On Crypto-anarchism
Why are you here in the first place?
To understand ourselves better, discover what moves us, or even guess where we find meaning in life —good luck with this one, but if you figure it out hit me up—, it is essential to reassess our deepest beliefs over time.
If you are reading this, it means you are a cryptocurrency enjoyooor. But Why are you here in the first place?
Let me introduce you to a word you must have heard plenty of times. A word that is often used with “bad” connotations in the eyes of society. Let’s discuss anarchism.
Anarchism /ˈanəkɪz(ə)m/
Anarchism is an ideological movement that is skeptical of authority and power. Based on equality, community, and non-coercive consensus-building ideals.
Anarchism claims, and defends, the importance of individual liberty. A type of liberty that is conceived as freedom from domination. This is the reason behind anarchists’ skepticism of political authority and their belief that real justice can only emerge from consent.
Why did crypto-anarchism emerge?
The movement was firstly introduced by Tim C. May in 1988 when he publically shared The Crypto Anarchist Manifesto at a crypto conference.
“Just as the technology of printing altered and reduced the power of medieval guilds and the social power structure, cryptologic methods will fundamentally alter the nature of corporations and of government interference in economic transactions.
Combined with emerging information markets, crypto anarchy will create a liquid market for any and all material that can be put into words and pictures.
Just as a seemingly minor invention like barbed wire made possible the fencing-off of vast ranches and farms, thus altering forever the concepts of land and property rights in the frontier West, the seemingly minor discovery out of an arcane branch of mathematics will come to be the wire clippers which dismantle the barbed wire around intellectual property.”
As the manifesto showcases, the crypto-anarchist movement emerges as a counterforce that aims to combat the mass surveillance and control that centralized entities such as governments and giant tech companies place over the population.
On information asymmetry and power
Information is knowledge, and knowledge is power.
Since ancient times, access to privileged information has been an edge. This edge can materialize in the form of a technological breakthrough (think of the first fire tamers, private medieval libraries safeguarded by monks, a doctor who unveiled the secrets of a disease, or armament superiority thanks to the invention of semi-automatic weapons). Another reason why knowledge can become an edge is that with the understanding of reality comes predictability, and with predictability comes control.
Note: It is important to understand that knowledge has a key property: Once information is publically available to anyone, that information is still useful but loses its value. It is no longer an edge.
We live in the era of information, and tech giants such as Google or Facebook are the owners (and guardians) of that data. Therefore, these companies are not only powerful but are positioned to better understand our behavior, increase their prediction capabilities, and control us.
Anarchism understands that the most powerful and influential actors of our society are not likely to tolerate any form of peaceful association that challenges their power.
Reflection on Law: The production of law is centralized by congressmen and congresswomen. The current democratic system places a theater (the election process and Congress debates) in front of the population, to prevent them from looking directly at power.
Anarchism claims that people have a fake sense of control over law production, whereas, in reality, the producers of law have full control and exercise it behind closed doors, favoring their interests and ensuring the prosperity of their power.
As showcased in the manifesto, these realities are the main reasons why crypto-anarchism emerged in the first place. The movement believes that to turn this situation around, the only way forward is to achieve true decentralization of power by ensuring that information is censorship-resistant and accessible to anyone.
Let's detour. Sidenote on anarcho-capitalism
A lot of people tend to misunderstand crypto-anarchism and assume that it is just a form of anarcho-capitalism. Let me explain what makes them different, and why anarcho-capitalism is not enough in the eyes of crypto-anarchism.
Like all the anarchist movements, anarcho-capitalism advocates for the abolition of centralized nation-states in favor of an individual property system. On top of that, this movement believes that society tends to self-regulate and civilize through participation in the free market. It claims that private property should be enforced by private defense agencies and/or insurance companies selected by customers.
If governments were dismantled and society ran under anarcho-capitalism standards, the private market would mimic what is already happening nowadays. Some centralized players (tech giants, insurance companies, etc.) would gather all the power, which, in turn, would end up in control over the population. So, we would end up in a similar scenario as the one we have today, but instead of producing laws via centralized public organisms, we would do it via centralized private organisms. Nevertheless, at the end of the day, those laws would still benefit the powerful ones who created them.
That is the reason why crypto-anarchism goes a step further and focuses on the decentralization of power to ensure that all individuals are free from domination.
But how does one decentralize power when it is not sustained by them?
As explained before, anarchists reject any sort of coercion and believe that individuals should be free from domination. So, to prevent power from being centralized and it is necessary to ensure:
Protection of privacy: Anonymity plays a fundamental role to ensure that individuals maintain their privacy and are not restrained.
