Will the Bitcoin Revolution bring Anarchy?

Anarchy, State, and Utopia is a 1974 book by the American political philosopher Robert Nozick. 
Nozick argues in favor of a minimal state, “limited to the narrow functions of protection against force, theft, fraud, enforcement of contracts, and so on.” When a state takes on more responsibilities than these, Nozick argues, rights will be violated. 
To support the idea of the minimal state, Nozick presents an argument that illustrates how the minimalist state arises naturally from anarchy and how any expansion of state power past this minimalist threshold is unjustified.
Many consider that Bitcoin technology will eventually make banks unnecessary, and also use it’s potential to make redundant, social networks, the markets for share dealing, and some financial observers go as far as including national governments as well!
Bitcoin is making world headline news. It is established and accepted in many countries, but it’s full power and latent forces for disruption and anarchy are not fully understood
In short, Bitcoin could be the trigger for a coming digital rebellion – “a catalyst for change that creates a new and different world,” to quote Jeff Garzik, one of Bitcoin’s most prolific developers.
It has already started. Bitcoin and rival crypto currencies such as Doge, Ethereum, and Steem have shown that banks can be replaced with software and smart algorithms.
And rebellious and creative programmers are starting to ask what else can we manage without?
That is just the start
Digital anarchy could transform our lives with machines that answer to you, your employers, crime syndicates… or no one at all. Nearly every aspect of our lives would be uprooted.
This would be brought about by the power of the “blockchain” –  party-to-party ledger which creates and records transactions and agreement on contentious issues using cryptography.
A blockchain forms the beating heart of Bitcoin. In time, blockchains will power many radical, disruptive technologies that clever people are continuously working on.
Historically, we’ve needed central bodies – banks, stock markets, governments, police forces – to settle vital questions. Who owns this money? Who controls this company? Who has the right to vote in this election?
Let’s start with money and the attraction of digital currency. Right now, in the wake of the sub prime mortgage lending crisis in 2007, it’s easy to understand the appeal of a new money that lies beyond the grasp of banks and governments.
No treasury can print more Bitcoins and inflate away the value of your savings, or recklessly lend them out for years to people with no chance of meeting repayments, eventually bringing the whole system crashing down. The rules of Bitcoin are set in digital stone.
This small programme of unbreakable computer code will allow people to solve the thorniest problems without reference to any authorities.
The benefits of decentralised systems will be huge: slashed overheads, improved security and (in many circumstances) the removal of the weakest link of all – selfish, corruptible, fallible humans.
But how far will disruptive effects reach? Are we rapidly approaching a singularity where, thanks to Bitcoin-like tools, centralised power of any kind will seem as archaic as the feudal system?
If the internet revolution has taught us anything, it’s that when change comes, it comes fast.
It’s not funny money any more.
It began with a paper written by someone calling himself “Satoshi Nakamoto” and quietly published via a cryptography mailing list in 2008. It laid out a plan for a form of money based on “cryptographic proof.
The true identity of Satoshi has never been revealed, although rumours abound: a lone academic, a group of disgruntled, anarchist programmers working in the financial sector, the CIA…
What is known is that the number of coins in circulation is finite, limited to 21 million. The plan is immutable: around 13 million are already in existence and the last ones will be released in 20 years or so.
Nakamoto wrote about his idea of keeping a digital ledger of all transactions – the blockchain – to prove who owned what. It was a breakthrough which solved a longstanding computer science problem: how to run a complex system with no central control.
Bitcoin has no bank to maintain security, record ownership or handle transactions. With the Blockchain none is needed.
Critics who say Bitcoin is nothing but zeros and ones in a computer file and therefore can’t hold value, miss the point that their bank balance is also nothing but a number on a computer.
The dollar is worth something only because people decide to place value in it. If that consensus broke down, then – as in the rampant inflation in Germany after the first world war – a wheelbarrow full of dollar bills couldn’t buy a cup of coffee. The US dollar is a famously stable currency – but just occasionally we’re brought up with a jolt.
 For example, in 2007 UKs Northern Rock was forced to go cap-in-hand to the Bank of England. A few customers rushed to withdraw their money, then a few more… and soon there was panic. Loss of confidence. Shades of Weimar Germany, or even Zimbabwe.
If national currencies can fall victim to a chain-reaction erosion of faith, why should a new currency like Bitcoin not experience the same phenomenon in reverse and soar?
Cyprus horrified citizens when it announced that it would seize up to 60 per cent of all savings over €100,000 to save its struggling banks. Suddenly Bitcoin seemed less risky and transaction volumes soared as people poured cash into the digital currency to keep it out of government coffers.
There were protests in Nicosia, Cyprus, in 2013 against a tax on bank deposits This same land grab could not happen with Bitcoin. There is no central power with the ability to help themselves.
Neither are credit-fuelled binges possible. The smoke-and-mirrors system that banks use to magic money into existence when they create loans is not possible in a Bitcoin world.
This holds a lot of appeal. Financial Times columnist Martin Wolf recently called for banks to be stripped of this bizarre right to create money from thin air, claiming that it is the root cause of credit bubbles and busts such as the painful cycle we have recently witnessed.
In his view, they should be confined to only lending the amount they have taken as deposits from savers. It’s hard to argue against such a common sense proposal.
The idea for radical change to the financial system was almost certainly motivated by the recession following the 2007 crash. Although Bitcoin and crypto currencies are radical in many ways, it is also strictly conservative: no debt is possible, no complex derivatives, no untrustworthy middlemen. You either have money or not.
The timing was impeccable, the perfect antidote to a financial system which can’t be trusted not to lead us into another round of boom and bust..
In that regards some financial watchers believe the blockchain is one of the most important inventions of the 21st century
“It’s ironic how what terrifies the banks today is actual free market capitalism. They don’t like that. They don’t like competition. Actually having to compete with smaller competitors that are nimbler and less costly is something that they’ve been able to prevent for years with the use of regulation as a barrier to entry.”
This success in the financial sector will be a springboard to other industries and applications. And there is growing opinion that blockchain will ultimately target democracy.
More on that in the next post.
 
 
Image Credit Time Magazine and www.coinedbits.com