Wendy McElroy: The Double C-Word in the Private Sector

The Double C Word in the Private Sector

The Satoshi Revolution: A Revolution of Rising Expectations
Section 5: Saving the World Through Anarchism
Chapter 11, Part 2
The Double C-Word in the Private Sector

The first rule of the politics of fear is that if you want to make something sound scarier than it actually is, you add the word ‘culture’ at the end of it. — Brendan O’Neill

“Crypto culture” is under attack by a theory that has been shaping society since before the term existed.

Crypto culture refers to the socially transmitted behavior, beliefs, and institutions that characterize the cryptocurrency community. The theory is epitomized by the slogan “the personal is political.”

This slogan yanks off the door separating the personal and political, the private and public spheres. When closed and locked, the door protects peaceful individuals from interference by so-called “trusted” third parties, primarily the state. The protection is known by different terms: individual rights, “a person’s home is his castle”, society versus the state, and personal freedom. When the door is removed, however, only the political sphere remains. Without constraint, the trusted third party problem entangles itself into most personal decisions, and pervasively so. The state dictates the details of daily life, down to the food that grocery stores may sell you.

The extent of the political sphere’s domination is apparent with regard to lifestyle beliefs that used to be personal choices but now are legally punishable. Why? Because they are politically “wrong.” The refusal to associate with homosexuals or other “marginalized” groups is an example. The trusted third party replaces the right of free association with laws that mandate who can be hired or who may demand a cake from a baker.

“The personal is political” is equally at play in economic beliefs and practices, such as the anonymous use of crypto or decentralized exchanges. The state replaces the personal choice of how individuals can deposit and spend their own money with laws that define what is a financial institution and what constitutes money.

The basic question is not whether the personal beliefs or their expressions are accurate; many of them will not be. The question is: who decides? With peaceful choices, civil society answers “the individual” because people have the right to be wrong with their own bodies and property. The state disagrees and authorizes itself to decide because, it claims, people have no right to be wrong if their beliefs or actions negatively impact society.


What is “The Personal Is Political”?

It is difficult to overstate the disastrous impact of this slogan upon individual liberty over the last few decades.

The specific wording arose in the ‘60s and ‘70s, although the concept was nothing new. Under a banner reading “the personal is political,” gender feminists argued that the traditional family was the root of white male culture (patriarchy), which was the root of women’s oppression. Marriage might seem to reflect the personal choice of women, but the environment or brainwashing of patriarchy determined the “choices” available to a fresh generation of women; like their mothers, they would be subservient, eschewing higher education and careers. Society would continue under white male control. In other words, gender feminists defined and demonized the personal (the family) as political (white male culture). Marriage became an act of force and an institution to be dismantled.

The preceding reflects a basic political pattern. A personal choice is perceived to have the “wrong” political or social impact. Thus the choice itself is dismissed or demonized in order to push aside considerations of human rights and preference. The “problem” is converted into an adjective and attached to the word “culture”: white male culture, rape culture, gun culture, racist culture. The term becomes a catch-all for the unacceptable attitudes and behaviors that are said to dominate an objectionable culture. Because the attitudes and behaviors are deliberately demonized, moral condemnation becomes a foregone conclusion, with political censure or control close behind. The good of society is given priority over individual choices. The institutions that enable the demonized “choices” are targeted to be deconstructed and reconstructed. The state is the construction company. Everything personal about the issue is now political. That is, decisions are no longer up to the individual; they are matters of state.

Crypto confronts a similar manufactured problem and political dynamic. The choice of individuals to host wallets and conduct transactions on their own computers seems to be a private matter. But to some, their choices have the “wrong” political impact on the money monopoly of banks and the state. Thus the choice itself is demonized by associating it with drug dealing, human trafficking, hacking, money laundering, scamming, tax evading, and terrorism. Crypto becomes a culture of unacceptable choices rather than a technology or an individual preference. The good of society is given priority over the individual choices of outlaws. Can political censure or control be far behind? No. Institutions that enable the anti-social “choices” are targeted for deconstruction and (sometimes) reconstruction. The state is the construction company. Everything personal about the issue is now political. That is, decisions are no longer up to the individual; they are matters of state.

Lost in the cultural caricature is the truth about individual users, most of whom are peaceful individuals who are trying to preserve their wealth and privacy; the narrative of personal choice does not advance the political agenda to demonize crypto. The fewer human faces that are attached to the state’s repression, the better it is for the trusted third party.

The flow of “the personal is political”:

  • Nothing is truly personal because everything affects society. This erases the distinction between the private and the public spheres.
  • Because one person’s attitudes, words, and actions impact others, it is appropriate for “others” to protect themselves against negative impacts by policing the person’s behavior. This erases the distinction between influence and force, between peaceful acts and violence.
  • Everything formerly in the private sphere, from sex to economic practices, are the proper subjects of law.
  • Objectionable attitudes and acts should be discouraged; correct ones should be encouraged. In short, social control is needed.
  • The goal is to restrict what can be seen, heard, expressed, or performed in order for acceptable behavior and institutes to dominate.

The foregoing is the stripped-down core of political correctness (PC). It is the obliteration of the most basic privacy of all: The right to judge reality. The right to conclude what is true or false, right or wrong, and to act upon that conclusion. Political correctness and “the personal is political” is the dehumanization of society.


Crypto’s Ability to Restore the Personal

The latest generations cannot remember when bank accounts did not need a social security number; large deposits or withdrawals did not require justification; the ability to bank was not used as social control. The personal used to be personal—at least, to an enormously greater extent than it is now. Perhaps the rise of technology and data processing crashed open the door between the private and the public.

If so, technology redeemed itself through Bitcoin. Cryptocurrency allows individuals to return to a world of financial privacy in which they are autonomous bankers, with no questions asked. It offers unparalleled control along with the old world charm of privacy. Blockchains and wallets do not ask for two forms of ID; they are indifferent to the purpose of a transaction; they could care less about how the wealth was earned. Crypto once again closes the door between the personal and political; indeed, it slams the opening shut.

Crypto provides an interesting way to understand the difference between the personal and political, to understand why the private realm needs to be zealously defended against the public one.

The private sphere in life and crypto in finance are direct parallels. In both, the personal is peer-to-peer, even though a society can build around this. Crypto consists of individuals and the institutions through which the individuals interact, such as the blockchain, decentralized exchanges, forums, and personal networks. People voluntarily enter transactions and stay within institutions according to what they value and how long they value it. People’s interactions impact each other, for good or ill, but they are voluntary; they are not acts of violence. When violence does occur—usually in the form of fraud—the community unites in condemning it and seeks ways to avoid it in the future.

By contrast, the public sphere of crypto—state-sanctioned currency and institutions—is controlled by a “trusted” third party. It consists of individuals, interactions and institutions being filtered for conformity to the state’s standards. People come and go depending on whether they are sanctioned to do so. The state’s rules impact everyone, and no one is free to disregard them without risking violence against which there is often no practical remedy. The state attempts to deconstruct and reconstruct the free-market institutions of crypto in order to produce a “correct” political outcome.


Conclusion

The path to anarchy can be viewed as nothing more than a return to the private sphere, which is a peer-to-peer network based on consent. Anarchism declares that “the personal is personal,” and it always has been. Anarchy and “the personal” can humanize society again.

[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 Double C-Word in the Private Sector appeared first on Bitcoin News.

Wendy McElroy: Crypto Takes Anarchism Digital and Explodes Old Concepts

Wendy McElroy: Crypto Takes Anarchism Digital and Explodes Old Concepts

The Satoshi Revolution: A Revolution of Rising Expectations
Section 5: Saving the World Through Anarchism
Chapter 11, Part 1
Crypto Takes Anarchism Digital and Explodes Old Concepts

All around us are the almost unimaginable benefits of markets, cooperation, and technology, yet somehow we’re naïve if we don’t want to funnel human activity through government cattle chutes. The vast material and digital abundance we enjoy every day is provided without any state apparatus, in fact in spite of that apparatus. Is this private world not part of reality? Government is the artifice, and statists are the utopian dreamers who imagine that individuals acting under the magical banner of government can plan, coerce, and coordinate millions of lives.

— Jeff Deist

Technology refines the definition and application of political concepts. It cuts old seams to release freedoms in fresh form. Software engineer Eric Schmidt referred to the Internet as “the largest experiment in anarchy that we have ever had”; freedom of speech became digital. When crypto bypassed central banking, anarchism flowed through the blockchain and every individual could be his own banker. 3D printers allowed individuals to manufacture their own needs, without taxes, tariffs, and other restrictions; they even manufactured controlled “substances,” like guns.

Cryptocurrency exemplifies the synergy between technology and freedom. Designed as an expression of pure anarchism, bitcoin’s stated purpose was to bypass the “trusted third party” problem of central banks. The word “trusted” was used ironically. Satoshi Nakamoto and most crypto-founders were anarchists who knew full well that a third party that enforced its “services” by law was untrustworthy in principle and corrupt in practice. Why else would it point a gun at “customers” and potential competitors? Central banks did so in order to enable another and more powerful third party to monopolize the flow of money: the state.

Above all, central banks want to eliminate choice so that individuals cannot avoid either the direct taxes or the indirect ones, such as inflation, which are the state’s lifeblood. Choice is a lethal enemy of the state. That’s why it scrambles to prevent crypto from sidestepping the trusted third party mechanisms that have controlled society so well for centuries. But it cannot. The state can retard progress and punish the targets within reach; it can fumble to control crypto and pass ineffective laws. But the blockchain, like the printing press, cannot be contained.

Crypto’s ability to make central banking obsolete is merely a glimpse of the freedom made possible by disabling the trusted third parties that are embedded, like fossils, into society. The trusted third parties with which individuals have been forced to deal are the state’s single most powerful mechanisms of social and economic control. It is no exaggeration: A world without unwanted third parties would be anarchism in action.

Statists are beginning to understand that hard truth. It is the looming future against which crypto-statists rail and fling ridicule, calling it a utopian dream or a foolish delusion. In fact, they are the dystopian dreamers who deny the political reality of a digital and cryptographic world that is here and now.

And what new wonder will be here tomorrow? Murray Rothbard—the founder of anarcho-capitalism and a mentor of mine—once advised, “It is a fast moving world, sweetie.” The crypto-anarchists are the ones who rush to climb aboard and turn up the speed of freedom. As they do so, however, they should pause to realize one thing: a somewhat new and slightly different formulation of anarchism is in motion.


The Principle Remains the Same

 The core principle of anarchism is constant; it is consent. This may not seem obvious to some because various schools of anarchism define “consent” in dramatically different ways. Some of the ways resemble nothing so much as coercion, or the “state” misspelt. Considering two schools provides insight into the type of consent that is natural to crypto-anarchism.

Individualist anarchism—sometimes called anarcho-capitalism or libertarian anarchism—takes a commonsense approach to consent. Every human being, simply by being human, has jurisdiction over his own body and property, against which no one can properly aggress. Saying “yes,” in any clear form is consent. The actions appropriate to a self-owner are “anything that’s peaceful.” The interactions appropriate to a just society are “anything that has mutual consent.” Those actions may or may not be moral, by whatever standard, but morality is another discussion. The individual’s freedom to choose comes first. Morality only arises in the presence of choice.

By contrast, socialist anarchism views choice through the lens of specific economic and class theories that are deemed to be just. An example: according to “the labor theory of value,” the worth of a good is (basically) the labor put into its production. A worker who earns a fraction of the market value of what he produces, therefore, is robbed of the good’s “surplus value.” The thieves are the capitalist who controls the means of production and the state that defends the “privilege” of capitalist ownership. No matter if the worker actively agrees to sell his labor. The surplus value is still stolen property and an act of violence still occurs. Here, the interactions appropriate to society are ones that establish a just system for workers. Unlike individualism, in which the process of choice comes first, socialism prioritizes the correct choice. In doing so, socialist anarchism creates a new trusted third party because some agency must monitor exchanges and enforce “just” results. This is the opposite of bypassing trusted third parties.

Technology and individualist anarchism are natural partners because their dynamics are mirror images. Both hand control to the individual who is free to choose according to his own judgment. Both achieve choice by pushing aside unwanted third parties and allowing peer-to-peer exchanges in communication, finances, and manufacturing. What is said, how wealth is spent, and what is created—the content of choice–is up to the individual. Technology has no moral or economic filter, no agenda; like crypto-anarchism, it is entirely process-oriented.


The Principle’s Evolving Form

It is a question every anarchist is doomed to hear. The questioner’s purpose is to burst the assumption that anarchism is anything more than a pie-in-the-sky delusion. “Where and when has a pure anarchist society ever existed?” The question is easy enough to answer. No pure expression of any political system has existed over time and territory because that would require a sustained 100% consensus.

But there is a more interesting approach: namely, to deny the questioner’s assumption because it is statist and collectivist. A state is defined as a governing agency that claims exclusive jurisdiction over a specific area where it exercises a monopoly on force. A successful state is one that is able to enforce its jurisdiction and monopoly. Critics of anarchism adopt the statist standard of success for anarchism because it is the standard they use for every other political system: how completely is the system expressed by the population of a specific area.

But anarchism is the antithesis of such political systems. An anarchist claims jurisdiction only over property he has earned, purchased, or inherited. His monopoly of force consists of defending his own person and property—a right that everyone else possesses to an equal extent. Because his freedom is a process and not an end point, there is no defined moment of success, like achieving a 99% consensus. The success resides in the process of being free. It lives within an individual as an ongoing dynamic.

Crypto has a lesson for those who judge a political system in terms of jurisdiction and territory—and it is a new twist on old theory. Real-life actualized anarchism is not a geographical area; it is the elimination of jurisdictions, borders, and geographical areas. Anarchism is not the centralization of power but a radical decentralization down to the individual level. It is not a monopoly of force over others but the rejection of force in preference for cooperation. Crypto-anarchism makes sense only when it is viewed as a network rather than a territory or static society. The new anarchism can manifest geographically, of course; there can be communes, floating cities, or people who meet for coffee. In the digital age, however, anarchism has no need for a physical community. Its “society” is the totality of individuals who come together to share whatever the network offers: trade, fellowship, and information.

Crypto-anarchism is the politics of network—not of land, military might, or collective will. Anarchism itself has been liberated from the political concepts and realities that defined it in traditional and geographic terms.

The real question about anarchism’s viability is “where and when has a pure expression of anarchist networking ever existed?” The answer is cryptocurrency, which has succeeded beyond all expectations. Not because it exists behind walls and within borders but because it breaks through walls and borders. In short, crypto has converted anarchism into a network, and that network is our society. Anarchism has gone digital.

[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

Sincere thanks are extended to the irreplaceable Peri Dwyer-Worrell for proofreading and editing.


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 Takes Anarchism Digital and Explodes Old Concepts appeared first on Bitcoin News.

