The Natural Right of Cryptographic Governance

[Published at the Center for a Stateless Society, Dec. 10, 2015]

In the wake of the recent terrorist attacks in Paris and around the U.S., sentiment among the governing class is turning powerfully against encryption.

Reuters reports an impending “crackdown” on Bitcoin in the EU. Other reports suggest France could inhibit Tor and free wi-fi at will. U.S. officials have taken the opportunity to go on the offensive against any form of encryption, with Senator Dianne Feinstein arguing encryption “ought to be able to be pierced.”

At the heart of the state’s fears is the loss of control it faces. In encryption, human beings have a tool to ensure security and privacy that is resistant to the escalation of force. Even after governments have taken out a warrant against someone, that person still has the ability to keep his information secret, subject to negotiation between himself and the state.

But officials correctly point out that child pornographers, drug dealers and terrorists can use encryption as a tool to keep vital information away from law enforcement. Its reliability and agnosticism, they claim, makes encryption a threat to public safety.

That creates a moral and philosophical dilemma for users and advocates of cryptographic technologies. We have an incredible tool at our disposal, but with the equal potential for legitimate use and abuse. Do we have the right to encrypt information regardless of government interests?

To answer this question, common law and statutory law are insufficient. With the improvements that blockchain technology could bring to the human condition, this is a deeper question with significant implications. The proper use of a disruptive technology that transcends borders should be considered outside of the normal philosophical channels when its existence is an affront to long-established political authority. Natural law and the fundamentals of the “social contract” provide better answers and a clearer direction.

The Surveillance State is Absolute

Rapid changes in information technology over the last two decades have created a banquet of easily acquired information about virtually everyone in the world. The world’s reliance on the internet has made normally private information incredibly easy to acquire. It has also made the existing social contract argument for government authority obsolete.

By the old nation-state system, a nation makes laws and protects rights within a certain geographical boundary. Those outside the boundary are neither subject to its jurisdiction, nor its protections.
But most international threats are now coming from non-state actors. The world has long since stabilized at the state level, but terrorist networks are waging peer-to-peer warfare, circumventing states in most cases by taking their political grievances directly to their citizens.

To combat this “denationalized” threat, states have exploited loopholes between these various “social contracts” that exist between states and their citizens. States may make some effort to respect the legal rights of their own citizens within their own borders; but rights do not tend to carry over to citizens of other countries. The Five Eyes Alliance is one glaring example, where states are widely believed to spy on each other’s citizens and share information so that each may circumvent their own domestic spying restrictions.

This trend is compounded by a lack of accountability. Control is difficult to enforce legislatively with widespread public apathy, and finding standing in court can be likewise impossible without information from behind the veil. The global surveillance state is expanding its reach beyond any practical restraint by legislatures, evolving into a highly fluid, rapidly adaptable information siphon. In that sense, it is becoming as “denationalized” as the threat it is trying to fight. As one NSA official succinctly put it: “It’s becoming a cliché that a permanent state of change is the new standard. It is the world we live in — navigating through continuous whitewater … lucky for us.”

Meanwhile the security state has used its powers to commit financial espionage, intimidate journalists and whistleblowers, and circumvent restrictions on information gathering for crimes unrelated to terrorism. According to cybersecurity expert Chris Soghoian, they continue to “prioritize their own foreign intelligence goals over the security of the Internet”, deliberately inserting exploits into vital security systems.

In light of this conflict of interests between the surveillance state and the citizen, the onus falls on the latter to protect his own privacy.

To break this down into a simple epistemology:

Political violence (war) is being denationalized.

The means of fighting political violence are being denationalized.

Since individual rights are at risk in war, the defense of rights should also be denationalized wherever possible.

States will not protect the privacy of foreign nationals because it would defeat the purpose of their job. They will continue to spy domestically because it’s easy to get away with. There aren’t enough Edward Snowdens out there to stop them. Their global reach leaves virtually no person’s privacy untouched. But this new paradigm isn’t just a reason to protect one’s own privacy. It invalidates the social contract and renders the prohibition of networked cryptographic alternatives morally impermissible.

The “Social Contract” Reconsidered

Since the decline of the “divine right of kings” doctrine, social contract theory has dominated the reasoning behind the coercion of the state. Its logic (like that of the “divine right” theory) has always been circular, but amenable to most people as a post-hoc rationale for their general approval of the role of the state in human affairs. For that reason, a careful reevaluation of the theory is necessary.

