to see. Anonymity is when your activities are transparent to the world but the fact that you are the one acting is not. Rick Falkvinge, founder of the first Pirate Party, elaborated, “The typical example would be if you want to blow the whistle on abuse of power or other forms of crime in your organization without risking career and social standing in that group, which is why we typically have strong laws that protect sources of the free press. You could also post such data anonymously online through a VPN, the TOR anonymizing network, or both. This is the analog equivalent of the anonymous tip-off letter, which has been seen as a staple diet in our checks and balances.”

Another distinction: there are two types of data — private and public. If data is private – for example, if it is kept behind closed doors or within a limited circle of personal transmissions–then it can remain private. If data is publicly displayed, however, the practical ability to control it is lost. If I discuss my sex life on a public bus, for example, I have no business denouncing a blabby eavesdropper who passes on my experiences. Unfortunately, a great deal of personal data becomes public through no fault of the person it describes. Government vigorously mines information on everyone from birth, and well-meaning parents register children for everything from medical care to government entitlements.

Happily, cryptocurrency transfers are the data under discussion; they combine the best aspects of private and public data. They are protected by encryption and anonymity or pseudonymity, while remaining transparent. This is a new expression of data that needs to be protected in new ways, both from government and from malicious hackers.

The most effective tactics may well be technological, but this article does not address them. The tactics change constantly and quickly in response to government or hacking threats. And, frankly, although some tactics are simple, like spreading assets over a number of wallets, understanding other tactics requires a technological sophistication that I do not possess.

Instead, the article points to variations on privacy strategies that have been used for decades, if not for centuries. Pick and choose, but it may be best to use them all because the regulatory wolves are circling. Here is a sampling:

Obfuscate or “hide in plain sight.” One way for a person to preserve privacy is to be so inconspicuous or subtle that he is almost unnoticeable. Blend in, or become invisible. Sometimes obfuscation involves participating in so much noise that an eavesdropper cannot distinguish your signal from any other. An example might be sending only modest payments across the blockchain so the transactions join with hundreds of thousands of similar others, all of which are of scant interest because of the small amounts. Other times, obfuscation means masking activity through mixers or tumblers that further anonymize transactions. The anonymization carries a risk, however. It can constitute a red flag to eavesdroppers.

Avoid Centralized Exchanges and Other Data Sharing Centers. If a person wants government to have his financial data, then he should just mail it in an envelope to the government. Of course, signing up with an exchange, like Coinbase, saves a stamp. Centralized exchanges are now an arm of the government. Moreover, they carry their own risks, including bankruptcy or other reasons for withholding funds. Nevertheless, there are good reasons for using exchanges; they permit futures trading and other Wall Street niceties, for example. But decentralized exchanges are preferable; exchanges outside the U.S. or other crypto-hostile nations are preferable, as are ones that do claim jurisdiction over private keys. Even then, wealth should be moved in and out as quickly as possible, without allowing the third party to control it for longer than necessary.

Find Discreet Ways to Cash Out. The crypto veteran Kai Sedgwick wrote,

“Bitcoin transactions are semi-anonymous: every transaction on the blockchain is broadcast publicly and visible for all eternity, but the owner of each wallet is unknown. Tying addresses to real-world identities is now relatively easy for the powers-that-be, because everyone has to cash out somewhere, and that usually involves linking bitcoin addresses to bank accounts.” Don’t. As much as possible, deal with people one-on-one. Seek venues that exchange crypto for gift cards to stores you regularly use, such as grocery stores. Be inventive in avoiding the banks and centralized exchanges; they are the “trusted third parties” that Bitcoin was designed to obsolete.

Use a Privacy Currency. Dozens and dozens of private currencies exist, with several being solid. Although most of them use different techniques to preserve privacy, anonymity is a theme. The founder of Zcash explained the philosophy behind that particular privacy currency. “We believe that privacy strengthens social ties and social institutions, protects societies against their enemies, and helps societies to be more peaceful and more prosperous…. A robust tradition of privacy is a common feature in rich and peaceful societies, and a lack of privacy is often found in struggling and failing societies.”