Wendy McElroy: Crypto and the New Cold War

Crypto and the New Cold War

The Satoshi Revolution: A Revolution of Rising Expectations
Section 4: State Versus Society
Chapter 10, Part 4
Crypto and the New Cold War

History is written by the victors.
-Winston Churchill

Success is a great deodorant.
-Elizabeth Taylor

The winning side of a war writes the narrative; politicians, cultural leaders, educators, and the media create the “facts” that school-children know. The losing side can struggle for decades to crack open a window onto inconvenient truths and a more complete picture. “Unimportant” facts do not fare much better in textbooks. Marginalized nations and groups are overlooked or selectively noted according to their relevance to the winner-loser framework. Things get lost. Average people get lost, because history revolves not only around victors but also around kings and queens, presidents and generals. Average people are faceless subjects or cannon fodder.

The historical parallel to the crypto revolution is called the “revolution of rising expectations.” The term refers to a condition in which even a slight increase in freedom and economic well-being make people believe they can improve their lives. They can benefit their families and future through action. The phenomenon rocked marginalized nations after World War II, from the Far East to Latin America and Africa, and it sparked political revolutions. The new order was often unpleasant, but that does not makes the phenomenon less remarkable.

Nothing in living memory has destabilized the world as thoroughly as World War II, and its aftermath. It wrecked industrialized nations that had anchored Europe; the world map was redrawn; America became the dominant empire; communism became a “bloc”; and the Cold War defined foreign policy until the fall of the Soviet Union in 1991. The destabilization was more than political. It was also economic, social, and cultural, because the fabric of society is a seamless web in which everything connects.

A similar destabilization is occurring within currency, with crypto poised to play a unique role in the redefinition of the global economy and personal freedom. For one thing, crypto enthusiasts are among the few who will applaud the destabilization of a corrupt system (central banking) and view it as an opportunity.


The Return of the Cold War

After almost two years, hysteria still permeates the media over Russia’s alleged interference in America’s 2016 elections. This obsession is a manifestation of a larger global conflict in which America and its allies—albeit, some reluctantly—are pitted against Russia and China, along with their allies, and against the nations that America has alienated through policies of invasion, sanctions, and other forms of aggression. The global rivalry is for political influence, trade advantage, territory, and the future of space and the Arctic.

In short, a new Cold War is in progress. Since the collapse of the Soviet Union, the U.S. has been the world’s ruling power, but competitors and dissatisfied “customers” now contest that status (at least, economically). Once again, the undeclared Cold War is between super powers. Once again, individuals and marginalized nations will benefit as best they can from the opportunities that arise from economic disruption.

Unlike many other disruptions, the currency crisis is measurable and inevitable. For decades, the U.S. dollar has been the world’s default or reserve currency. A reserve currency is one that is held by governments and institutions for their foreign exchanges; it is the default currency used in international transactions by agencies and individuals. In 1944, the dollar was established as the reserve unit, partly because of its comparative merits and partly because of World-War-II political dynamics. The Bretton Woods Agreement was forged by over 700 delegates from 44 Allied nations in order to regulate post-war international finance. Central banks were to maintain fixed exchange rates between their national currencies and the U.S. dollar, buying or selling the dollar as necessary to regulate their own money supply and value. A “floating rate” was later substituted.

Owning the printing press for the world’s reserve currency contributed hugely to America economic and political dominance. It has been challenged over the last few decades, however. The European Union established a homogenized money across almost 20 nations, making the Euro the second-largest reserve currency and the second-most-traded one. Nations have also called for a “cashless” society, which would raise questions regarding the future of fiat. These challenges come from governments as they jostle for advantage.

And, then, there came the arrival of crypto. It was created by individuals in order to bypass the politics of currency and to control their own lives. It was developed by revolutionaries who had rising expectations of freedom.


The Challenge to America’s Currency Power

In a fast-moving world, a 1944 agreement has naturally eroded, not least because it was based on political circumstances. America has hastened its own decline, however, by abusing the dollar’s global muscle. In broad strokes, America will lose the power derived from a default currency and a dollar-based banking system for two reasons:

First: America’s belligerent foreign policy and its fiscal incompetence have run amok around the globe. In the last two decades, America has invaded more countries than ever before in its history. The astronomical cost of perpetual war is not merely economic; the cost is also the alienation or hatred that much of the world now feels toward the U.S. Even nations that have not been invaded resent the U.S.’s monetary policies, such as FATCA (the Foreign Account Tax Compliance Act), which have been imposed upon the world to benefit the Americans at everyone else’s expense. 

Meanwhile, America’s inflation and debt soar to ruinous levels. The dollar-based central banking system is close to crashing. An economic cliff approaches and, seeing it on the horizon, the central banks scramble for solutions from a cashless society to negative interest rates or the issuance of official crypto. Removing the dollar as the reserve currency does not seem to be under active consideration. For one thing, it would mean a brutal confrontation with the U.S. For another, the systemic problems of central banking cannot be cured by swapping in a new reserve currency.

Second: Alternatives to the dollar and to the current central banking system are being developed. Former antagonists find common cause in this goal. In particular, China, Russia, Iran, and (now) Turkey have become dollar mavericks. Much of their response is driven by U.S. sanctions. Radio Free Europe reported, “Russia is vowing to speed up its efforts along with China and Iran to stop using the U.S. dollar in global trade, particularly in oil sales that are vital to both Moscow and Tehran.” The point is not whether the currency coup will succeed; the point is that other nations are actively weaponizing an alternate fiat against the U.S. If the currency coup does succeed, however, the basic functioning of the world’s finances will not change: fiat money, central banks, and the consequent theft from the individual.

More than money is stolen; hope and opportunities are stripped away. By contrast, crypto offers escape. It confronts fiat and central banking via the remarkable strategy of not confronting them at all; it simply bypasses them. Crypto is a proof of principle. The principle: it is possible to have global finance without government fiat or the toll bridge of central banking. It is possible for average people to control their own finances and to prosper, without the sanction of authorities. Crypto fuels a quiet but growing revolution.


The Revolution of Rising Expectations

People are awakening to autonomy through crypto. And that’s where the revolution resides-not in traders or investors, but in average people who glimpse financial freedom and safety for their families. Having glimpsed it, they then demand it. The energy of this demand rises like heat from two sources:

  • Marginalized nations in which survival is a driving force. Crypto thrived through Venezuela’s devastation and currency collapse, for example, despite harsh laws against it. Africa could-be-next-frontier-cryptocurrency is an engine for crypto because people have a visceral desire for a currency that is both independent of corruption and accepted by the wider world.
  • Secessionist movements that seek monetary independence as part of political autonomy. According to a Cointelegraph article (Oct. 8, 2017), “How Blockchain Helps Pave the Way for More Autonomous Governance,” “…independence movements [like Catalonia] are being supported by…the introduction of the cryptocurrencies, particularly Bitcoin, and their underlying Blockchain technology. The growing use of the cryptocurrencies could help drive the success of secessionist movements around the world as digital currencies can be used by separatist states to finance their own governments…”


Why the Revolution is Dismissed

The crypto community makes the mistake of looking to investors, traders, and businessmen for political and historical analysis. Those who came up through the ranks of crypto probably have valuable perspectives, but those to whom crypto is nothing but a way to profit from a new form of investment will view it as nothing more than a new form of investment. Profit is a laudable thing, but it is not political or historical analysis. Those who view the essence of crypto as an investment will naturally promote policies that favor the goal of profit, such as respectability—that is, regulation. They will be scornful of advocates who perceive a deeper meaning to crypto, especially if that meaning sometimes obstructs profit, as does resistance to regulation.

Yet the political or historical analysis of successful traders and investors is accorded automatic credibility simply because they make profits. An important element is factored out of their analysis, though: the average person, the workingman who is trapped in a financial cage as strong as any bars. Those who open the door for him should not be derided. Freedom is not the enemy of profit. Nor is the overthrow of a corrupt system.

[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 and the New Cold War appeared first on Bitcoin News.

Wendy McElroy: Crypto Is a Revolution of Hope – Which Is Why It Succeeds

Crypto Is a Revolution of Hope - Which Is Why It Succeeds

The Satoshi Revolution: A Revolution of Rising Expectations
Section 4: State Versus Society
Chapter 10, Part 3
Crypto Is a Revolution of Hope, Which Is Why It Succeeds

The abolition of the market means not only that the consumers—that is all members of society—are robbed of virtually all choice of consumption and all influence over production; it also means that the information and communication are monopolized by the State, as they too need a vast material base in order to operate. The abolition of the market means, then, that both material and intellectual assets would be totally rationed. To say nothing of the inefficiency of production convincingly demonstrated in the history of communism, this economy requires an omnipotent police state. Briefly: the abolition of the market means a gulag society.

–Leszek Kołakowski, The Self-Poisoning of the Open Society

That’s what the obliteration of hope looks like: “the abolition of the market” in commerce, art, education, conscience, and all other social expressions. An abundance of hope looks like a market place on a busy weekend, buzzing with activity, colors, ideas, and people arguing about what is fair, what is new, and what is best.

The opposite: the imposition of a uniformity that quashes whatever and whomever differs or sparkles. Kolakowski concluded that the “abolition of the market means a gulag society.” Such a gulag society may have wide-screen TV, sporting events, and fast food. Those are trimmings. Its defining core is the rule of, by, and for the elite, with the majority of people living in conformity, fear, or an apathy-induced grayness. Drab buildings, approved art, official slogans, political show events, redistributed wealth, false news, mandatory responses with the punishment of “wrong” ones, bureaucratic paperwork, puffed-up patriotism… A state monopoly is the spiritual death of individualism and of anyone who hopes to advance through merit, character, hard work, originality…or even luck.

Grayness. And,then, the unexpected sparkle! It could be an artist, a lone voice, slogans written on walls at night, privately circulated pamphlets, or an esoteric block of code. If the new actor is an idea or an invention whose time has come, then its impact is revolutionary. (Here, an invention can be viewed as an executed idea). With 3D-printers, every individual is able to manufacture whatever fills his own needs, free from state dictates, such as trade restrictions and sales taxes, as well as from artificial prices charged by monopolies. With cryptocurrency, every individual is his own banker, free from state theft, such as the monopoly of fiat, and the domination of central banks. Control is torn away from authority and thrown back to the individual.

This bears emphasizing: Nothing is more powerful than an idea whose time has come. When the idea has a deep and broad political impact, it is unstoppable. The printing press shattered censorship; 3D printers make gun control obsolete; crypto cracks the dominance of fiat and the global banking system. Crypto does so through a flash of brilliance called the blockchain and an act of defiance called digital currency. But crypto could not be a social phenomenon without millions of people who are willing to try something new, despite the risks; it has succeeded because people hope.

Historical examples of ideas becoming revolutions are legion, and crypto can learn from every one of them. The crypto revolution has pioneered the elimination of trusted third parties in world commerce; it rewards self-interest rather than obedience; but we must understand the importance of the role of one of the strongest motivations within man: hope.

 

Hope is the political battleground now—the battle between individuals who glimpse financial autonomy and authorities who demand control through laws that penalize peaceful behavior. Authorities want ownership of crypto—the blockchain, the issuance of coins, the mechanisms and dynamics of exchange. This would allow them to own, and to destroy, the means of escape from the financial prison that governments and central banks have constructed for the individual. They  would own and destroy hope.

Authorities realize this. That’s why they constantly try to convince us that “Resistance is Futile.” In George Orwell’s novel 1984, O’Brien is an Inner Party member who tortures an average man named Winston for the crime of questioning and doubting. O’Brien admonishes, “There is no way in which the Party can be overthrown. The rule of the Party is for ever. Make that the starting-point of your thoughts.” But if O’Brien’s claim were true, it would not require a huge, relentless propaganda to sustain.

Hope may not be apparent in some revolutions. The posters people carry may read “Land, Peace, Justice,” but hope unifies those messages. People state what they want, and what they believe is possible.

An Uprising that Floated on Hope 

The Polish philosopher Leszek Kołakowski has been called “the most important single thinker behind the most important event of the late 20th century, the implosions and the peaceful nonviolent end of the communist system.” The Polish Solidarity movement (1980s) has been called one of the most successful revolutions in modern history. Solidarity referred to Kolakowski as the “awakener of human hopes.” His writing, including the book Theses on Hope and Hopelessness, eviscerated Polish socialism for imposing an ideologically sanitized view of history and the contemporary world, which blocked people from living with honesty and truth. The job of philosophers, he claimed, was to build the “spirit of truth” and to “never stop questioning.” Kolakowski believed, “[T]here is one freedom on which all other liberties depend, and that is freedom of expression, freedom of speech, of print.” Hope lay in the persistence of questioning and the preservation of personal expression. His writings emboldened people to reject a gray life.

The Solidarity labor union was founded in 1980, shortly after and in response to a woman’s dismissal from the Gdańsk shipyard for participating in “illegal” union activity. The backlash quickly swelled into a national movement for social change through civil resistance and nonviolence; a strong theme was an opposition to bureaucracy. By its first Congress in 1981, Solidarity’s membership had reached 10 million, or one third of Poland’s working-age population. The state slapped back with martial law, but the need for negotiation with the labor union was clear. By 1989, semi-free elections were established. Solidarity’s leader, Lech Wałęsa,was elected President of Poland in 1990. A recent (2013) movie of his role in Solidarity is entitled “Wałęsa, Man of Hope.”

What can Solidarity teach crypto? The movement provides insight into the nature of radical change—insights that crypto seems to manifest naturally. They include:

  • Revolutions arise from a handful of people, with comparatively few counter-examples of spontaneous mass insurgence. Crypto evolved from the work of relatively few cryptographers, cypherpunks, and cryptoanarchists. It began to gain popularity only after being adopted by Wikileaks.
  • Popular revolutions, not elite ones, move freedom forward. The ultimate success of Solidarity resided in its name; it was a mass and voluntary movement. Military coups and other aristocratic power grabs are the opposite of revolution. Equally, crypto is a mass and voluntary movement that draws “members” by appealing to their self-interest. Decentralized users (members) drive financial freedom and privacy, while centralized actors (the voice of authority) hinder them.
  • The more successful the revolution, the more likely the state is to confront it. If suppression fails, then the state usually compromises in self-preservation, because the alternative is collapse. States around the world are in different stages of dealing with crypto; some governments are collapsing, largely due to a fiat implosion. Others are trying to own the phenomenon; still others are accommodating it in the hope of skimming revenue. The reactions all testify to the crypto revolution’s success.