John Locke claimed in his Second Treatise on Government (1689) that the contract was the price of civilization: prehistoric humans, possessing natural rights of life, liberty and property sacrificed those rights to the state in order to create early civilization, reaping in turn the stability, security and prosperity that large societies make possible. Natural rights can then only be taken away legitimately by the state upon conviction of a crime through a rigorous process of law. As long as the state abides by the rules set by the contract and receives the continued support of the governed, so the argument goes, individuals have no right to subvert it to pursue their own interests.

But the growth of global information systems has created some new problems for the social contract.
The first problem is the collapse of reciprocity: According to Locke, the social contract necessitates the state and the citizen exercise mutual obligation toward each other, the state to protect rights, and the citizen to maintain the legitimacy of the state through voting, paying taxes and abiding by its rules. But with a networked surveillance apparatus not controlled by any single nation state acting in secret, the ballot box is unlikely to be of much help. This “deep state” exists outside of the contract: it is its own entity and routinely violates privacy rights as a matter of course.

The second, and more important issue is one of consent. If individuals don’t want any part of this, do they have any recourse or are they bound to the terms of the contract? Locke acknowledged that individuals cannot be perpetually bound to any government, “every man being… naturally free, and nothing being able to put him into subjection to any earthly power but only his own consent.” Consent, he argued, could be tacit, but it was nonetheless vital. Non-consent could be expressed by abandoning the system and creating a new one. “Since the government has a direct jurisdiction only over the land”, Locke claimed, individuals are free to “begin a new one, in vacuis locis, in any part of the world, they can find free and unpossessed.”

There were also little “loopholes” in the contract created by the difficulty in determining consent. Locke noted that “EVERY MAN HATH A RIGHT TO… BE EXECUTIONER OF THE LAW OF NATURE” (caps all his) because “if by the law of nature every man hath not a power to punish offences against it … I see not how the magistrates of any community can punish an alien of another country; since, in reference to him, they can have no more power than what every man naturally may have over another.”

This is a key point. The Father of Classical Liberalism claimed that because social contracts did not reciprocate across national boundaries, any individual could morally punish a transgression against his own rights by a foreigner. This could of course easily translate to the peaceful defense of one’s privacy against some foreign government’s spying capabilities. Locke’s acknowledgement shows the weakness of the social contract argument when applied across national borders. It also shows the intellectual bind Locke found himself in in order to affirm that the contract requires consent to be valid.

Privacy and the Open Source Revolution

As I have argued previously, privacy should be considered a natural right if it can be considered a right at all. Individuals retain the right to use air-tight encryption as a defensive tool to protect their privacy against the failure of their legal and political systems. But if individuals are retaining their “state of nature” right to defend themselves against state dysfunction, they must create a new kind of “state” with multiple functions in order to defend those capabilities.

For example, the right to exchange value must necessarily accompany the right to procure a resource, or opponents could render that right functionally irrelevant. Open source encryption software is free and easy to come by for now. That could change if states make it illegal, requiring a risk premium for developers and high costs for consumers.

To counter this possibility and deter prohibition, a robust cryptocurrency trade would be necessary to keep people free in the event the state shut down people’s bank accounts or credit cards, as was the case when the U.S. government pressured credit companies to shut down Wikileaks’ finances. This means that denationalized cryptocurrencies like Bitcoin and Dash are an integral tool to preserve individual rights.

As former CIA officer and open-source advocate Robert David Steele noted, to function properly, open source systems must develop in tandem. “The open source ecology is made up of a wide range of opens — open farm technology, open source software, open hardware, open networks, open money, open small business technology, open patents – to name just a few. The key point is that they must all develop together, otherwise the existing system will isolate them into ineffectiveness.”

Cryptocurrency transactions, run through a trustless mixing system are virtually untraceable. We’re not just talking about private emails anymore, but the right to create a new, transparent, resilient framework of alternative institutions as the old ones succumb to their own opacity.

But cryptography may not just tear down the social contract in the negative sense — it could also rebuild it in a way that better defends individual rights.

The Social Contract and Land Rights

The natural rights were enumerated by Locke as life (the right to defend one’s person against physical threats), liberty (the right to act freely without interference from arbitrary authority) and estate (the right to retain property mixed with one’s labor). Property in particular is one space that is being redefined by technology, leaving open the possibility that the nation-state could be disintermediated from its traditional role of definer and defender of property rights.