Zip It on Public Forums. Public forums, like Facebook or Twitter, are monitored and mined by government and corporations. They are collection points for data, even if a person tries to post anonymously. If social media is necessary for professional reasons, then use it to the bare minimum. Never post anything on social media that you wouldn’t put on the front page of the New York Times, and that includes crypto forums.

Be Careful in Writing Down Information. Do not write down your private keys, for example, without having a secure, undisclosed place to store them.

Conclusion

The government is coming for crypto, which means it is coming for users. Its front line attack will be an attempt to eliminate privacy; it realizes privacy is the backbone of cryptocurrency as a freedom tool, even when users do not. Now it the time for heightened vigilance. To paraphrase the comedienne Lily Tomlin, “No matter how paranoid I get, it is never enough to keep up.”

[To be continued next week.]

Reprints of this article should credit bitcoin.com and include a link back to the original links to all previous chapters


Wendy McElroy has agreed to ”live-publish” her new book The Satoshi Revolution exclusively with Bitcoin.com. Every Saturday you’ll find another installment in a series of posts planned to conclude after about 18 months. Altogether they’ll make up her new book ”The Satoshi Revolution”. Read it here first.

The post The Satoshi Revolution – Chapter 5: Privacy, Anonymity, and Pseudonymity (Part 1) appeared first on Bitcoin News.

The Satoshi Revolution – Chapter 4: Kiss a Computer Engineer Today (Part 4)

Kiss a Computer Engineer Today

The Satoshi Revolution: A Revolution of Rising Expectations.
Section 2 : The Moral Imperative of Privacy
Chapter 4: When Privacy is Criminalized, Only Criminals will be Private
by Wendy McElroy

Kiss a Computer Engineer Today (Chapter 4, Part 4)

If you care about liberty, the nonaggression principle, or economic freedom in general you should do everything you can to use Bitcoin as often as possible in your daily life.”

— Roger Ver

Every time I turn on a light switch, I want to kiss an engineer. I cannot make light in the darkness, but they can. I can do so at the flick of a switch only because they have created the FM that makes it happen without my needing to know how. (FM = F***ing Magic, which is what much of technology seems to me). Fortunately, I married an electrical engineer and computer zealot, so I am able to express a lot of gratitude on a regular basis.

What does the foregoing commentary have to do with cryptocurrency? Everything. The coders who drive crypto technology are like the engineers who make light happen. Their hands are on the engine of the most powerful freedom force of our time: the blockchain and the crypto that flows through it. I am a passenger on this wild ride; I don’t pretend to be anything else. Or, rather, I do have something to contribute. Some of those who are technologically-steeped are blind to the social implications of what they’ve created. That’s a shame, because more lights have been switched on than they realize.

The first crypto creators were anarchists who understood the social, political FM of it all. Satoshi Nakamoto was an anarchist visionary who knew its revolutionary potential, and he wanted to develop it slowly so Bitcoin could accommodate changing circumstances. When Wikileaks adopted Bitcoin, the careful development was swamped by a sudden popularity that had a path of its own.  With every new ICO offered, with exchanges that report its every breath to the government, with every step into the mainstream swirl, crypto forgets its roots. It risks losing them altogether.

Returning to the Roots

The transformation of society caused by cryptocurrency is vast and complex, which makes it difficult to sketch. It can be glimpsed in microcosm, however, by looking at a small slice. Consider one issue: authentication. It sounds like a dry and almost sterile topic, but its implications are vast.

Authentication is the process of verifying something or someone to be true, genuine, or valid. It is the backbone of modern finance -– credit checks, background information, references, government credentials — institutions want to vet people within an inch of existence before opening an account or transferring a dollar from one hand to the other. The reason is clear. Government demands a complete accounting of who everyone is and of every cent they own. Government approval and authentication of identity is the modern form of financial reputation. Without government authentication in the form of documents and bureaucratic approval, few things are (or were) financially possible.