Perhaps the two most important lessons of former revolutions are:

  • Ideas and ideology matter as much or more than specific social issues. Individualism and independence fueled the American Revolution: “No Taxation Without Representation.” The Bolshevik Revolution advanced communism: “Peace, Bread, Land” and “All Power to the Soviets.” The creators of crypto coded privacy, personal freedom, and decentralization into the fabric of society. And, of course, the ultimate degree of decentralization extends down to the individual level.
  • Nonviolence is the most effective strategy for social change, even against Soviet-style regimes. A 2011 report by the American political scientist Erica Chenoweth and her colleague Maria Stephan presented data collected on 323 violent and nonviolent political campaigns since 1900, each of which involved at least 1,000 active members. To be ranked “successful,” the campaign had to achieve its stated goal within one year of peaking. The resulting report, Why Civil Resistance Works: The Strategic Logic of Nonviolent Conflict, found that nonviolent campaigns had a 53% success rate and about a 20% rate of complete failure. Almost the reverse was true of violent campaigns. They had a 23% success rate and about a 60% rate of complete failure. Nonviolence resulted in partial success over 20% of the time; violence partially succeeded about 10% of the time.

The superior showing of nonviolence is good news for crypto, which is intrinsically peaceful. If true, the Chenoweth report is further reason for hope, not only for individuals but for society as well.

Hope and a belief in the possibility of change are inextricably connected. When rooted in reality, hope leads to the reasonable belief that freedom is possible. At that point, hope explodes. It organizes millions of protesters within a communist country (Poland); it breaks the grip of colonial authority by wielding the weapon of moral suasion (India); it racially integrates a bigoted society by mirroring the injustice through civil disobedience (1960s America). Crypto and other enabling technologies can return people to the market that Kołakowski lauded, where life is in color—not black and white, not gray.


Conclusion

An interesting parallel to the crypto revolution exists. Historians label it “the revolution of rising expectations.” In the political instability that followed World War II, the rising expectations—the reasonable hopes—of people in marginalized nations were responsible for a series of revolutions and dramatic social changes. Today, the synergy between crypto and secessionist movements is well documented. As with decentralization, the ultimate degree of succession extends  down to the individual level.

[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 Is a Revolution of Hope – Which Is Why It Succeeds appeared first on Bitcoin News.

Wendy McElroy: The Crypto Revolution Will Not Be Centralized

The Crypto Revolution Will Not Be Centralized

The Satoshi Revolution: A Revolution of Rising Expectations
Section 4: State Versus Society
Chapter 10, Part 2
The Crypto Revolution Will Not Be Centralized

You say you want a revolution. Well, you know,
We all want to change the world.
You tell me that it’s evolution. Well, you know,
We all want to change the world…
But when you talk about destruction
Don’t you know that you can count me out…
You say you got a real solution. Well, you know,
We’d all love to see the plan.
You ask me for a contribution. Well, you know,
We’re all doing what we can…

–John Lennon

Revolutions generally occur when two circumstances converge. State and society are in raw opposition on issues upon which there is no compromise; and the state can no longer contain dissent. Modern states and central banks have pushed the exploitation of average people too far. It is not merely that people are refusing to assist in the looting of their own wealth, it is also that financial systems are in one stage or another of collapse. Cryptocurrency provides an escape route for people to take back their own financial power. It also confronts the state with dissent that cannot be controlled.

Common denominators ensure the continuing success of the crypto revolution. One characteristic: users bypass statist institutions, like central banks and centralized exchanges (Trusted Third Parties, or TTPs), by using peer-to-peer transfers and decentralized platforms. Indeed, the desire to avoid financial TTPs was what created Bitcoin. Satoshi Nakamoto’s White Paper introduces Bitcoin with the words, “A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution.” In short, without state involvement-without TTPs.

In the political arena, the trusted third party problem dooms most revolutions. A discontented populace relies on revolutionary leaders to overthrow tyranny and to follow through on constructing a better world. The leaders rally the popular support they need in order to grasp power and, then, they are supposed to produce the promised results. But political TTPs do not champion or represent the average person any more than financial ones do, which is to say, not at all. The new leaders become the new boss—same as the old boss, or worse.

By contrast, crypto users control their own reins of power, without a need for leadership. This individual control leads to the second characteristic that ensures the crypto revolution’s success: self-interest. Crypto is driven by the pure and diverse self-interest of millions of people.


Self-Interest: Another Assurance of Revolutionary Success

Response to the word “self-interested” is usually negative, and intensely so. It is seen as a synonym for “greedy,” “selfish,” “amoral,” or “inhumane.”

But self-interest is not a matter of ethics but of praxeology, which is the science of human action. According to praxeology, every human action that is not reflexive, like sneezing, is purposeful. If someone acts, it is in order to achieve a goal that may be consciously realized or not. Even slightly shifting in a chair is prompted by a desire to relieve discomfort, improve a line of vision, relieve boredom… If an action serves no purpose whatsoever, then it does not occur.

Self-interest is simply goal-directed behavior, and the natural, healthy goal of all human beings is to improve their lives. In basic terms, this means procuring food, warmth, shelter, and the other necessities that allow life to continue. In evolved terms, this means securing the means to care for loved ones, to provide safety against hardship, and to build prosperity. When self-interest is pursued through work, merit, and trade, then the cumulative activity of “selfish” people creates a safe and prosperous society in which cooperation benefits everyone. It establishes freedom.

Ethics come into play when the phrase “enlightened” or “rational self-interest” enters the discussion. What constitutes “enlightened self-interest” has been analyzed ever since man knew enough to build a fire around which to sit and talk. Modern cynics conclude that self-interest lies in being powerful enough to screw others over with impunity, but this has not been the consensus opinion of philosophers and average people. Ancient Greek philosophy located self-interest in self-control, honesty, friendship, and the other classical virtues that were essential to happiness. Average people locate self-interest in self-respect, family, meaningful work, community, and the other reasons they get up in the morning. If a person defines his “enlightened self-interest” by how much pain he can inflict or how many cars are in his garage, then it is a comment upon his failure as a human being, not upon the value of self-interest. If he attempts to attribute his personal failure to the nature of mankind, it is no more than a moral sleight of hand by which to escape judgment.

A reasonable question arises; Aren’t all revolutions motivated by self-interest, even the ones that fail? The answer is, “of course.” No one trades the safety of obedience for the risk of uprising unless they are motivated by extreme self-interest. The motive can be material, such as a demand for land or food; it can be an injustice, such as racial or religious persecution. The existing violation of self-interest must be strong enough to make people gamble on being arrested, harmed, or having their families punished.

By contrast, crypto users who spurn the system do not need to take to the streets, to sign manifestos, or to confront the military. Their revolution of self-interest can occur in the comfort and relative safety of homes, behind closed doors.

The follow through is when self-interest breaks down in most revolutions. The old regime has been swept away; the new order prepares to govern. With eerie predictability, the new order issues the same demands that caused people to rebel against the old one: obedience, unquestioning belief, tribute, and respect for the privileges of the elite. The revolution has become centralized, and it is no longer responsive to the decentralized needs of the people whom it now views as a threat. After all, the people upended the former authority. Most individuals do not invite ideologues or armed guards into their homes and businesses. They do not welcome the “opportunity” to exhaust their lives in fulfilling the ambitions of an elite rather than in attending to their own self-interest. But they do so anyway, and the revolution is dead.

The reasons for compliance vary widely. Fear, peer pressure, respect for the law, weariness, an attempt to curry favor, confusion, hopelessness… The inevitable “moral” campaigns that the new order launches against self-interest are a strong factor, as well. Their highest virtue is patriotism; without it, parents would not send children off to die in wars in foreign lands. The individual must be sacrificed to the greater good; otherwise, people would not sacrifice their time and money—which is their lives—to benefit strangers. It is everyone’s duty to obey the state; this is the veil under which neighbors turn in neighbors, officials imprison children, and soldiers execute those who voice disagreement.

Crypto avoids the lethal pitfalls of centralized follow-through. There is no need to sweep away an old regime; the status quo falls of its own weight when it is ignored and rendered irrelevant. There is no new regime of elites to impose their self-serving demands; if there were, the ever-increasing privacy and anonymity of crypto would make widespread intervention problematic. After the revolution succeeds, users act in the same manner as they did before; they exercise a personal control of crypto that furthers their own self-interests.


Means Versus Ends, Versus Means Are The Ends

The foregoing expresses another difference between crypto and other revolutions. Crypto has no wall of separation between means and ends, between the method of achieving revolution and the end results. Typical revolutionaries proclaim that equality, justice and prosperity will arise when the status quo is destroyed and the counterrevolutionaries crushed. At hat point, paradise will emerge. But means and stated ends are vastly separated, with paradise often coming to resemble hell. And it is not always because revolutionary leaders are insincere opportunists.

Gandhi espoused nonviolent revolution because he understood the intimate connection between method and results. The means were the ends in progress. In the weekly journal Young India, Gandhi wrote, “They say ‘means are after all means’. I would say ‘means are after all everything’. As the means so the end… There is no wall of separation between means and end. Indeed the Creator has given us control (and that too very limited) over means, none over the end. Realization of the goal is in exact proportion to that of the means. This is a proposition that admits of no exception.” Violence breeds violence. Lies require more lies. Power grabs result in the exercise of power over others. Equally, the peaceful pursuit of self-interest produces a society in which self-interest is peacefully pursued. A revolution gets what it gives. With crypto, the method is individual control of a financial system that bypasses the state. The goal is individual control of a financial system that bypasses the state.

Another criticism confronts the idea of a crypto revolution. Namely, that the use of crypto is said to be too diverse and dispersed to constitute an real uprising. This is a collectivist view of revolution that postulates the need for a common cause and consciousness. Crypto does not have either. A user in Venezuela, who is desperate to hedge the inflation of fiat, is not politically the same as a user in Germany, who profits from converting one crypto to another. They do not share goals or communicate. How can they form a revolution?

Easily. Consider the printing press. Like crypto, it caused a revolution through technology that allowed people to escape a monopoly of authority; with the printing press, it was the monopoly that state and church held on knowledge. Many technological breakthroughs, like the telephone, do not threaten authority. But the printing press and crypto invaded areas that the status quo considered to be their prerogatives.

When Gutenberg engineered an affordable and manageable means by which average people could mass-produce documents, then opinions, propaganda, and information exploded. The material printed had different goals, and publications often contradicted each other. The books and pamphlets were issued in dozens of nations and languages; often, they had been translated by people who did not know or coordinate with the original author. And, yet, everyone was part of the same revolution that gave birth to the Enlightenment. The revolution was freedom of speech through which average people were empowered by printing and reading material that they deemed to be in their self-interest. The revolution in free speech and knowledge occurred from the cumulative impact of the decentralized self-interest of strangers.

Revolutions do not need to be centralized. Centralization only returns people to the need for trusted third parties called leaders. Revolutions do not need a coordinated or collective consciousness. If collectivism is the means, then it is likely to be the result as well. The most effective revolution may well be a decentralized one that satisfies the uncoordinated self-interest of individuals. It may be what people refer to as “the free market.”

Writing again in Young India, Gandhi compared social change to “a beautiful tree, not one of whose millions of leaves is like any other. Though…they are from one seed and belong to the same tree, there is none of the uniformity of a geometrical figure about any part of a tree. And yet we know that the seed, the branches and the leaves are one and the same. We know too that no geometrical figure can bear comparison with a full-blossomed tree in point of beauty and grandeur.”


Conclusion

Yet another commanding advantage of the crypto revolution is overlooked. Namely, it does not arise as the last option of despair or rage. It comes from hope for a better future. In political theory, this is known as “a revolution of rising expectations.”

[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 Crypto Revolution Will Not Be Centralized appeared first on Bitcoin News.

Wendy McElroy: The Key to the Crypto Revolution’s Success is Overlooked

The Key to the Crypto Revolution’s Success is Overlooked

The Satoshi Revolution: A Revolution of Rising Expectations
Section 4: State Versus Society
Chapter 10, Part 1
The Key to the Crypto Revolution’s Success is Overlooked
by Wendy McElroy

Turning and turning in the widening gyre
The falcon cannot hear the falconer;
Things fall apart; the centre cannot hold;
Mere anarchy is loosed upon the world,
The blood-dimmed tide is loosed, and everywhere
The ceremony of innocence is drowned;
The best lack all conviction, while the worst
Are full of passionate intensity.

–W.B.Yeats, “The Second Coming

A political or cultural revolution is a fundamental and often sudden change in how society functions. There are several forms of revolution, including violent, nonviolent, technological, ideological, or issue-driven. Cryptocurrency is an ideological and a technological revolution. It is also trustless, which is why it will continue to succeed.

Those who view crypto as nothing more than an investment or a fiat substitute seem to delight in deriding and denying that crypto is either ideological or revolutionary. They demean or dismiss those who champion the political power of private money, contracts, and communication. To crypto enthusiasts, these characteristics of crypto do not constitute strategies for freedom; they are freedom, and not merely for individuals. The borderless flow of finance, business, and information opens up the world.

Enthusiasts laud many characteristics of the crypto revolution, including its nonviolence and efficiency. But the key to its success is overlooked. Crypto avoids the fatal flaw of most revolutions: relying upon trusted third parties known as “leaders” for success in achieving goals and following through on them. Just as an individual who relinquishes wealth to a central bank also relinquishes economic control, so, too, does an individual who surrenders his political power to representatives surrenders control in that area. The leaders of a revolution act no more honorably with political power than central banks do with economic power. In short, revolutionary leaders embody the trusted third party problem-a choke point of corruption-that bitcoin was created to bypass, keeping power with individuals.

In his book The Bitcoin Standard, the economist Saifedean Ammous observed, “Bitcoin can be best understood as “distributed software that allows for transfer of value using a currency protected from unexpected inflation without relying on trusted third parties.” The crypto revolution can thus be best described as distributed software allowing for a private transfer of wealth , information, and power that is protected from the state by eliminating the latter’s  role as a trusted third party.” The pseudonymous, decentralized, peer-to-peer process is transformative. When the retention of individual power becomes sufficiently widespread, then it becomes a leaderless revolution—a trustless revolution–with no need to depend upon commanders, who never grab power out of selflessness. Users depend, instead, upon pursuing their own self-interests.


Expanding the Perception of Revolution

The stereotypical revolution has individuals rising en masse to reclaim control of political and economic power from elite and oppressive rulers. Such revolutions are “popular” in the sense that they start with a groundswell of popular resistance against the status quo.  That’s how many begin. Then, most of them go horribly wrong. Some have ushered in far greater oppression than was swept away.

The French Revolution is an example. Soul-crushing taxes and a rigid class structure fed the uprising. The Bolshevik Revolution is also an example.  The catastrophic death toll and starvation caused by World War I, more than a commitment to Marxism, was what led Russians to revolt. The trusted third parties called rulers had pushed society too far, and they lost all trust.

The uprisings had long fuses but sudden explosions. Under the banner “Liberté, Égalité, Fraternité” (Liberty, Equality, Brotherhood), the new French officials conducted mass arrests and executions that often targeted average people who violated economic laws, such as by smuggling. The Revolution brought power to blood-thirsty autocrats like Robespierre and St. Just. Under the slogan ”Peace, Land, Bread!,” Russian officials instituted a totalitarian regime of elite power, rather than the workers’ paradise they promised. The Revolution gave rise to “democratic dictators” like Lenin and, eventually, Stalin. This is the common path of many revolutions.