Locke argued that in prehistory, the very first “social contracts” were formed when individuals ceded their land to governments in exchange for protection. All subsequent owners of that property, he claimed, enjoyed the protection of the state, and were thus bound to perpetuate its authority. The logic is circular, to put it mildly, but worth noting: he makes it clear that the Social Contract is justified because there was no practical alternative to define and protect land rights.

Governments were defined by the land they protected. Within their borders was a single “final arbiter” with a monopoly on violence to keep order. Many would argue this model provided stability and security for populations around the world and enabled the growth of economies of scale for centuries.

But if property rights can be established and defended without the state, dependence on government institutions could be broken. A major pillar of the old social contract could be replaced.

Securing property rights is a pillar of the new cryptographic governance. Projects like Factom are attempting to show the blockchain can be a substitute for government agencies in the developing world, functioning as the final word on property ownership without risk of corruption or alteration.
Similarly, other projects are being developed for reputation verification, and still more are revolutionizing how we think of notary and legal systems. Connectivity experiments like Bitnation are seeking to show these ideas can be converged and exercised together, functioning as a sort of alternative governance system enforced through cryptographic protocols and consensus.

With non-state record keeping a reality, enforcement mechanisms can be created. But their quality won’t be determined by their geographic origin. They could be competitive, transparent, overlapping systems available globally.

These technologies are still in their infancy. But theoretically, the capabilities are there. As the use of the blockchain and other cryptographic systems grows, they become more secure and reliable. Due to the malleability of the technology, they could also evolve greater and more useful capabilities over time.

What Does This All Mean?

As the NSA likes to point out, we live in a rapidly changing world. The legacy social contract is inadequate to protect individuals in an increasingly fluid global information system. The rapid development of technological capabilities that few in any legislature in the world understand are leaving the sluggish legislative process in the dust. Individuals cannot morally be compelled to sacrifice their own right of secure communication of ideas or private exchange of value without submission to a global security state they cannot control. The globalization of information necessitates individuals learn to employ open source, cryptographic systems to define their own social contracts in peaceful terms.

Since private, secure monetary transactions cannot be taxed except with the consent of the participants, this denationalization could expand the shadow economy over time. Advocates of cryptography can probably expect a backlash, including bans and even jail time in some parts of the world.

Ultimately, this experiment will likely prove that consent in democratic societies has always been manufactured. Locke twisted himself into knots trying to shoehorn the notion of consent into his Social Contract, an exercise largely abandoned by John Rawls and other modern theorists. But the new cryptographic governance introduces the possibility of real consent in governance for the first time. This could ultimately exonerate John Locke’s contributions to political thought.

There is a palpable inevitability to all this. Even major publications like the New York Times and The Atlantic have hypothesized the obsolescence of the nation state. The United States National Intelligence Council envisioned that in just 15 years a “nonstate world” could exist in which “governments had given up on real reforms and had subcontracted many responsibilities to outside parties, which then set up enclaves operating under their own laws.” Nonstate systems will likely develop increasing leverage to compete with legacy nation states. The New York Times acknowledged the scenario describes “much of how global society already operates.”

The real question is how difficult this transition will be. Most states around the world abhor any loss of authority and are likely to prohibit any capability they consider a threat. Bitcoin and other cryptographic technologies have been in their sights. In doing so, they drop any pretense of moral authority and act merely as animals in Locke’s “state of nature,” fighting more for self-preservation that the protection of natural rights. For the first time in history, a real social contract is a possibility within reach. We’d do well not to squander it.

Can the Blockchain provide governance?

Author's Note: This is a brief explanation of how blockchain technology could provide services previously allocated to governments, originally written for the BitNation whitepaper in September 2014 but later excised and completed with some review by Chris DeRose and David Duccini. It explains in brief how the blockchain may have the ability to provide consensus that only governments had previously been capable of, thereby enabling the technology the ability to serve as a general verifier and issuer of identification and transactional information that is permanent, trusted and universally recognized.

This is written from the perspective of a political scientist, rather than a technologist, and describes what a transition in information verification between old state institutions and blockchain technologies might look like.

Why Do Governments Provide Services?

Governments are problem-solving institutions: having a monopoly on violence afforded governments the ability to coerce consensus out of a population in order to solve problems and answer questions in a society, such as establishing identity and land ownership, providing a system for dispute resolution, and much more.