The opposite of the authentication of identity used to be true in economic exchanges. In days of barter, or direct trade, the question of identity was not important; character was not necessarily important. A chicken was a chicken was a chicken. It did not matter whether the seller was a devil or a saint, as long as chicken was healthy and fat. A buyer examined chickens, looked at horses’ teeth, and squeezed tomatoes. The authentication focused on the good being traded rather than upon the people involved. There was no need to confirm identity – only to confirm the quality of goods. At a swap meet, what does it matter if the person selling you cheap vegetables is a ex-con, a priest, or is sex worker on the side? You examine the vegetables. You authenticate the commodity, not the seller. Thus, barter offered anonymity.

Modern life requires more sophistication than barter can supply. It is not possible to send money overseas, to cash a paycheck, to acquire a home loan, or to conduct most financial necessities without going through institutions that focus on authenticating identity, rather than authenticating the good being transferred – namely, money. And it is relentless. The banking system endlessly invades privacy for its convenience and advantage, at the expense of customers.

Cryptocurrency reverses the authentication process. It takes authentication back to the barter stage of verifying goods while, at the same time, providing the sophistication of modern finance. Users of the blockchain can be anonymous or pseudonymous, which is the opposite of being authenticated. The focus is all on the “good” involved: that is, the crypto. If the blockchain accepts or authenticates the crypto, then no real identities need to be involved. A bitcoin is a bitcoin is a bitcoin. The people don’t matter.

All the anonymity advantages of barter are present in crypto, along with the incredible power of modern finance. The blockchain offers the same sophistication as central banking. Money speeds across borders; it purchases real estate; it allows investment, and all without demanding authentication of identity. In other words, and to be repetitive, cryptocurrency preserves the enormous anonymity of barter while providing the sophistication of complex finance.

The “trusted third party” problem was always code for “the central banking problem.” Satoshi rejected it because banks are the choke-point at which authentication switches from goods to people. To acquire necessary financial services, people must be documented, registered, and reported to government. But the blockchain substitutes for central banks. It becomes an automatic clearinghouse that requires no authentication of identity. It is an exchange of value – that is, crypto – with no privacy violation.

One of the keys to financial freedom is where the authentication is vested. Is it vested in the individual or in the good itself.

Of course, government is trying to reverse the authentication process in order to make it all about identity rather than about goods; or, rather, it wants to document both aspects of financial exchanges. The push to regulate exchanges is an example. It converts them from expressions of the free market into arms of the government, which function in the same manner as banks. The enrollment process for exchanges like Coinbase, for example, are now as grueling and invasive as any bank. That’s the future governments want for cryptocurrency: the extensive authentication of identity and of transactions.

Everyone should kiss a computer engineer today. Until Satoshi Nakamoto and the anarchist ilk with whom he ran, no one imagined there would be a sleek, compartmentalized method to financially empower the individual. It is the blockchain. It is an elegant solution to the third party problem that allows people to be anonymous, or close to it, while conducting financially sophisticated transactions.

As someone who has spent a lifetime in the humanities, especially in history, it took me by surprise that human freedom would not come from a mass of people taking to the streets under banners reading “Truth, Justice, Freedom.” It would come from computer radicals and cryptographers who code.

[To be continued next week.]

Reprints of this article should credit bitcoin.com and include a link back to the original links to all previous chapters


Wendy McElroy has agreed to ”live-publish” her new book The Satoshi Revolution exclusively with Bitcoin.com. Every Saturday you’ll find another installment in a series of posts planned to conclude after about 18 months. Altogether they’ll make up her new book ”The Satoshi Revolution”. Read it here first.

The post The Satoshi Revolution – Chapter 4: Kiss a Computer Engineer Today (Part 4) appeared first on Bitcoin News.

The Satoshi Revolution – Chapter 4: Is Privacy Possible in the Digital Era? (Part 3)

Is Privacy Possible in the Digital Era?

The Satoshi Revolution: A Revolution of Rising Expectations.
Section 2 : The Moral Imperative of Privacy
Chapter 4: When Privacy is Criminalized, Only Criminals will be Private
by Wendy McElroy

Is Privacy Possible in the Digital Era? (Chapter 4, Part 3)

Recent inventions and business methods call attention to the next step which must be taken for the protection of the person, and for securing to the individual … the right “to be let alone” … Numerous mechanical devices threaten to make good the prediction that “what is whispered in the closet shall be proclaimed from the house-tops.”