Why? As trusted third parties, revolutionaries become a nouveau upper class who adopt the same basic power structure as before: absolute government that rules through claims of revolutionary legitimacy, intimidation, and raw force. The faces and ideologies change but not the centralization of power, the brutality toward dissidents, and the stark indifference to the populace.  Call the new regime socialist, Islamic, Marxist, democratic, or fill-in-the-blank–they have one thing in common: The rulers impose ideology and policy for their own advantage. That can be trusted.

Why will the anti-state ideology and revolution of crypto produce different results?

Its decentralization and peer-to-peer structure ensure that power is not vested in trusted leaders; it remains with individuals who pursue self-interest, whether self-interest is defined politically, financially, or otherwise. The crypto revolution is the cumulative weight of users who destroy the state’s monopoly, not through violence but by simply not using the system. This both shatters the monopoly and renders it irrelevant. And it cannot arise again. The state ceases to be a trusted third party led by the likes of Robespierre, Lenin, Pinochet, Mao, or Castro. Attempts to reconstruct the state by killing dissenters are doomed because there are no leaders to assassinate, imprison, or corrupt.

Individual freedom and revolution are yet other ways that crypto obviates the trusted third party problem.


The Backlash Against Idealism and Revolution

Those who argue for the status quo of state-controlled finance could be called counter-revolutionaries. Their motives matter. Some newcomers to crypto may be ignorant of bitcoin’s history and, so, shrug off claims that it was born in anarchism. Education may be an appropriate strategy for them. Others may under-estimate the devastation that the state monopoly of money wreaks upon their own well-being. Again, education and reasoned arguments may work best. And, then, there are those who believe in or are otherwise vested in state authority. They regard those who flount it as criminals or at least criminally naïve enough to be dangerous to society. We need to oppose true believers in the  because they actively advocate the imposition of law on peaceful behavior; they want to point guns at crypto users who do not conform to their ideology. They want to return crypto to the politics of trusted third parties.

It does not matter to true believers in the state that the crypto they use would never have existed without visionaries. It does not matter to them that idealism is built into the blockchain through features such as transparency and decentralization. It does not matter to them that the vast majority of users are peaceful people, living their own lives. That is how strong the cult-like habit of trusting third parties has become. Those who are willing to pull guns on peaceful neighbors have no tolerance for choices different from their own.

The passionate scorn directed at idealism is best viewed as a gauge of which phase the crypto revolution has reached. Gandhi famously said, “First they ignore you, then they laugh at you, then they fight you, then you win.” The current reaction to the crypto revolution is somewhere between laughter and pugilism.

The derision will keep pouring out because counter-revolutionaries are correct on one point; idealists do obstruct the mainstreaming of crypto—that is, if the “mainstream” is defined as state sanction and adoption by central banks. In a real sense, the scorn is a lull before the storm.


An Irrepressible Digital Freedom, But How to Weather the Storm?

Crypto needs to return to its roots and acquire a fresh realization of its political strengths.

In the 80s, the cypherpunks used cryptography and other privacy technology to subvert government in areas such as censorship and taxation. The punks’ strategy was rooted in David Chaum’s development of cryptographic anonymity and pseudonymity as described in his 1985 paper, “Security without Identification: Transaction Systems to Make Big Brother Obsolete” [.pdf]. Somewhat later, the cryptoanarchists began to avoid the state and ensure freedom by using cryptography and other privacy technology. Timothy May captured the essence of digital anarchism in his 1988 “Crypto Anarchist Manifesto.” May wrote, ”Computer technology is on the verge of providing the ability for individuals and groups to communicate and interact with each other in a totally anonymous manner…These developments will alter completely the nature of government regulation, the ability to tax and control economic interactions, the ability to keep information secret, and will even alter the nature of trust and reputation.”

But the power of the crypto revolution does not reside in its roots alone. It draws from the clarity of its definition of freedom, which its protocol executes. Moreover, its revolutionary strengths extend far beyond the trusted third parties known as leaders. Which additional characteristics ensure that cryptocurrency will be revolution unlike anything the world has seen?

[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 Key to the Crypto Revolution’s Success is Overlooked appeared first on Bitcoin News.

Wendy McElroy: The Jiu-Jitsu of Crypto – Personal Freedom vs Social Change

The Jiu-Jitsu of Crypto - Personal Freedom vs Social Change

The Satoshi Revolution: A Revolution of Rising Expectations
Section 4: State Versus Society
Chapter 9, Part 7
The Jiu-Jitsu of Crypto: Personal Freedom vs Social Change.

It is often assumed that power derives from violence and can be controlled only by greater violence. Actually, power derives from sources in the society which may be restricted or severed by withdrawal of cooperation by the populace. The political power of governments may in fact be very fragile. Even the power of dictators may be destroyed by withdrawal of the human assistance which made the regime possible.

–Gene Sharp, The Politics of Nonviolent Action

Cryptocurrencies withdraw assistance from the state’s engine of power: the financial system. But they do more. They create a parallel payment and monetary system that draws upon the state’s own energy to defeat it.

The Japanese martial art of jiu-jitsu is a method of defeating an armed opponent in close combat, even though the defender is unarmed. The attacker’s force and power are used against him. The defender never directly confronts the attacker with opposing force. Jiu-jitsu is an art of self-defense in which the attacker is not the opponent; his movements are.

Bitcoin defeats the central banking system even though crypto has no force of law or standing military with which to directly confront the attacking banks. Instead, crypto feeds off the backlash of discontent created within society by the corruption of the financial system. Crypto’s strength as a freedom tool lies in its role as a parallel system, which revolutionizes payment and monetary systems to eliminate the state and banks as trusted third parties. It recognizes these parties as armed opponents in close combat. In short, crypto uses the arrogance of the central banking system to good advantage by attracting the rebellious and disillusioned within society to engage in financial self-defense.

This current strategy of jiu-jitsu confronts two obstacles, however.

One is the state. Or, rather, it is users and institutions who view crypto as a type of new fiat, not as a vehicle for freedom. They view exchanges as a new type of traditional bank that is geared to handle an innovative specie, in much the same manner as credit card companies handle a different type of transaction. These users want state involvement because it brings “respectability” and the safety they believe a trusted third party can provide. To them, those who prattle on about freedom are irritants or troublemakers who hinder the true future of crypto.

The second obstacle to a jiu-jitsu strategy is an alternate manner of addressing the state: confrontation. This strategy has its time and place-generally as a last option-but it is in conflict with the self-defense tactic of waiting for an opponent’s movement and drawing upon it for strength. Direct confrontation relinquishes the jiu-jitsu advantage. Julian Assange and Satoshi Nakamoto clashed about their attitudes toward bitcoin when Assange flaunted the crypto as a donation method to the otherwise financially embargoed Wikileaks. Theirs was a clash of strategies for freedom: confrontation versus low-profile growth. Assange crowed, “Bring it on!” to government officials; Satoshi recoiled because the prominent bravado endangered the quiet paradigm that was replacing the dominant one by exploiting the latter’s weaknesses.

A fist of defiance thrust into the air is emotionally satisfying, to be sure, and it may be appropriate in some circumstances. But those who want crypto to become a part of daily life should ask: is the goal to be free, or is it to vent? Is it to construct a different society, or is it to rail against the current one? There can be real tension between these goals. Crypto is not big enough or powerful enough to win in a face-to-face conflict with the state, especially if the battleground and weapons are of the state’s choosing. The state excels at brute confrontation. Crypto’s advantages differ: it is fast on its feet; it is incredibly inventive; and, it draws on the state’s weaknesses as well as on its power.  By commandeering the animosity and corruptions that banking creates, a David and Goliath scenario plays out in which a diminutive but nimble challenger defeats a lumbering giant.


What Strategy is Optimal? Personal Freedom vs Social Change

The “best” strategy-if only one exists-depends on the goal being pursued.

Those who view crypto as an investment or as a paternal twin of fiat will embrace the state. Those who view crypto as a path to personal freedom will avoid the state whenever possible. The situation becomes more complex if the goal of social change is added to the mix. Although personal freedom and social change are intimately-related concepts, they are also separable. Those who seek social change may well engage in the high-profile rebellion that can be anathema to personal freedom.

Personal Freedom. Bitcoin was designed to free individuals. Its emphasis on privacy and pseudonymity allows people to navigate the financial world with unprecedented autonomy. Governments may loudly announce that they can crack transactions wide open, but they are scrambling, with no clear idea of how to handle mixers, tumblers and the other privacy innovations. Crypto advances more quickly than repression can, and governments—like bullies—are often loudest when they are impotent. If governments could kill the independence of crypto, they would have done so already. As it is, they fall back upon a standard method of enforcement: intimidation. The next step is open violence, the last resort of the state, which prefers to operate as though consent were present. Open violence means social control has failed, and no other alternative is available.

Social Change. Traditionally, social change involves an entirely different dynamic than personal freedom. The reform-minded individual does not seek privacy or avoid the state because the established strategies of social reform require visibility and confrontation. Public speeches, protest marches, petitions, guerrilla theater, editorials, sit-ins, boycotts, buycotts, pamphlets and books, civil disobedience…these strategies aim at raising a social issue to such prominence that it can’t be ignored but must be addressed.

Catching the state’s attention is dangerous. Its first reaction to an effective challenge is usually repression. That’s why those who engage in nonviolent action often go through training on how not to react to a backlash-how not to react to police attacks, for example. Social reform can be a dangerous business.

Cryptocurrencies have a valuable edge over traditional social-change approaches.  Instead of being convinced to confront and resist the state by raised their political awareness, people use crypto out of rational self-interest; they avoid the state for the same reason. Traditionally, social reform seeks to change the hearts and minds of people, one by one, until there are enough people to create a tipping point at which society itself is altered. Crypto seeks to change people’s perceived self-interest, one by one; self-interest is a far more prevalent and accessible motivation than social consciousness. (The preceding statement is cynical only to those who hold a negative view of self-interest.) When a sufficient number of people prefer crypto over banks, and crypto over fiat, then society will have changed…without violence, without martyrdom, and without courting danger.

How many individuals must be “converted” before a society is reformed? No one knows. But the success of freedom or of repression does not seem to require large numbers. The Christian anarchist Leo Tolstoy observed,

“A commercial company enslaved a nation comprising two hundred millions. Tell this to a man free from superstition and he will fail to grasp what these words mean. What does it mean that thirty thousand men…have subdued two million…? Do not the figures make it clear that it is not the English who have enslaved the Indians, but the Indians who have enslaved themselves?”

Equally, many revolutions have been led by a handful of believers who tapped into strong emotional currents of the people, such as the hatred of corruption and a desire for a better life.

A tipping point is not a measurable dynamic. This may be especially true of crypto because so much of the activity and so many of the people are low profile.  Typically, activists look over their shoulders and notice that a significant change has occurred. Then they say to themselves, “That was it—three months ago.” Radicals have debated what the “tipping-point” is for centuries. Ninetenth-century individualist anarchists in America believed that laws became unenforceable if ten percent of the people refused to obey them; that is, the laws became “dead letter,” which is just as effective as repealing them. An entire system can also become unenforceable.

At that point, of course, the topic is no longer social change. The topic is revolution.

[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 Jiu-Jitsu of Crypto – Personal Freedom vs Social Change appeared first on Bitcoin News.

Wendy McElroy: Other Than the Black Market, a Last Stand for Economic Freedom

Other Than the Black Market, a Last Stand for Economic Freedom

The Satoshi Revolution: A Revolution of Rising Expectations
Section 4: State Versus Society
Chapter 9, Part 5
Crypto: Other Than The Black Market, A Last Stand For Economic Freedom?

Money…is the economic area most encrusted and entangled with centuries of government meddling. Many people, many economists, usually devoted to the free market stop short at money. Money, they insist, is different; it must be supplied by government and regulated by government. They never think of state control of money as interference in the free market; a free market in money is unthinkable to them. Historically, money was one of the first things controlled by government, and the free market “revolution” of the eighteenth and nineteenth centuries made very little dent in the monetary sphere. So it is high time that we turn fundamental attention to the life-blood of our economy—money.

-Murray Rothbard, “What Has Government Done to Our Money?

Envisioning free-market crypto should be easy because cryptocurrency was created on the free market, and it remains unregulated in many places. How difficult is it for a person to envision what is standing in front of his or her own eyes? Coins like Bitcoin or Bitcoin Cash are success stories for all to see.

Unfortunately, governments also see it. They recognize crypto as a fierce competitor to their own fiat monopolies, their tax systems, and a relatively untapped source of wealth. To control crypto, however, government cannot praise the phenomenon; government needs to demonize crypto by creating public hysteria over problems both real (fraud) and manufactured (links to terrorism). Rest assured, if crypto was an economic Satan rather than a business sensation, governments around the world would not be salivating and scheming about how to co-opt the industry. To do so, they paint crypto as a ‘good’ that is currently rife with abuses, which only governments can solve. The free market has failed, they claim.

Pressure from government is increasing. As cryptocurrency becomes more accepted as money, the cry for regulation grows. A recent report from the trading giant eToro and the Imperial College London claimed, “Cryptocurrencies like Bitcoin offer a viable evolutionary ‘next step’ for money and have the potential to become a mainstream form of payment within the next decade.” The report stated that regulation was a necessary prerequisite for such an evolution.

And most people will listen to the call for regulation because they believe a government monopoly makes money safer for them to use—at least, safer than free-market money, which they do not understand. Of course, the opposite is true. Government money gives those in power an iron control of the economy, and that arrangement never ends well for the average person. By contrast, the free market panders to customers who are the source of profit. How many government restaurants would allow people to send meals back to the kitchen for a replacement? How many have a “no questions asked” return policy on goods or services?

The free market also provides goods and services, including money, more efficiently than government. For one thing, competition forces companies to be efficient in order to achieve the low prices that attract customers. The free market also expresses far greater morality because it is based on voluntary exchanges, while the government consists of coercion.

Nevertheless, money is considered to be a “special” case that requires government intervention because money is essential to the functioning of a healthy society. But so is food. And, yet, the free market provides a cornucopia of groceries from around the world at affordable prices. Most people can walk to stores with a bounty for sale. It is difficult to imagine a government managing a similar food chain; indeed, the governments that have tried have produced rationing, famines, black markets, and soaring prices on the essentials of life.

Hysteria is a standard fall-back position for those who wish to obscure reality. And hysteria against crypto is underway because it is the best strategy to convince people that government is an instrument of crypto justice, not a crypto-criminal wannabe.


Respectability=the Need for an Injustice to Remedy=Regulation

Governments are playing a multi-leveled shell game with crypto, which is likely to play out as follows.