Historically, everyone recognized that a certain framework of rules that were decided upon by majority vote would be followed. This created predictability, because people who followed the rules needed to know that other people would follow those rules as well. Governments created rules and established guidelines and penalties to ensure those rules were followed. All of this work came with costs, so governments also raised taxes in order to diffuse the cost of services among the population that benefited from them.

So traditionally, someone offering what we call “governance services” needed to meet certain conditions within the polity before their service can be considered reliable and legitimate:

1.            They must be able to ensure that services can be proportionally distributed

2.            They must be able to ensure that services will be universally recognized

3.            They must be able to ensure that services will be worth the price

4.            They must ensure that there is a process for changing the rules and services as needed

At a glance, there doesn’t seem to be an inherent property that would keep a private sector organization from being able to offer governance services, and many services in the U.S. have been increasingly outsourced to private contractors since the 1980’s. Perhaps the biggest challenge is universality. Governments can ensure through coercion that their services are universally recognized. The dollar’s value, for example, is enforced  by American guns, as is its legal system, identification system, etc. Without universal recognition of your marriage or birth certificate, so the convention goes, you have a mess when it comes to leveraging those documents to procure other resources.

But is universality really critical? We know from historical experience that different forms of money, for example, can function in a competitive market without a government mandate. We also know that universality isn’t really global: when you travel abroad, a foreign country doesn’t usually ask to see your birth certificate and social security card. They use your passport, a method of identification from an entirely different identity verification system they are not intimately familiar with. They trust it because they trust that the institution that has certified your identity has a rigorous identification process and a system by which your reputation can be discerned.

Governments have historically been the trusted verifier and issuer of identification and transaction information simply because they were the best positioned to offer those services to the public. Private companies have their own verification systems, but companies come and go. When companies do offer some identification or reputation service, such as a credit bureau, it is usually to a specific market for a specific reason. They don’t offer the broad range of services the government are able to with redistributed tax dollars. If a competitor is to offer such services, they must be permanently reliable: i.e., they can’t just go bankrupt and lose your birth certificate or marriage record. They have to be able to maintain accessibility to the records regardless of market volatility. They also must have a universally recognized and widely trusted process for determining your identity and they must be around as long as the document is guaranteed to be valid (in the case of licenses) or forever (in the case of birth records) to vouch for you.

The blockchain protocol may be the first technology that checks all of the boxes required of a governance system. Once the information is online, it exists forever on the network. It has a rigorous verification process that is virtually impossible to crack once the network reaches a certain critical mass. It can record births, marriages, deaths, property ownership, business contracts and a variety of other records traditionally created and held by governments. The identities of individuals on the network can be established definitively through their unique “signatures”, and in turn, those individuals can sign and verify transactions (say, the attending physician at your birth, or the priest officiating your wedding). Instead of a government official acting as notary or other trusted third party verifier, the consensus of a blockchain’s “miners” or other verifiers takes on that role.

Governance Services

Using the blockchain technology as a platform, companies, non-profits and other non-state actors can offer their own competitive governance services. Theoretically, there is no limit to the services that can be offered, and the distribution and availability of services will be governed by market forces. This concept has already been proven in part with “colored coins,” multi-signature transactions and smart contracts that currently exist on the Bitcoin blockchain.

In a sense, the world is already a web of competing legal and governance systems, just tied to geographic territories. The question then is this: is there a value in creating a virtual governance system that is not tied to coincidental geographical boundaries? Is it even possible to offer such a thing without coercion?

According to attorney Pamela Morgan of empoweredlaw.com,  one way to prove provenance while circumventing coercion may lie in the presence of the “timestamp” in the blockchain protocol. One of the reasons government has been expected to provide identification and property ownership services is it considered sufficiently impartial that it would not lie or cheat to favor one citizen’s interests over another with respect to provenance for land rights, for example. The timestamp removes the need for this level of trust in a person or organization. The transaction’s date and time cannot be tampered with, and thus can serve as the final arbiter in the event of a duplicated or fraudulent transaction, even across different blockchains. On a technical level, there is still the possibility that a bidding war could erupt between filers wishing to process a transaction faster and thus claim provenance, but it seems unlikely this would be a problem for most transactions.