Ideological freedom: A fair society can only emerge from individuals with freedom of speech. Therefore, individuals’ ideas shouldn’t be restricted.
Economic freedom: The ability to freely trade goods is also crucial since otherwise the market is biased and favors some players with privileged benefits.
As you can imagine, this is where the cryptography part comes into play. Crypto-anarchism embraces technology as the only possible means to regain power and ensure it is not centralized again.
The movement claims that with the combination of cryptography, distributed systems, and an open-source approach, protection of privacy, ideological freedom, and economic freedom can be guaranteed. Therefore, all information could be censorship-resistant and public, effectively enabling a potential decentralization of power.
Fancy words and unfeasible dreams? A bit more history
In October 2008, the vision manifested in The Crypto Anarchist Manifesto started to materialize when a person/group, pseudonymously named Satoshi Nakamoto, published the bitcoin whitepaper.
This peer-to-peer digital cash system was a 0 to 1 innovation. In the eyes of crypto-anarchists, it represented the placement of the first step toward a decentralized and censorship-resistant world.
The Bitcoin whitepaper didn’t only enable a peer-to-peer digital cash system, but it also proved that individuals could voluntarily cooperate and create new social operating systems. Nation-state agnostic systems, with pre-defined consensus rules, that people could anonymously join or exit at their own will.
On top of that, the creation of Bitcoin unleashed the creation of plenty of blockchains that aimed to improve some of Bitcoin’s functionalities. Over time, emerged the second generation of blockchains (such as Ethereum) which weren’t limited to p2p transactions. These new blockchains, in turn, kickstarted the creation of decentralized applications governed by smart contracts.
With the invention of smart contracts, the crypto-anarchist thesis has been proven to be feasible thanks to the introduction of:
New economies, based on decentralized financial services and products (DeFi), which get rid of intermediaries and give full ownership to their users. Since these trustless economies remove control (and therefore power) from middlemen, they are positioned as a real alternative to the banking system.
Decentralized Autonomous Organizations (DAOs). Flat organizations governed by their token holders in a trustless and transparent manner thanks to smart contracts.
Note: Both DeFi and DAOs are still in their early stages, and despite the need to be further refined and improved, they have already proven their value proposition and feasibility.
Going forward
As previously explained, these technologies threaten the current social structure and challenge the powerful corporate and government hierarchies. Because of that, these entities will try to discredit and criminalize these technologies (spoiler, they are already doing it).
So, going forward, if the crypto-anarchist movement wants to threaten the current social structure, it will have to focus on the scalability of these networks (to onboard as many users as possible) and, especially, on further developing their censorship-resistant attributes.
The censorship-resistant attributes of these technologies must be improved on several different fronts. To progress and scale, the movement should work on:
Protection from nation-state repression. Zero-Knowledge Proof technology will play a crucial to give people anonymity. Ensure that individuals are not prosecuted for participating in these alternative financial and social systems.
Resistance to malicious internet service providers (ISP) and blocks from nation-states. To do so, validators should be geographically dispersed and uniformly distributed across the internet. Local adoption of mesh networks would also be useful.
Resistance to governance centrality. Lowering the requirements to run a node, blockchains can onboard more validators and increase the Nakamoto Coefficient (minimum number of entities necessary to disrupt the system).
Educational and open-source content. The best way to combat censorship is by publically sharing all the information and spreading awareness and knowledge. Taking power away from the conglomerates and decentralizing it, can only be done if the majority of the society awakens. To do so, open-source and divulgation initiatives such as WikiLeaks are key.
Conclusion
Crypto-anarchism is a relatively young movement that aims to become a non-coercive, community-driven alternative to a dystopian future where power and control are taken away from individuals (which is not that different from our current reality).
Although the technology that should enable this revolution is not fully functional yet, it has been proven to be feasible, and one must acknowledge that the progress made in the last decade is impressive.
The cryptocurrency ecosystem represents an emerging technological sector. As such, it has seen massive growth and, consequently, has caught the attention of a lot of speculators. Nevertheless, it is important to understand that the ideology behind its existence goes far beyond quick profits.
If crypto-anarchists want to succeed, they need to ensure that the ethos of the movement is the north star that guides new projects/developers. They need to ensure foundational ideas are well-known by all participants of the ecosystem.
“Anarchism is not a romantic fable but the hardheaded realization, based on five thousand years of experience, that we cannot entrust the management of our lives to kings, priests, politicians, generals, and county commissioners.”
― Edward Abbey