First and wherever necessary, crypto will be redefined as money rather than as an asset, because central banks, government agencies, and traditional financial institutions have no proper authority to regulate privately-held assets that are legally acquired and held. Governments can tax and confiscate, to be sure, but that level of control is modest compared with the monopoly power to issue and/or to define what is legal money.

Next, crypto will be conflated with crypto-asset markets, such as exchanges and businesses that issue ICOs (Initial Coin Offerings). Although the two are separate, most people make little to no distinction between them; the concepts become jumbled together. Those who want to regulate crypto itself find the jumble to be useful because it facilitates broad legislation that covers the entire sphere of crypto and its many manifestations.

The blueprint for crypto control is predictable; it is also global. Last week, for example, the Financial Stability Board delivered a report to a G20 meeting of Finance Ministers and Central Bank Governors, which discussed a framework for setting standards on crypto-asset markets.

A few months earlier, the International Monetary Fund’s (IMF) Managing Director Christine Lagarde indicated how global bodies would proceed. There were familiar references to crypto’s alleged role in terrorism and money laundering. But the emphasis differed. On the IMF blog, Lagarde called for crypto-asset markets to protect consumers in the same manner as traditional financial markets do. Know Your Customer policies and global coordination were stressed.

The call for consumer protection is echoing. At a June 25th conference, for example, the Federal Trade Commission’s Bureau of Consumer Protection Director Andrew Smith, explained, “With the rise of cryptocurrencies we’ve seen many signs, from public sources to law enforcement actions brought by us…that scammers are using the lure of cryptocurrencies to rip off consumers.”

“People need protection from the new money!” is ascending as the argument for regulating crypto. The argument not only appeals to an ingrained bias against free-market money, it also plays on people’s fear. Popular support makes it much easier for government agencies and central banks to succeed in their global grab at crypto. And, so, the word “fraud” is becoming more common whenever crypto is discussed, even though crypto-asset markets are usually the focus. (Note: the fact that fiat currencies are total frauds, along with many penny and over-the-counter stocks, does not arise.)


The Most Damnable Aspect of the Widespread Fraud Claim

There is real truth to the accusation of fraud. Crypto, like every other investment, is a “caveat emptor” situation due to the risk of fraud and other forms of theft. “Caveat emptor” is usually translated as “Buyer Beware,” and it means that a buyer or customer is responsible for checking goods and services before purchasing them. The principle is valid, but it is unsatisfying and an incomplete answer when confronted with fraud, which is a crime—the crime on which government pins its dreams of usurping crypto.

How massive is the problem of fraud? A recent study prepared by the Satis Group found that, as a percentage of the ICOs it examined, “approximately 78% of ICOs were Identified Scams, 4% Failed, 3% had Gone Dead, and 15% went on to trade on an exchange.”
It is not clear if the findings are valid, especially since expert reports have become a stock aspect of any push for legislation; many of them are sloppy and politically motivated. Frankly, the figures seem exaggerated. On the other hand, many ICOs have been revealed as corrupt, and the existence of fraud is undeniable, especially in crypto-asset markets.

Admitting a problem, however, does not validate a particular solution, such as government intervention. For one thing, government has proven itself to be unwilling to prevent fraud in the monetary system it already commands: central banking. Satoshi Nakamoto explained,

“The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve. We have to trust them with our privacy, trust them not to let identity thieves drain our accounts. Their massive overhead costs make micropayments impossible.”  

The debasement of currency is also known as inflation, which becomes inevitable because inflation is a prime source of revenue for the government and for the groups it favors. But the damage of government money extends beyond the degradation of value. Rothbard explained,

“It has fragmented the peaceful, productive world market and shattered it into a thousand pieces, with trade and investment hobbled and hampered by myriad restrictions, controls, artificial rates, currency breakdowns, etc. It has helped bring about wars by transforming a world of peaceful intercourse into a jungle of warring currency blocs. In short, we find that coercion, in money as in other matters, brings, not order, but conflict and chaos.”

And, yet, one of the main arguments against free-market money is that the marketplace is too chaotic and corrupt. Nonsense.

 There Oughta Be a Law

Fraud requires a legal response because a crime has occurred. But, again, admitting a need does not validate a particular solution. This is especially true of the legal solutions offered by government.

Generally speaking, there are four types of laws that function in society, and they sometimes overlap.

  • Ones that impose a specific vision of the world or of morality. These include laws against alleged vices, such as alcohol or drug use, as well as laws requiring alleged virtues, such as voting or paying taxes. The goal is to mandate a code of behavior, thus erasing the boundary between the legal and (someone’s vision of) the moral. Typically, the laws are enforced on everyone, except those with power seem to be exempt.
  • Ones that regulate a targeted segment of society. These include laws about who may conduct a specific business and how it must operate, as well as laws that discriminate between people based on factors such as race. The goal is economic and social control, with enforcement focusing on designated people.
  • Ones that protect against physical harm and property damage, including theft. These include laws against assault and vandalism. Rather than mandate a behavior, they prohibit one–namely, violence, which includes fraud. The goal is to provide the safety that allows a healthy society to thrive, with enforcement applying to everyone.
  • Ones that are created by contract. These include laws that allow creditors to seize assets in arrears, such as a repossessed car, and laws aimed at enforcing behavior, such as the performance of work for which payment has been rendered. A contract can always be breached, but there is a penalty for doing so: for example, a repossessed car, a refund of fees. The goal is to establish enforceable contracts, which are nothing more than enforceable consent between individuals. Again, it provides a safety that allows a healthy society to thrive and which discourages violence as the only way to resolve a dispute. The law applies only to those who contract.

On crypto, the government flexes only the first two forms of law: a specific vision imposed on the world; and, the regulation of a targeted sector. The laws do not protect people and property, as evidenced by the fact that recovered funds are not returned to those who have been defrauded. Fines, fees and recovered wealth go into the government’s coffers. In short, the laws serve government; they do not protect consumers.

The last two forms of law protect individuals, including consumers, and not government. They are laws that would exist in the free market because they fulfill human requirements. But what exactly would they look like? And how would they be enforced?

[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: Other Than the Black Market, a Last Stand for Economic Freedom appeared first on Bitcoin News.

Wendy McElroy: Does Your Money Serve the State or You?

Does Your Money Serve the State or You?

The Satoshi Revolution: A Revolution of Rising Expectations
Section 4: State Versus Society
Chapter 9, Part 4
Does Your Money Serve the State or You?

The State, in short, subjects people, whereas Society associates them voluntarily.

– Felix Morley

Two simple litmus tests determine whether money serves the state (organized force) or whether it serves society (voluntary exchanges).

  • Who issues it? State money is issued either by the state or by an authority controlled by it, who claims a monopoly.
  • Can people choose to use it or not? State money is established by requiring people to accept it as legal tender.

Cryptocurrency is privately issued, and no one is forced to use or to accept it. Crypto is a pure money of society—a public money, not one that serves rulers and elites. Indeed, many people use it to escape the corrupt central banking system and its domination of the global economy through fiat money. Control of the economy is the basis of social control.

The state lives or dies through its ability to regulate the flow of wealth within society. This makes cryptocurrency, even in its infancy, a threat to established power that the state addresses by dominating crypto through regulation, through its own monopoly issuance, or through banning it. Each step requires law. And, except for dictatorships, law requires public justification. Even with dictatorships, public justification is usually offered in order to avoid public resistance. The state needs law to destroy crypto, which means it needs justification. If there is not a real need, then a false one must be created.

The appeal to law reveals another and more fundamental difference between state money and that of society. Namely, what is the purpose of law regarding each one?


What is the Purpose of State Law Regarding Crypto?

The alleged illegality of crypto and of those who use it is, again, divided by the state into two clear categories.

First and foremost to the state are violations of its own self-declared jurisdiction. Given that the state produces no wealth, its claimed jurisdiction amounts to the rules by which wealth is confiscated and redistributed. Crypto violates these rules. Some uses do so directly. For example, it is sometimes used for tax evasion, money laundering, black-market activities, and other functions that compromise the state.

Of course, people who use fiat also commit such ‘crimes.’ In those cases, however, there is a remarkable difference in how the law approaches the offenses. Namely, objectionable individuals are demonized, often in a high-profile manner that intimidates those in the shadows. But the money itself is accused of no crime, and bears no liability. With cryptocurrency, both individuals and the money are demonized. The money is the true target, with individuals being the means by which to attack its legitimacy. Prosecutions springboard quickly into calls for monetary control.

Crypto also violates rules of the state in a more profound manner. It renders trusted third parties irrelevant, and there is no more massive third party than the state. The state created the central banking system as an omnipresent regulator of money and as a choke point for information. It wove an iron web of laws to monitor money and require its ounce of flesh from every transaction. If no one needs central banks, if they can easily avoid the strangling laws, then the power of the state dramatically diminishes. Some crypto zealots argue that the power is or will be destroyed. In either case, crypto constitutes a threat as muscular as any other revolution. Perhaps more so. No wonder, the loudest cry of “there ought to be a law” revolves around the preservation of state privileges.

The second round of the state’s cry for law is the claim that crypto violates the person and property of individuals. The line of attack is secondary, by far, and often sounds like an afterthought. But it is also the most dangerous claim to the continued freedom of crypto users because the accusation is valid, and it resonates with decent people. Most people hate taxes, and many would avoid them if it were safe to do so. But the same people hate fraud, theft, and violence.


Fraud, Theft, and Violence

Some uses of cryptocurrency are fraudulent. A March 2018 article in bitcoin.com opened,

“In the time it takes you to read this sentence, $850 will have been lost to cryptocurrency scams. In the time it takes to complete this article, that figure will have risen to $17,000. Phishing; fraud; theft; hacking; it’s all rife. In the first two months of 2018, there were 22 separate scams involving thefts of $400,000 or more. Put it all together and that equates to an average of $9.1 million a day. Oh, and that doesn’t include 2018’s outliers – Coincheck, Bitconnect, and Bitgrail. Otherwise, the total would actually stand at $23 million a day.”

There are thieves who prey upon the crypto community. An April 2018 article in bitcoin.com explained,

“Hardware wallets are regarded as one of the safest means of storing bitcoin and other cryptocurrencies. Each device grants the holder possession of their private keys and adds a PIN code plus other tamer-proof [sic] tech for enhanced security. Hardware wallets are not impregnable, however, as one British man found to his peril after purchasing the device on Ebay. Redditor moodyrocket is coming to terms with having his “life savings” wiped out this week, after $34,000 of crypto was stolen from his newly acquired Nano Ledger hardware wallet. The device was compromised, not due to any flaws in its design, but thanks to a man in the middle attack that saw the reseller insert their own recovery seed.”

Crypto allegedly cloaks acts of violence. This is the shakiest claim, because it is based on reports from state officials, or experts who are often in their pay. The “10 of the Biggest Lies Told About Bitcoin” (December 2017) addressed the claim that crypto is the finance of choice for terrorists.

“If you want to blame a currency, try the U.S. dollar which has been used to fund more wars, proxy wars, bombings, hijackings, and insurgencies than any other. Europol found no evidence that terrorists were using cryptocurrencies to fund their activities. That’s not to say it hasn’t happened and won’t happen. It’s telling however that the only people linking bitcoin with terrorism are governments seeking to crackdown on digital currencies.”

For the sake of argument, assume every accusation leveled at cryptocurrency is true. But it is also true of fiat. Fraud, theft, and violence has been associated with every means of exchange that has ever existed. Again, only crypto is discredited. Not barter. Not gold. Not fiat, against which no one shakes their fist due to fraud. It is telling that cryptocurrency is blamed for the actions of individuals, in much the same manner that guns are blamed for crimes.

Law will be imposed upon crypto. The state needs to reassert control. The free market needs to do what it does best: provide a solution to a need. State versus society. It will play out before our eyes.  I have a good idea of what it will look like, on both sides.

[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: Does Your Money Serve the State or You? appeared first on Bitcoin News.

Wendy McElroy: Crypto and the Structure of Class Warfare

Crypto and the Structure of Class Warfare

The Satoshi Revolution: A Revolution of Rising Expectations
Section 4: State Versus Society
Chapter 9, Part 2
Crypto, and the Structure of Class Warfare

The wall separating state and society is crumbling. Or, rather, the state is taking a jackhammer to it in an aggressive attempt to control every aspect of productive and cooperative life…The people you deal with on a daily basis are ceasing to be good neighbors, honest merchants, and disinterested strangers. They are becoming state informants who monitor your expression, your money, your behavior and attitude in order to report you to the authorities. They are ceasing to be “society” and becoming instead “the state.”

Murray Rothbard

Cryptocurrency has an advantage that almost every other alternative money in the past has lacked. It does not mimic state-issued currency or state-controlled transfer systems, such as banks. Its revolutionary structure and function are as uniquely compatible with society as they are antagonistic to the state.

State versus society: Libertarian class analysis is based on the interaction of the two categories, which are in irresolvable conflict with each other. The structure of each class–the arrangement of their parts according to a unifying theme—are also antagonistic. Into this analysis, crypto enters with a framework that rebukes the state and provides society with what it has sadly lacked: a free-market money for the average person. The compatibility of crypto and the free market and crypto is born out by their remarkably similar structures. (“Society” and “the free market are used as synonyms here because, in its broadest definition, the free market” is more than an economic dynamic; for example, there can be a free market of ideas. Broadly defined, the term refers to any free exchange.)


The Structure of State, Society, and Crypto

“Form follows function” means that the basic shape of a thing is determined by its purpose. For Frank Lloyd Wright, the two were inseparable. “Form follows function-that has been misunderstood,” Wright observed. “Form and function should be one, joined in a spiritual union.”
This is true of government or the state; it is also true of society.

The function of a state is to regulate society in a manner that maintains its own existence and privileges. The state uses force or the threat of force to impose its policies; behind every law is a gun and its intimidation value. The purpose of the state defines its form; coercive agencies, such as law enforcement and the military, abound. Intrusive practices, such as the widespread collection of personal data, are the norm. In turn, the agencies and practices require intense centralization and bureaucracy.

The function of society is as a venue where individuals interact peacefully for mutual benefit, whether that benefit is defined in economic, spiritual, or other terms. Society is voluntary, with legal obligations arising only from contract and consent. Because individuals are diverse and unpredictable, the form of society is fluid, quick to respond, and highly decentralized.

The two classes are at war because the state produces no wealth of its own; it takes what is needed from society through taxation in its various manifestations, including inflation. To do so, the state asserts its authority over the peaceful behavior of others, which the others resent.

The state does more than loot society, however. It usurps the functions of society—the interactions that should occur on the free market–such as road construction and financial institutions. Over time, segments of society are reshaped to resemble arms of the state. Banks are a prime example. Free-market banks would serve the needs of customers, including privacy. Current banks are information gathering centers for the state, with customer requirements being secondary.