The blockchain protocol also has some advantages over traditional government services, including very high transparency, low overhead/transaction costs, and a high degree of accessibility. The system is also highly stable with just enough flexibility to ensure systemic changes can be made if they are very necessary. Unlike a nation state government, it doesn’t require an army of bureaucrats to maintain. It cannot be bribed or blackmailed and it will never make you wait hours in line or slap you with arbitrary fees and fines in order to boost revenue. This makes it a great alternative to traditional services.

What if many blockchains exist simultaneously? Couldn’t there be conflicting information for the same identity? Yes. However, it won’t likely matter much. First of all, without a barrier to entry, any user can join any blockchain just by downloading freeware so he or she can check identities wherever they exist. Second, if there is conflicting reputational or transactional information, users will eventually even out the differences through regular activity across networks, with larger, more utilized networks, having higher value, predominating.

Think of blockchains as competing information marketplaces. Like with prices in exchanges in a competitive marketplace, the information that is freely available to all will tend to even out over time, making arbitrage more difficult. So the reputational arbitrage that scammers may attempt on various blockchains will get increasingly difficult as the system matures. Furthermore, layers of meta-systems will eventually be constructed on bitcoin and other blockchains that will enable users to more easily navigate information between them.

The net result is a competing set of reputational systems, with some overlap and redundancy that exists permanently in cyberspace, with identities verified by the users themselves. Universality through force will become superseded by universality through competition, and consensus is something that will be achieved by the “votes” of miners or other system custodians, rather than by political votes.

Reputation Systems

The effectiveness of a simple user-driven reputation system was proven long ago by eBay, Amazon and Yelp and taken a step further by Pirate Bay and the Silk Road. Divorced entirely from any sort of legal system, the Silk Road’s various iterations has managed to thrive as a totally anarchic marketplace with entirely user-designated reputations until being taken down by authorities. Despite conflicts with existing law, the system itself remained internally sound, and “dark web” marketplaces succeeded despite lacking access to a formal legal accountability system. Blockchain 3.0 is the next level, creating an autonomous “economic layer” for the internet without authorities, and the ability to experiment almost without limit.

In the words of Melanie Swan of the Institute for Ethics & Emerging Technologies:

“Decentralized models have the potential to reorganize all manner of human activity, and quickly, because they are trustless, the friction of the search and trust-establishment process in previous models of human interaction is eliminated. This could mean greatly accelerated rates and levels of activity on a much greater humanity-level scale. The blockchain (decentralized network coordination technology) could emerge as a fundamental infrastructure element in the model to scale humanity to its next levels of orders-of-magnitude-larger progress.”

Potential applications

Key to establishing a reliable form of alternative governance services is the ability to establish identity, rights and reputation.

Establishing identity: Birth, marriage, death certification, next-of-kin, power-of-attorney, parent/legal guardian, account holder, contractor, property owner, creditor, proof of insurance, student, proof of profession, proof of native American tribe membership, club membership, press pass, proof of payment, and school identification, among possible others. Early applications would probably be geared more toward experimentation than essential legal services, and may include moving some existing identification systems to a blockchain-type system. “We probably need to see this used online extensively, before we start to see these applications,” noted Bitcoin expert Chris DeRose. “So, possible examples of online identity would include facebook-esque logins, comment attribution, and credit mechanisms (think airbnb tenant-evaluations, uber rider evaluations, darknet identity services, etc).”

Establishing rights: Blockchain transactions can help with property disputes by showing (even among different blockchains) that a transaction happened at a certain time, indicating reliably whether a “double spend” problem has occurred. The establishment of provenance over property is crucial to the system’s integrity and usefulness, and how this will work remains to be seen.

Establishing reputation:  David Duccini of ID Coin believes that blockchain reputation systems can be far more dynamic than the simplistic, static systems employed by retailers like eBay and Amazon. Signaling not only a positive/negative transaction but indicating the strength of the relationship via signaling mechanisms, as well as the ability to challenge a reputational event and influence one’s own reputation are potential characteristics of blockchain tech, according to Duccini. For further elaboration, check out this interview.

Proofs of identity could replace flawed methods of password retrieval such as mother’s maiden name, having to produce multiple documents or answer questions, provide fingerprints, etc.

The blockchain can replace a single human authority anywhere such is required simply to recognize that an event has taken place. So for example, a doctor can verify your birth on the blockchain rather than signing a piece of paper which is then sent to a governing authority for record keeping. His public key verifies his own identity, and other doctors (or the AMA) and his patients can verify both his identity and reputation as satisfied or dissatisfied patients.