— Louis Brandeis

What is privacy? Simple images come to mind, like slamming a door in the face of a census taker, but the question unlocks a complex issue.

Perhaps the most famous answer comes from an article by the American attorneys Samuel Warren and Louis Brandeis, which appeared in a 1890 issue of the Harvard Law Review. It was one of the most influential articles in the history of legal theory. “The Right to Privacy” is considered to be the first prominent call for privacy as a concept to be cemented into law. It opened: “THAT the individual shall have full protection in person and in property is a principle as old as the common law; but it has been found necessary from time to time to define anew the exact nature and extent of such protection.” Elsewhere, privacy is defined as the right to be left alone.

The article argued for privacy as a “foundational” or basic human right, upon which all other rights depended. “The right of property in its widest sense… including all rights and privileges, and hence embracing the right to an inviolate personality, affords alone that broad basis upon which the protection which the individual demands can be rested.” No right is more basic than privacy; freedom of speech, sexuality, freedom of conscience, and financial security depend upon it because none could exist in the presence of storm troopers smashing through your bedroom door. The right to close your door is paramount.

Interestingly, the Brandeis-Warren article was in response to technological developments that were seen to threaten personal privacy, much as the internet and blockchain are seen to threaten it today. One of those developments was the portable camera with which journalists photographed prominent people in venues that were formerly private, such as restaurants, weddings, and funerals. Today, the focus of privacy rights has shifted from rude journalists to the rude government for which “privacy” is a synonym for “secrecy.” The government regards privacy as a smoke-screen for criminal acts, especially tax evasion. The shift is probably a function of how powerful and massive government has become, compared to the 1890s.

Although privacy rights have been a theme in common law and, so, a strong theme within Anglo-American societies, their legal status has been vague. Indeed, before “The Right to Privacy,” the legal expression of the right was splintered. There were laws against trespassing, for example, but being safe from the invasion of property and home is only one aspect of privacy. The codifying of the broad concept of privacy is more difficult.

After all, what does the “right to be left alone” mean? Everyone knows a woman’s purse should not be snatched or a house broken into. But these are easy cases, and not the ones cryptocurrency users will confront; they must deal with their personal information being mined, and then being used against them.

The blockchain’s ledger of transfers allows uninvited parties to eavesdrop on financial and other information that has been voluntarily made public — at least, to some degree. What should the legal status of eavesdropping be? If someone overhears a personal conversation in a public place and he repeats the content, does the act infringe anyone’s right to “be left alone?” What if the eavesdropper uses the information to advantage, for example, by acting on a stock tip? What if he uses the data to blackmail? Is there a right to legally restrain the eavesdropper?


The Bottom Line of Privacy

The iconic libertarian Murray Rothbard argued that all human rights devolve to property rights; that is, they come down to the question of who properly controls the use of something, anything: a widget, an idea, information, your body. It is always possible to use force and usurp control, of course, but who is the proper owner in a peaceful society? It is the individual who acquires valid title through production, trade, or other peaceful means. There is no more clear or valid title than the one individuals have to the use and protection of their own bodies, which includes their personal information.

This right is under concerted attack by the biggest eavesdropper in human history–and one that intends to use the data against you with extreme prejudice. Government wants to access and control personal information in order to own the power of its content–that is, to use the power of your identity against you. It registers babies at birth; it pathologically chronicles everyone’s financial, medical, and educational status; it requires official paperwork at all junctures of life, including death. It does not matter if the person has done no harm and he is accused of no crime. The government’s purpose is control. Individuals who do not meekly acquiesce to being controlled are criminals.

One reason government succeeds at stealing information is that privacy is an ill-defined concept that people do not understand; if they did, they might value it more. Privacy hinges on two questions. As a place to start asking them, consider the right to control of your own thoughts and their expression. (Privacy consists of more than this ability, of course, but it is a springboard point.)