In the past, the state’s encroachment upon society enjoyed a huge advantage; the state controls the legal definition of money, its issuance and much of its flow. Society had to accept fiat, to tolerate monetary policies, and to live with banking rules. At least, society had no real choice until the explosion of cryptocurrency. Suddenly, individuals became their own banks, and they made their own exchanges…all without the state.

Crypto is the money of society, the money of people. This status is not negated by the fact that some people become ridiculously wealthy through crypto; the free market has always rewarded successful innovators and early adopters. The status is not damaged by crypto experiments that fail; the free market is a brutal laboratory, with many dead ends. Imprudent people, who lose money through foolish acts, discover that the free market is also a corrective mechanism, without compassion. Even fraud does not cast a shadow on crypto as the money of society. Fraud haunts all human activities, especially lucrative ones. And those who appeal to the state for a remedy should remember that the state is institutionalized fraud and theft. Over time, the free market tends toward self-regulation.

What can threaten crypto’s role as the money of society? The greatest danger is the drive to change the function and form crypto from being an expression of society into an expression of the state. The drive for so-called “respectability” involves regulation, state-issuance, and other measures that would reduce crypto to another form of fiat, another form of central banking.


Crypto and Society Share the Same Basic Form

One indication of crypto being the money of society is that the two have the same basic function and form. The function is to empower the individual; form follows. It is no wonder that crypto’s structure parallels that of society itself. The parallels include,

  • A hard structure underlies them both. For crypto, it is the immutable blockchain that is remarkably immune to manipulation or exploitation; for society, it is the inviolable principle of non-aggression.
  • The frameworks do not inhibit diversity. Their security and freedom encourage almost infinite innovations. A major reason: Adopting the underlying structure is not a matter of law but of choice, which is unrestricted thereafter.
  • Third parties are not necessary for many of the transactions. For a complicated exchange, such as one that demands escrow, a third party is useful. Even then, however, the amount of trust required can be limited by strategies like getting in and out quickly.
  • There is no barrier to entry. No state license, no permission, no legal forms.
  • Both crypto and society are decentralized. Among the many advantages of this is that neither has a single point of failure where the entire system is vulnerable to bad actors.
  • The individual is the locus of power. As long as a person retains his or her keys, that person controls their use. The parallel in society is the individual’s right to say “no.”
  • Transactions can be pseudonymous or announced to the world, depending on individual preferences. Crypto purchased with a faux identity, which uses a different wallet for each transaction, can be almost as anonymous as cash.
  • Exchanges are not ideological or political. Crypto and the free market are great levelers of traditional social distinctions, such as the race or religion of a buyer or seller.
  • Crypto and society are both worlds in which wealth is based on merit, including the profits that properly come from taking risks that succeed.

By contrast, the structure of the state is antithetical to that of crypto and the free market. It is based on coercion rather than consent; it is centralized rather decentralized; its wealth comes from confiscation rather than merit. Form follows function.


Conclusion

There is a popular myth about crypto. Namely, that free and state-controlled crypto can co-exist. In theory, it is possible. In practice, it will not happen because state-issued or state-controlled crypto does not merely differ in terms of its origin but also in terms of its form. Crypto cannot serve both state and society; it cannot express both centralized control and decentralized choice. The two may exist in parallel for a time but, inevitably, the state will reach for a monopoly.

Crypto is becoming a new frontier in class warfare between the state and society. The state will try to reshape crypto in order to serve its own purposes. Instead of privacy and individual choice, state crypto will involve total disclosure and regulation. Instead of accessibility for all and the absence of trusted third parties, there will be licenses or bank-like exchanges becoming an unavoidable third party. The incredible benefit of crypto to society will be turned upside down, and it will become a benefit to the state.

State-issued or controlled crypto will be a bitter mockery of the original vision, but it is coming. And one of the major impacts of the Brave New money will be almost invisible; the basic form of crypto will become the opposite of what it was created to express. This goes with the function of crypto changing.

The best hope for free-market crypto is that concepts, such as decentralization, are so deeply embedded into its structure that a state-issue is doomed to fail. As a next resort, of course, the state will regulate what it cannot create. Society’s money will become a bit riskier and more difficult to use.

[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 and the Structure of Class Warfare appeared first on Bitcoin News.

Wendy McElroy: Crypto as Class Warfare

Crypto as Class Warfare

The Satoshi Revolution: A Revolution of Rising Expectations
Section 4: State Versus Society
Chapter 9, Part 1
Crypto as Class Warfare

“Antagonism between the classes will be removed. I do not envisage a dead and artificial level among the people. There will be a variety among them as there is among the leaves of a tree. There will certainly be no have-nots, no unemployment, and no disparity between classes and masses such as we see to-day. I have no doubt whatsoever that if non-violence in its full measure becomes the policy of the State, we shall reach essential equality without strife.”

-Mahatma Gandhi

Cryptocurrency is the realization of an anarchist dream that dates back centuries:  a free currency and a free banking system. Crypto is in its infancy, which means  its future applications are electrifyingly unpredictable, except in one regard: any successful application will fill a human need. No human needs are as acute as food and shelter, which require money and exchange. To control the flow of money and exchange, therefore, is to control life itself. And the financial flow is often captured by one word: banking.

In their quest for free banking, social reformers of the past made a distinction that is often lost today. Namely, banking is at the core of class warfare. The ramifications of that insight rests upon the definition of “class” being used: capitalist v. worker, nobles v. peasants, the political v. the productive. Crypto departs sharply from the meaning imposed by socialists centuries ago–capitalists v. workers–and expresses a 21st century form of financial class warfare: the political v. the productive.

The extraordinary crypto network is not a banking system, as traditionally conceived, but it can replace most banking functions. And future evolution within crypto applications may wipe out any remaining need for central banks.


Past Banking Experiments

19th century anarchists knew that freedom hinged upon what French radical Pierre Joseph Proudhon called a Bank of the People—a bank that served the financial interests of workers, not of the elite. Proudhon’s vision was a cooperative bank that provided low-interest credit and which issued notes based on labor instead of money based on gold.

The many attempts at free banking usually had a theme in common; they failed. Three factors played a significant role.

Ideology. Early anarchists accepted the socialist concept of a “Labor Theory of Value.” That is, the just economic price of a good or service is determined by the labor needed to produce it. The theory forms the linchpin of socialism’s condemnation of “the capitalist,” who steals the wealth earned by “the worker” when he charges and pockets more than the cost of production for a good. In short, socialists believe embedded labor, not subjective value or supply and demand, determine a just price. Banking experiments of the past tended to stumble and fall over this deeply flawed economic model. Not until Murray Rothbard fused individualist anarchism with Austrian economics, and popularized them both, did free-market anarchism emerge.

Structure. Many alternate institutions depended on the system against which they rebelled. Proudhon’s proposed Exchange Bank, which was intended to be an umbrella structure for smaller Banks of the People, is an example. The Exchange was meant to replace France’s central bank and to obsolete the financiers who preyed on workers. In his periodical Liberty, the iconic 19th century American anarchist Benjamin Tucker explained, “The Bank of Exchange was to be simply the Bank of France transformed on the mutual principle.” Thus, it was a vision of reform—radical reform, to be sure—but not a vision of revolution.

The alternate institutions that fared better tended to be part of a broader support system for a specific community, such as the social agencies operated by early labor organizations in America for their members. Those organizations exemplified the class awareness; for example, the Knights of Labor refused membership only to bankers, lawyers, gamblers, and saloon-keepers, who were viewed as the bane of working people.

Legal Opposition. Two circumstances that invited a backlash from authorities were intersection and visibility.

Intersection: In 1848, Proudhon approached Louis Blanc, a minister in the French Provisional Government, for assistance in transforming the Bank of France into an Exchange Bank. Proudhon was unsuccessful. But because his bank was partially based on government approval, it floundered. Today, so-called alternative financial institutions apply for licenses or otherwise comply with regulations. In doing so, they either go out of business or  cease to be alternatives; they become part of the problem.

Visibility: When an alternative financial institution threatens the status quo, and is seen to do so, it is dismantled. Transparency is not its friend.

A case on point is the massive network of voluntary labor unions in 19th century North America, which provided millions of workers with everything from credit to life insurance. The voluntary labor unions were also hotbeds of political dissent. President Franklin D. Roosevelt all but eliminated them by establishing a monolithic Big Union that enjoyed government privileges through legislation such the Wagner Act (1935); the fact that modern unions were backed by Big Business should have been a red flag. An article entitled “The Great Lie of the Modern Union,” explained, “The modern union that arose…” was “the opposite of what it claimed to be. It did not voice workers’ rights. It silenced them.” The decline of voluntary labor unions meant their financial safety nets evaporated.

Revolutionizing Class Definition

Cryptocurrency is not “new under the sun” in providing an alternative to government banking. It is not even new in providing a free-market one. But the dynamics of crypto are stunningly unique. The algorithms and blockchain are able to blow past three of the main pitfalls of previous alternatives—ideology, structure, and legal opposition.

Satoshi Nakamoto designed bitcoin and the blockchain to bypass a central banking system that served the status quo, not the individual. Given that the central banking system is not capitalistic but exists in communist societies, as well, the capitalist v. worker class analysis does not apply to crypto. Another form of class analysis fits perfectly.

Before discussing class analysis, however, it is necessary to define the word “class.” A class is a group of people or things with common characteristics. The grouping occurs because it is useful to whoever is defining the category. A researcher of financial habits might break his subjects into credit card users and non. A doctor studying drug addiction might split his patients into cocaine users and meth addicts. A classification can be defined by almost any shared characteristic: hair color, sexual orientation, preference in deodorant…

But if capitalists v. workers does not work well with crypto, what is the basis of crypto class analysis? It is the state v. society.

In his classic work, The State, the German sociologist Franz Oppenheimer spearheaded an analysis of these key terms.

Oppenheimer defined the state as “that summation of privileges and dominating positions which are brought into being by extra-economic power [force].” As well as the visible structure of politicians and bureaucrats, the state includes all agents (such as the military and law enforcement), affiliates (such as banks), and cronies (such as corporations and the mainstream media). Rothbard expounded on the concept. “I define the state as that institution which possesses one or both (almost always both) of the following properties: (1) it acquires its income by the physical coercion known as ‘taxation’; and (2) it asserts and usually obtains a coerced monopoly of the provision of defense service (police and courts) over a given territorial area.”

Oppenheimer defined society as “the totality of concepts of all purely natural relations and institutions between man and man.” Rothbard explained that a free society was “one where there is no legal possibility for coercive aggression against the person or property of an individual.” Society was the total of human interaction that occurred in the absence of institutionalized force.

Force and the threat of force are necessary to the state because it produces nothing. Its only source of “income” is the wealth it grabs from others, including through taxation, confiscation, fines, fees, tariffs, inflation, bribes… To exist, the state must steal. By contrast, society consists of voluntary exchanges that produce wealth, whether in terms of money, culture, family, spirituality, and other human values. An exchange occurs only when all parties to a transaction agree to its terms, which means all parties benefit.  occur. Rothbard highlighted the difference between state and society. “If I cease or refrain from purchasing Wheaties on the market, the Wheaties producers do not come after me with a gun or the threat of imprisonment to force me to purchase; if I fail to join the American Philosophical Association, the association may not force me to join or prevent me from giving up my membership. Only the state can do so; only the state can confiscate my property or put me in jail if I do not pay its tax tribute.”

Individuals who interact through force and privilege—“extra-economic power”– are the political class. Individuals who interact voluntarily are the productive class. The dynamic is political v. productive. The two are antagonistic because the political class is a parasite on the productive class, and it cannot exist otherwise.

Before crypto, even people who saw this class divide clearly were forced to use the state because so much of modern life was monopolized by it. Banking and the issuance of currency are fine examples. This essential realm of human interaction became a state monopoly. Little could be done about it; a bank account was almost a requirement of daily life, and it was extremely difficult to send money overseas without involving banks or other authorized institutions. No more. Crypto upends the state’s monopoly.

As with ideology, crypto is also able to answer the issues of structure and legal opposition that plagued prior financial alternatives to the state.

[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 as Class Warfare appeared first on Bitcoin News.

Wendy McElroy: Crypto Can Create a “Perfect” Political System

Crypto Can Create a “Perfect” Political System

The Satoshi Revolution: A Revolution of Rising Expectations
Section 3: Decentralization
Chapter 8, Part 6
Crypto Can Create a “Perfect” Political System

The anarchists…work not for a perfect social state, but for a perfect political system. A perfect social state is…totally free from sin or crime or folly; a perfect political system is merely a system in which justice is observed, in which nothing is punished but crime and nobody coerced but the invader.

-Victor Yarros, American anarchist, lawyer, and author

The perfect society is embodied by the institutions that individuals create and through which they function. The same is true of a dystopian society. That’s why institutional analysis is essential to understand how freedom and totalitarianism work. One institution is cryptocurrency, which profoundly affects other institutions of society, and reaches far beyond the financial ones.


What is an Institution?

The Random House dictionary defines an institution as “a well-established and structured pattern of behavior or of relationships that is accepted as a fundamental part of a culture, such as marriage,” voting, or bankruptcy. An institution is any stable and widely-accepted mechanism for achieving goals within society. The term applies to wide-ranging and complex concepts, such as “family,” “the free market,” “common law,” “religion,” and “the state.”

Not all institutions are compatible, however, because some pursue antithetical ends; free-market crypto and the central banking system are a stark example. Crypto is a spontaneous and decentralized empowerment of individuals; the banking system is a centrally-planned and unified expression of government control. As a practical matter, a society often contains the two institutions in uneasy parallel, but their antagonistic goals lead to inevitable conflict. Government will attempt to regulate or ban free-market crypto because, otherwise, the free market will do what it does when left unfettered: prevail.

Modern society is a political war zone: the culture war, a race war, weaponized media, class warfare against the 1%, the drug war, a war for democracy, militarized police, the new Cold War, a war on terrorism… One battle provides a common theme for them all. It is a warfare over the structure and goals of competing institutions. Every social conflict involves a clash of institutions that express different ideologies, including cryptocurrency. Created by anarchists using break through technology, it is at war with governments’ desire to regulate and to own it. Technology versus government. Freedom versus control.

Generally speaking, there are two types of institutions: spontaneous, and designed. An example of a spontaneous institution is the family. In Western culture, at least, no one predetermines who will marry and produce children; those decisions are left to the individuals involved. All spontaneous and non-violent institutions express freedom in how they function. By contrast, an example of a designed institution is the public-school system, which is created by authorities and experts who impose their vision upon children at tax-payer expense.

Not all designed systems are equal, however, and some can also be vehicles of freedom. These are voluntarily-designed free-market systems, such as a car factory or a tuna fish cannery. Factories may impose rigid rules, because producing a specific product requires them, but everyone who “obeys” does so willingly and from self-interest, which usually comes in the form of a paycheck. The pivotal question for a designed institution is whether it is coerced or voluntary. All coercive institutions express government or violence in how they function. Everyone who “obeys” does so without the option of saying “no.”

Free-market cryptocurrency is highly-designed and entirely voluntary. Central banks may offer a veneer of being voluntary–for example, people are not compelled to become customers—but the entire economy is regulated so as to prohibit alternatives that refuse to act as an arm of government. The same arguments are deployed against them as against crypto. Free-market financial institutions are said to be scams for tax evaders and other so-called criminals, such as drug dealers. They defraud honest people, who foolishly trust them with money. The true motivation of suppression is unspoken: alternative financial institutions threat the government’s monopoly on money and commerce. And, so, Institutionalized violence—that is, law enforcement—is used against the competition; it is justified as protection against occasional crime and against the poor judgment of individuals left to decide for themselves. 


What is Institutional Analysis?

Institutional analysis examines the dynamics by which institutions of society express and define laws, customs, and culture. It asks: What is an institution’s purpose, the rules by which it functions, its impact?

Parallel institutions that purport to serve the same purpose are often compared through a process called “comparative institutional analysis.” An example is to compare how the Federal Reserve creates currency with how an alternative system, such as cryptocurrency, does so. A good starting point of analysis is the competing assumptions upon which a centrally-designed institution and a free-market one rest. The first system uses mathematical representations, historical precedent, and market manipulations to produce currency, because it believes an economy can be scientifically engineered by authorities and experts. The second system realizes that human beings are fallible, driven by fluid preferences, by self-interest, and other factors that cannot be predicted, only analyzed in retrospect. Central banking grounds itself in mathematical models, which can be jiggered or false, and in central authority, which can lie or be badly mistaken. Free-market alternatives ground themselves in human behavior that faces the quick feedback of consequences, and which may be unwise, but not false.

Comparative analysis looks at the structures and procedures of competing institutions, which will determine what they produce. It does not consider motivations. In other words, as long as specific procedures are followed, the motivations are irrelevant. A worker in a hat factory may intend to produce wedding gowns. As long as he follows the workplace rules, however, the result will be a hat. A police officer may believe in Murray Rothbard’s free-market-anarchist model of justice, but as long as he follows police procedure, he will enforce laws that punish peaceful behavior. Only by breaking the rules can the hat maker and honest officer achieve their personal goals.

Comparative analysis also considers the differing impact of parallel institutions. For example, what can appear to be the ‘chaotic’ nature of spontaneous institutions provides a huge benefit to society—innovation, which cannot be centrally designed. Its powerhouse is the ability of creative people to adapt to changing circumstances. The adaptation can be lightning-fast, as with crypto, and successful adapters are richly rewarded by fortune that favors the first to arrive. Late arrivers are also rewarded, however, because an innovation will survive only if it provides value.

In 300 BD, the Chinese Taoist philosopher Chuang-tzu wrote, there has been such a thing as letting mankind alone; there has never been such a thing as governing mankind with success. Good order results spontaneously when things are let alone.”

By contrast, centrally-engineered institutions stifle innovation because their structures and procedures resist all feedback, their flaws are embedded and protected. The institutions serve the interests of an elite class, not of individuals or society.


The Institutional Ripple-On Effect of Free-Market Crypto

The effect of crypto on authorized financial institutions is well-known. But such a massive door to freedom does not merely crack open; it bursts all its hinges, and shakes up other institutions of society. To touch upon several, in passing:

Foreign Policy. Food is frequently used as a weapon of foreign policy. A recent article in Free Thought Project describes how blockchain is bypassing the weaponization of food: “Revolutionary Blockchain Tech is Helping Disaster Victims & Feeding the Hungry Without Government.” Crypto allows needy nations and individuals to skirt economic sanctions imposed upon them by the powerful. It makes it more difficult to starve people for political advantage.

Domestic Policy. When Venezuela’s government devalued the Bolivar by removing three zeros from the currency, citizens flocked to the free-market alternative of bitcoin, with which they were already familiar. Crypto rescues businesses; it saves lives; it can topple governments.

The Social Control of ‘Vice’. “Operation Chokepoint” was an Obama-era banking policy that attacked allegedly undesirable but legal businesses, such as selling medical marijuana. The banking system closed accounts, canceled credit cards, and refused all services to miscreant customers. The practice is being revived. Banks are targeting marijuana outlets, sex workers (legal or not), and gun businesses. Increasingly, these sellers are turning to crypto to sustain their livelihoods.

Protection of Free Speech. After circulating documents that embarrassed governments, Wikileaks faced a banking blockade that killed its access to donations, which were its life-blood. Wikileaks opened donations to bitcoin, and wealth poured in. Censorship was sidestepped.

The Free Flow of Information. Intellectual property (IP) prosecutions are usually based on following the money and uncovering the individual at the other end. Since crypto can be close to anonymous, that strategy is gutted. For those who reject the validity of IP, as I do, this is an amazing ‘good’ for the global flow of information.

Immigration Policy. Immigration and temporary migration are often based on the possibility of sending money back home. But migrants are often “unbanked” or pay huge fees to do so, with their families waiting days for the transfers. Trump has threatened to cut off this incentive for migration by closing down channels of transmission. Fast, cheap transfers of crypto will be incredibly difficult to control.

The Strangle-Hold of Lawyers and Courts. Smart contracts are legally binding agreements that use software to execute themselves. Smart contracts are on the path to becoming ubiquitous, from real estate deals to insurance claims, which dramatically reduces the need for lawyers.

The Autonomy of the Family. Inheritance taxes are heinous because they are double taxation; family wealth that has already been taxed is relooted by governments. Crypto can invisibly divide assets among loved ones.


Conclusion

The preceding is a passing taste of how profoundly cryptocurrencies are redefining the institutions of society.

To grasp the scope of the institutional revolution, however, it is necessary to focus contrast more intensely on the two fundamental human institutions. In his classic work, the German sociologist Franz Oppenheimer identified one of them in his book The State (1914). The other is Society.

[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 Can Create a “Perfect” Political System appeared first on Bitcoin News.

Wendy McElroy: A Dazzling Explosion of Spontaneous Order

A Dazzling Explosion of Spontaneous Order

The Satoshi Revolution: A Revolution of Rising Expectations
Section 3: Decentralization
Chapter 8, Part 5
Crypto: A Dazzling Explosion of Spontaneous Order

“Our civilization depends, not only for its origin but also for its preservation, on what can be precisely described only as the extended order of human cooperation, an order more commonly, if somewhat misleadingly, known as Capitalism.”

Friedrich Hayek, The Fatal Conceit

Cryptocurrency brings order to the monetary realm. It may seem like chaos because the word “order” is often used as a synonym for “uniformity.” Lines of military march in tandem across a parade field, or an entire industry runs by the same mandated standards and practices. By contrast, crypto seems like the Wild West, largely due to three factors: crypto embodies the polar opposite of military unity, spontaneous order; crypto is in its evolving infancy, still struggling to find equilibrium in institutions, customs, and price; and government regulation and restrictions hinder its innovative development by trying to enforce conformity.

Government argues that it needs to intervene because the market place in crypto cannot regulate itself.


The Almost Unadulterated Good of Civilization

Civilization is an amazing benefit to mankind. It provides “goods” such as knowledge, prosperity, culture, progress, and emotional self-fulfillment in a manner impossible to man in isolation. Retreating to isolation becomes preferable only when a “civilization” is so totalitarian that it strips away all freedom and becomes a danger to life itself. Then, antebellum slaves flee North with hounds on their heels. Then, desperate youths climb a barbed-wired wall in East Berlin, despite guns trained on their backs. They escape a savagery that passes for civilization, and risk death to do so.

A pivotal question for free crypto is whether the free market can establish monetary civilization. This question breaks down: how does order arise, and how does it decline? The questions are pivotal because, if freedom cannot provide a healthy society, then a central authority will fill the void. Murray Rothbard famously cast the political struggle throughout history as Power versus Liberty. If civilization requires central planning, then Power wins. If a sound currency requires a central authority, then Power wins.

Liberty more than holds its own in this contest. Civilization not only emerges without government, the presence of authority is its greatest obstacle. The genesis of civilization is spontaneous order.


Spontaneous Order

A common illustration of spontaneous order is the forging of a path through a pasture of tall grass. The first person to cross the field makes a crude trail, lined by broken stalks. Acting separately, ten more people choose to follow the crude path. A clear-cut trail begins to emerge, and it becomes the standard way for to cross the field. To use a famous phrase, the path is a “result of human action but not of human design.”

The path example is a stripped-down version of spontaneous order. It conveys the basic idea, but the example is less than satisfying. For one thing, to replace the central-planning model of civilization, it is necessary to explain much more than how a trail is created. How does an immensely sophisticated, global network of interactions between strangers create civilizations? How do strangers form a seamless web that becomes a thriving economy and society?

Crypto provides the answer: cooperation, whether that goal is intentional or not. Some cooperation is intentional. Farmers sell produce to local markets; a team of programmers design the latest, greatest app; a hospital coordinates staff schedules, and the doctors consult on patients; truck drivers deliver goods to a given address; a start-up business contracts with a marketing expert; an international firm cements relations with its foreign counterparts. The cooperation is not aimed at creating civilization or society, however. It is motivated by self-interest, whether that concept is defined as profit, satisfaction, or some other form of payment.

“I, Pencil” (1958) is a brief essay by Leonard Read, founder of the Foundation for Economic Education. It tells a story from the perspective of a pencil, which chronicles its own creation. The saga begins with the harvesting, mining, and forming of raw materials, including cedar, glue, wax, graphite, lacquer and pumice. Crews of foreign ships transport the materials to where dock workers unload the containers, and truckers convey them to pencil-making factories. Up to this point, almost everyone involved in the manufacture of the pencil cares nothing about doing so; they probably do not even know the part they play. They are making a living, pure and simple.

The factory is where self-conscious cooperation toward creating the pencil begins. Whether automated or not, the factory requires investors, oversight, repairmen, a janitor and an array of other people to manufacture one instrument. Of course, the profit lies in manufacturing millions and millions of them.

In his introduction to “I, Pencil,” the Nobel-winning economist Milton Friedman wrote,

“None of the thousands of persons involved in producing the pencil performed his task because he wanted a pencil. Some among them never saw a pencil and would not know what it is for. Each saw his work as a way to get the goods and services he wanted—goods and services we produced in order to get the pencil we wanted. Every time we go to the store and buy a pencil, we are exchanging a little bit of our services for the infinitesimal amount of services that each of the thousands contributed toward producing the pencil.

“It is even more astounding that the pencil was ever produced. No one sitting in a central office gave orders to these thousands of people. No military police enforced the orders that were not given. These people live in many lands, speak different languages, practice different religions, may even hate one another—yet none of these differences prevented them from cooperating to produce a pencil. How did it happen? Adam Smith gave us the answer two hundred years ago.”

Smith’s answer was the “invisible hand.” The term was introduced in the book Smith considered to be his masterpiece, The Theory of Moral Sentiments (1759), and it reappeared in his subsequent work, Wealth of Nations (1776). The invisible hand refers to the unintended but immense benefits to society that flow from people who act in their own self-interests, especially economic self-interest, in the manner described by “I, Pencil.”

Those at the factory have no grand social scheme beyond the efficient and profitable manufacture of pencils. And, yet, society benefits. Children have pencils to use in art class, workers can feed their families, and a useful product is available inexpensively. All prosper. But for the free market to provide social benefits, government regulations and restraints must be eliminated.

This answers the questions posed earlier: order arises out of the self-serving actions of individuals who cooperate with others, whether intentionally or not. Order declines when self-interest and voluntary interaction are hindered by government interference. In short, Liberty brings order and civilization; Power produces disharmony and conflict.

“I, Pencil” and the “invisible hand” clarify another confusion that can come from the path example; namely, the definition of spontaneous order as the “result of human action but not of human design” is ambiguous. Clearly, the order within the pencil-making factory is designed by humans. The phrase does not deny that reality. “Not of human design” means that no central planner organizes all beyond those who design, own and manage the factory.

“Not of human design” refers to the army of strangers whose actions deliver a stunning array of products and services, even though there is no grand scheme or conscious intent to do so. They merely act in their own self-interest. As a result,  the average person enjoys a higher living standard today than nobles in the past. The cooperation also binds people together in peace because they have a vested interest in continuing to profit from each other. Multiply this cooperation by millions of interactions which create millions of products and services, and the dynamic becomes a glue that holds society together and allows civilization to emerge.

In other words, “not of human design” does not preclude active cooperation between individuals. Quite the contrary. It rejects any attempt by central authority to insert itself between cooperating individuals, such as regulating the free flow of crypto between individuals. The phrase seeks to explain how complex networks can arise out of the seemingly random and unintentional cooperation upon which modern society depends.

Arguably, one man designed Bitcoin, the first viable cryptocurrency. But a long chain of theorists and crypto-anarchists forged the path for Satoshi Nakamoto. Almost all of them did so without appeal to government or tax-paid salaries. Cryptocurrency survives because an immense number of strangers control nodes, do transfers, specialize blockchains, invent better software, and cooperate for their own selfish gain, which results in gains for others. Bitcoin exploded on the monetary scene and changed the economic dynamic forever precisely because it obeyed no central authority. It had the wildness and innovation of freedom.

Cryptocurrencies may resemble chaos because they do not express military order; they are still in the early stages of development; and there is a surging war between Liberty and Power that distorts their functioning. Moreover, Power is on a propaganda campaign. Power wants the extreme advantage of people believing crypto is chaos, and it is the remedy. It is not. Or, rather, it is a “remedy” that would have failed either to create a pencil or have created one so expensive as to be a luxury item.


Conclusion

So far, this article has applied spontaneous order only to economics, which is the bedrock of society. But human beings have other needs, as well: law, spirituality, culture, education, family…these are some of the institutions by which civilization is defined. With the bedrock in place, it is time to explore how spontaneous order establishes the other institutions of civilization. They, too, are not the result of human design—that is, not the result of central planning. And cryptocurrency is redefining these institutions in the image of Liberty.

[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: A Dazzling Explosion of Spontaneous Order appeared first on Bitcoin News.

Wendy McElroy: Crypto and the Impossibility of Knowledge in Planning

Crypto and the Impossibility of Knowledge in Planning

The Satoshi Revolution: A Revolution of Rising Expectations
Section 3: Decentralization
Chapter 8, Part 4
Crypto and the Impossibility of Knowledge in Planning

Bitcoin…is better understood using the conceptual lens of the Catallaxy: participants in Bitcoin spontaneously form a decentralized monetary and financial ecosystem, collectively choosing Bitcoin as a medium of exchange and store of value. Bitcoin is…an irrefutable demonstration of spontaneous order in action.