Question #1: Who owns what is in your mind? Most people would loudly declare “no one owns what’s in my mind!” Your thoughts are yours for the same reason that you own your fingers and eyes; they are part of your body; they are an integral part of who you are. But what if the thought in your mind is a chemical formula that you accidentally glimpsed? The instant you glimpsed the formula, it began to change by integrating with every other thought you have on chemistry and life. Do you own the altered formula that is now in your mind? If you do, then can you market it over the protest of the chemist who perfected it? If not, why not?

The parallel to financial information: if someone has financial assets, such as a sack of gold, then the information is properly private, but only as long as it is unrevealed. The problem with cryptocurrencies — at least, for this paradigm of privacy — is that all transactions are revealed.

Question #2: Who owns information that is now part of another person’s mind? Who owns information that has been made public? The 19th century libertarian James Walker stated, “My thoughts are my property as the air in my lungs is my property…” But what if you exhale? What if you willingly throw ideas or information into a public realm, like the internet or the blockchain?

If information sharing comes with a nondisclosure contract, then there is no problem; the originator retains rightful possession. But reality isn’t usually like that. Most violations of personal information are involuntary, such as being registered at birth and assigned a government tracking number for life. Some result from a transaction in which a naive person exchanges data with a corporation for a free subscription or the like.

The glut of personal information in the public sphere returns to the title of this article: Is Privacy Possible in the Digital Era? The answer is “yes.”


The Solution

As long as the old paradigm of privacy is used — that is, privacy = concealment — then the transparency of the blockchain is a death knell. But what if privacy now equals transparency, and the focus of protection is not on the transaction but on the identities of actors? This is a new and purer paradigm of privacy. For the sake of honesty and equitable trade, do not hide any transaction. For the sake of privacy, do not require the identities of actors anymore than grocery stores require ID of those who buy milk with cash. Then, let everyone see; let everyone verify. Both honesty and privacy can be preserved. The key is to keep your identity private—own what is in your mind, and in no one else’s—while allowing the information to be public as a proof of honesty.

Of course, there is a catch. How does anyone protect identity while making an open transaction? The solution to privacy is often painted as the problem. “Technology destroys privacy” is a common sentiment. The opposite is true.

Consider a small aspect of how to preserve privacy: encryption. Encryption is the process of coding and decoding information.

The idea and its importance to privacy is not new. It played a key role in the founding of America. Before Confederation, the Founding Fathers attacked the existing post office because the British used it as a censorship machine. After Confederation, some Founders did much the same thing. The Continental Congress wanted to declare some political material “unmailable” because it was deemed to be dangerous. A prime target was anti-Federalist letters and periodicals; the anti-Federalists fought many aspects of the Constitution, and they effectively blocked ratification unless the document included a Bill of Rights. During the intense debates, they simply could not circulate their material through the Federalist-controlled post office. Many of them, including Thomas Jefferson, resorted to corresponding in code.

The American government has always realized the political importance of controlling the flow of information. In the 1770s, communication may have occurred through postal routes maintained by horseback riders, while today, we communicate through packets of data beamed across optical cables. This difference is irrelevant to the principles involved. The key questions are: “Who owns your words and ideas?”; “Who has the right to read them?”; “Who owns your personal information?”


Conclusion

Few rights are as important as financial privacy because wealth is the way people feed themselves. The attacks on privacy are intensifying because government realizes the stakes; after all, your wealth is also the way government feeds itself.

The new paradigm of privacy is transparency without identity. But it works only if people protect their identities at every turn. Never willingly give personal data to government, to exchanges, or to the corporations that are government proxies.

Privacy is a human right, but it is a right you can surrender in the much the same manner as you can surrender your claim to a pile of cash by throwing it into the wind. In a word: don’t.

[To be continued next week.]

Thanks to editor/novelist Peri Dwyer Worrell for proofreading assistance.

Reprints of this article should credit bitcoin.com and include a link back to the original links to all previous chapters


Wendy McElroy has agreed to ”live-publish” her new book The Satoshi Revolution exclusively with Bitcoin.com. Every Saturday you’ll find another installment in a series of posts planned to conclude after about 18 months. Altogether they’ll make up her new book ”The Satoshi Revolution”. Read it here first.

The post The Satoshi Revolution – Chapter 4: Is Privacy Possible in the Digital Era? (Part 3) appeared first on Bitcoin News.