Francis Pouliot

Cryptocurrency is a perfect example of catallaxy and of a remedy for its polar opposite: central planning. The opposites are at war, of course.

The concept of “catallaxy” is similar to that of “spontaneous order,” but the latter concept can be broadly applied to most areas of life. Catallaxy applies specifically to how economic order emerges in a system through the uncoordinated and diverse actions of individuals who pursue their own self-interests. The social theorist Friedrich Hayek defined it as “the order brought about by the mutual adjustment of many individual economies in a market”.

The obscure term captures a dynamic that is essential to the creation of civilization: cooperation. If human beings are to rise above the level of Robinson Crusoe or savagery, then they must interact to mutual advantage. Historically, the “cooperation” is usually orchestrated by a central authority-a government, a tribal leader, a religion-that negates the voice of the individual. One reason people agree to be silenced is because they worship the authority, which makes them willingly or unthinkingly sabotage their individualism.

And yet, human beings are conflicted. Most hope to be the type of person who would stand between a lynch mob and the black man it is hunting. There is a yearning to be heroic and unique, even if it is expressed by standing in a crowd in which everyone yells, “I am unique!” This is not always hypocrisy. It is often a conflicted but honest response to two antagonistic urges: worship of authority; and, the need to feel real as an individual.

Recent centuries have given us a new paradigm of how cooperation creates civilization-a paradigm other than control from on high. Civilization rises from the grassroots. It arises through the uncoordinated and voluntary association of individuals and groups. It comes from catallaxy, which is sometimes called “catallactics.” The concept was a long-sought-after intellectual breakthrough that allowed free-market advocates to explain the evolution of society without a central authority.

In his masterpiece Human Action, Ludwig von Mises attributed the concept’s origin to the 19th century economist and academic Richard Whately who wrote, “A[dam] Smith, indeed, has designated his work a treatise on the Wealth of Nations; but this supplies a name only for the subject-matter, not for the science itself. The name I should have preferred as the most descriptive, and on the whole least objectionable, is that of catallactics, or the ‘Science of Exchanges’.” Whately sought what Mises called praxeology-the science of human action-but he focused on economics.

Digital currencies are the most fascinating example of economic spontaneous order that has occurred in decades. It may not seem to be grassroots economics because it is so technologically sophisticated, but it is as grassroots as it gets. As a practical matter, however, free-market crypto stumbles over an obstacle. Users still buy into the trickle-down version of organization, and they tend to surrender their independence to centralized exchanges that function as central banks. Like banks, the exchanges maintain control of deposits, which is de facto ownership, and they report all transactions to the government. People are free to choose for themselves, of course, but central powers inevitably violate the principle of free choice by banning anything that competes with them for power or money.

Thus, the ideological struggle within crypto is between centralization and decentralization. Governments need the first to control the economy; individuals need the second to achieve financial independence. There can be no compromise between the two because they are antithetical. But, as a matter of brute reality, both operate side by side within most societies because they each satisfy a competing urge within many human beings: a desire for authority, and a desire to be free. Authorities benefit tremendously, of course, and their motives are clear. But they could not prevail if a sufficient percentage of the population did not agree enough to go along.

Both government and the free market provide conflicting models for social order and civilization.

No one championed the free-market dynamic more vigorously than Hayek. He  argued persistently against what he called “constructive rationalism”-the belief that social order should be constructed by a central authority. He argued that it should not be but also that it could not be constructed. All that could emerge was government-imposed order, which was the opposite of social order. Hayek’s definition from The Constitution of Liberty: “Order with reference to society thus means essentially that individual action is guided by successful forethought, that people not only make effective use of their knowledge but can also foresee with a high degree of confidence what collaboration they can expect from others.”

Hayek’s arguments differ from the usual crypto critique of trusted third parties because he does not dwell on the corruption of the system. He focuses on its disutility. Satoshi Nakamoto’s White Paper also touches on the practical flaws of the central banking system, but Hayek differs from Satoshi as well. Satoshi offers precise critiques of real practices; Hayek offers fundamental critiques of the inherent inability of the system to provide what it claims. Another way to state this: conceivably, the faults addressed by Satoshi could be corrected because they are practices. The faults attacked by Hayek are insurmountable because they form the ideological foundation of central planning. 


Centralization Versus Decentralization

He knew first-hand the consequences of central planning, which he called rational constructivism. Hayek had witnessed the devastation of classical liberalism by two world wars, but especially by World War I, which broke the mold of the free market. Wartime governments clamped centralized control over the private sector to ensure the flow of armaments and other “necessary” goods. Governments inflated their monies to pay for massive military build-ups. And war strangled the flow of free trade that classical liberals considered to be a prerequisite to peace, prosperity, and freedom. In short, Hayek had watched as 20th century statism replaced 19th century classical liberalism. Central planning was the mechanism through which freedom had been destroyed.

In response, Hayek developed a sophisticated system of social theory to explain how the institutions of society naturally evolved from the bottom up, which meant they could evolve once more. He maintained that the natural institutions of society were the collective and unintended results of human action. Even complex social phenomena-such as religion, language, or money-were the unintended consequences of individual interactions. For example, no central authority decided to invent human speech, let alone to design a language as specific as English. Acting solely to achieve their own ends, individuals began making sounds to facilitate getting what they wanted from others, whether the goal was economic or more personal. Speech resulted from human action but not from human design, and it naturally evolved into language. The evolution may not have proceeded with scientific efficiency, but it was efficient enough to speed along the development of civilization. The efficiency of government programs suffer by comparison, to say the least.

Yet constructivists claimed that an unplanned society is chaos. With sufficient knowledge and a scientific approach, a perfectly efficient society could be engineered. No surpluses, no scarcities, no waste. Stock markets would not crash, and currencies would not fluctuate. Society could be designed so that its members walked in unison toward the same desirable social goals, just as they marched toward victory in war.

Hayek bluntly stated that the knowledge constructivists sought is unattainable. It is not possible to plan the dynamics of tomorrow based on yesterday; predictions may be possible but knowledge is not. It is impossible because people and circumstances are erratic. Even a small thing, like the price of bread yesterday, does not give knowledge of the price tomorrow or what a person will be willing to pay. The price of bread might skyrocket due to a shortage, or the person might value the loaf differently. Using yesterday to engineer tomorrow goes against a fundamental tenet of human action: the principle of inevitable change. Human beings are fundamentally different from the physical objects examined by the hard sciences. A scientist can learn everything he needs to know about the behavior of an object, and the information might not change over time. But human beings act on psychological factors and motivations that are hidden, often from themselves. Society does not consist of objects that can be neatly categorized and made to obey the laws of science. Society consists of unpredictable individuals who react to changing circumstances.

In Human Action, Mises commented, “Human action originates change. As far as there is human action there is no stability, but ceaseless alteration…The prices of the market are historical facts expressive of a state of affairs that prevailed at a definite instant of the irreversible historical process….In the imaginary-and, of course, unrealizable-state of rigidity and stability there are no changes to be measured. In the actual world of permanent change there are no fixed points…”


Conclusion

Throughout the work of Hayek and Mises, two closely related concepts emerge again and again: methodological individualism, and spontaneous order. The two concepts are an essential part of the ideological backbone that forms the structure of cryptocurrency. They also explain why the explosion of freedom brought by crypto was so unexpected. It sprang from individuals and from freedom of action.

Cryptocurrency resembles the lone-gunman theory. History stumbles along a fairly steady, though not necessarily salutary path. Then a lone gunman jumps out of nowhere and shoots Archduke Franz Ferdinand of Austria, or some other prominent figure. In the case of Franz, the assassination sparked WWI. History changed forever.

The centralized financial world was stumbling along a path until crypto jumped out of the bushes and assassinated the banking system. Economic history changed forever, and it cannot be undone. But, to understand the power and potential of crypto, a clear sense of spontaneous order is necessary. The free-market model of freedom and the institutions it requires depend upon it.

[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 and the Impossibility of Knowledge in Planning appeared first on Bitcoin News.

Wendy McElroy: The Centralization of Crypto and the Banality of Evil

The Centralization of Crypto and the Banality of Evil

The Satoshi Revolution: A Revolution of Rising Expectations
Section 3: Decentralization
Chapter 8, Part 3
The Centralization of Crypto and the Banality of Evil

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. For a social collective has no existence and reality outside of the individual members’ actions.

–Ludwig von Mises

In 1963, the political philosopher Hannah Arendt wrote a book Eichmann in Jerusalem, about “the banality of evil,” which redefined that concept forever. Evil is not usually committed by sadistic monsters, she argued, but by ordinary people who relinquish personal responsibility for their actions and obey the orders or rules of a corrupt system. (Here, evil is defined as deliberately and callously inflicting great harm on innocent people.)

Arendt reached this conclusion while reporting for The New Yorker on the trial of high-ranking Nazi Adolf Eichmann, which occurred in Israel. As a German Jew who fled the rise of Hitler, she should have been appalled to be in the same room with Eichmann. Instead, Arendt was fascinated by him. There was no guilt, no rage, no sense of responsibility, nothing exceptional. As her book explained, Eichmann kept repeating that, “He did his duty…; he not only obeyed orders, he also obeyed the law.” He was also assisted by a vast network of average people—clerks, railroad workers, low-ranking soldiers—who sent innocent others off to prison or worse fates, without a second thought. It was the law.

Cryptocurrency confronts the banality of an economic system for which the word “evil” is not too strong a word. Opening with Arendt may seem like hyperbole, but it captures something important. The central banking system and the other economic controls imposed by government seem benign because they are so familiar; people grew up with them. And bank clerks can be very pleasant as they demand Know Your Customer data; if the customer objects, they answer “I am doing my job, and it is the law.” Nothing benign occurs in the system. Hard-working people are robbed of their wealth through measures like inflation and the monopoly of fiat currency; food is taken from the mouths of children; innovators who could produce a better world are shackled; in some nations, people die for want of nourishment or medical care.

Venezuela is an extreme example of economic evil, as well as an example of the remedy. When the economy collapsed in 2014, many people’s lives were ruined while many others survived by using the only alternative they had to worthless fiat: cryptocurrency. President Nicolas Maduro was well aware of the dynamic. That’s why he issued the first-official state crypto—the Petro—which was announced last December (2017). The Petro is doomed,  of course. When centralized in Maduro’s hands, it will become just another form of fiat. But the Petro indicates one of the main ways the economic system will try to defuse the threat of crypto—namely, centralize crypto by either issuing coins or regulating a few institutions approved to handle it, such as exchanges.

Two main factors in how long the Petro will last are the centralization of power, and how many average people will accept the official status quo because it is (or will become) the law. These are the people who will work in the financial system, or turn in a neighbor for mining, or vote to ask for regulation. They are the banality of economic evil, without which the system could not exist.


Methodological Individualism

The harm done to freedom by those who act against decentralized-market crypto is more than just a denial of financial independence to others. Free-market crypto  fortifies some of the most important concepts of liberty. One of them is “methodological individualism,” which is the exact opposite of what Arendt called “the banality of evil.” Instead of individuals relinquishing their responsibility for actions to an institution, like central banking or the military, individuals are entirely accountable for their own behavior.

The Austrian economist Ludwig von Mises rested much of his philosophy on methodological individualism. He declared that, ultimately, only individuals exist; only individuals act. Even within the dynamics of a collective, such as the state or society, it is individuals who comprise the structure and carry out all actions. Mises famously stated, “The Hangman, not the state, executes a criminal.” Individuals who look at the hangman [and] see the state in action do so only because they have created an abstraction known as ‘the state’ in order to provide a context. The hangman may be pressured to perform his job, but the performance is ultimately his choice. Equally, people never truly see or hear a group conversation. All they see or hear are individuals speaking, and then they label the sum of the exchange as ‘a group conversation’.”

Mises argued that collectives-such as family or society–were valuable abstractions that people used to describe their interactions with others within a specific context. He did not deny the worth of many collectives. Quite the contrary. He explained, “Methodological individualism, far from contesting the significance of such collective wholes, considers it as one of its main tasks to describe and to analyze their becoming and their disappearing, their changing structures, and their operation. And it chooses the only method fitted to solve this problem satisfactorily.” Individualism was the key to understanding collectives.

What does this have to do with cryptocurrency?

The most difficult area in which to implement methodological individualism is  finance, which is one of the most powerful collectives in existence. Central banks, tax agencies, and reporting forms are ubiquitous types of evil. Governments do not produce any wealth. And, yet, they need vast amounts of it to finance bureaucracy, the military, and the other centralized trappings of power. This means governments need to steal vast amounts of wealth. But to do so directly would cause resistance. So they issue fiat and bonds, and force all finance to go through institutions they control. For a long time, for most people, there was no viable path around the centralization.

And, Then: Cryptocurrency

Free-market crypto is methodological individualism writ large in an essential area of life. Methodological individualism is an incredibly powerful challenge to the centralized control of economics. It was designed to be so.

The concept arose in response to the theory of social holism that became popular in the early twentieth century. Social holism claims that systems must be viewed as wholes rather than as collections of their parts. It maintains that a collective has a dynamic that differs from the sum of its parts. In short, the collective is greater than the individuals who comprise it.

Marxists often accuse those who espouse methodological individualism of being atomistic, or unable to bow to the greater social good. Some go so far as to assert that the individual, and not society, is the true abstraction. That is, individuals do not exist without society. As Mises observed, “The notion of an individual, say the critics, is an empty abstraction. Real man is necessarily always a member of a social whole.”

Karl Marx argued this point by using a Robinson Crusoe example. An individual who had been born and immediately abandoned on a desert island, he contended,  would not be a human being at all. His point was that human beings are social organisms-social constructs, if you will-who cannot be lifted from their defining context and still remain human. Reversing Misesian logic, Marx claimed that society created its individual members. To create the “right” type of people, all social institutions had to be thoroughly regulated for the social good, however that was defined. The brutal conformity of communism is an example of centralization. So is the expression, “I was only following orders.”

Classical liberals argued that a person raised in utter isolation would still be a human being with human characteristics. For example, he would have a scale of preferences, and he would act to achieve the highest one first. Without social interaction, of course, huge parts of the person’s humanity would never develop. But this would not make the individual less human. Collectives do not define humanity. Human beings define collectives.


Conclusion

Coerced centralization is so inculcated into the culture that it is considered to be normal and healthy. Public schools, central banks, public works, tariffs, …many people cannot envision society through any other lens. But coerced centralization demands that people surrender their moral compass to a collective authority. It is the source of Arendt’s banality of evil.

Methodological individualism is the cure, especially through the dynamics of a  free crypto, which is implemented through decentralization. But how does a decentralized society create the free-market institutions valued by Mises? The answer is another key concept of liberty: spontaneous order.

[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 Centralization of Crypto and the Banality of Evil appeared first on Bitcoin News.

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.


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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.

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