For the time being, governments are likely to reject blockchain transactions that attempt to supplant privileges that they have claimed the right to deny others (such as registering your car on a blockchain instead of the DMV). However, for transactions that do not result in possible revocation of certain rights or privileges granted broadly to citizens in good standing (such as signing a contract or establishing ownership of property), a blockchain transaction can be counted as “digital evidence” in court and is likely to be increasingly accepted as understanding of the technology increases in the legal community. Adoption may also be stronger in markets where reliable governance services are usually scarce. As Chris DeRose noted: “I think decentralized identity is wonderful, but it will need to gain traction in underserved markets for a long time, before it gains traction in well-served markets.”

As time marches on and the technology gains wider acceptance by the legal system, business community and the public at large, usage is likely to increase. The blockchain technology offers an extremely unique approach to transaction and identity verification that has never before existed in human history. If these projects are successful in proving the concept and converge in a way that its convenient and reliable for the average user,  the changes wrought to the way people interact could be explosive.

Why Bitcoin Could Explode With The "Shadow Economy"

Bitcoin’s most visible advocates have spent much of the last year begging congress to go easy on their baby so it can grow into the new powerhouse payment system they so badly want it to become in the global economy.

The economy has been mostly inhospitable, probably because Bitcoin’s future remains uncertain in a hostile environment of conflicting tax and regulatory schemes, efficient competing payment systems and public apathy. But as Jon Matonis pointed out in a Forbes piece back in March 2012, Bitcoin may find a surer footing in the unregulated “shadow” economy that has been expanding globally in the wake of the 2008 crash.

Of course, many Bitcoin fans don’t want to think that such an incredible new invention will be forever known as the currency of drug dealers. But the shadow economy isn’t just the black market; it includes all unreported income. All over the U.S., Americans are increasingly going off the books as they pursue opportunities to generate income in the face of ongoing structural unemployment, Obamacare mandates, and other issues that appear to be facilitating an expansion of the “informal” or “shadow” economy. As its growth collides with the growth of internet usage for day to day business, Bitcoin could become the payment method of choice for the millions of Americans for whom working off the books is the best option available.

As U.S. News & World Report reported last year, the decline of the labor force participation rate to 30-year lows is believed by some economists to reflect a shift to the off-books economy. The percentage of Americans who are "unbanked" or "underbanked" likewise rose from 25.8 percent in 2009 to 28.3 percent in 2011. Many of the underbanked are poor or have bad credit. But the rise in consumer spending over the last few years is larger than the sagging labor market suggest it should be. This may indicate that substantial unreported profits are being reaped. These “shadow” entrepreneurs appear to be electing to keep their earnings-- from consultant, dog walking, babysitting, repair or even online sales businesses-- off the books.

Economists estimate the shadow economy may reach about $2 trillion worth of US GDP. Much of the informal economy is happening online, with billions of dollars in profits on sites like Etsy and eBay. The latter is considering adding Bitcoin to its menu of payment options. This move alone could mean a bright future for Bitcoin as a currency option for shadow entrepreneurs who don’t want to leave bread crumbs for the IRS to follow.

Internationally, the shadow economy is a much larger piece of the pie. By 2020, the Organization for Economic Cooperation and Development (OECD) predicts it will employ two-thirds of the world’s workers. It is also the world’s fastest growing economy, already second in size to the U.S., and is likely to be the largest source of new jobs in the coming years—all unregulated, untaxed and off the record. While mainstream consumers may be unimpressed with Bitcoin’s alleged benefits—better anonymity than dollars, better security and cheaper transactions than credit cards—those who need that anonymity for more than just buying mushrooms for the next Phish concert may find investing in bitcoins more interesting.

Despite the negative connotation, the shadow economy’s existence can prevent the real economy from falling apart during lean times, according to some economists. Milton Friedman pointed out that shadow economies are stimulated by overbearing government regulations and excessive taxation. As governments reeling from the impact of 2008 apply new banking restrictions in an effort to stabilize their own institutions, they are likely to find growing numbers of people comfortable going off the books. With access to consumer technology getting cheaper and easier around the globe, cryptocurrencies and anonymizing networks will likely play a significant role as anonymity grows in importance, internet penetration deepens and cash transactions continue to decline.

Tightening capital controls, the introduction of bail-ins, a rise in financial warfare against non-compliant companies, banks and governments, as well as the push by some nations to embrace a cashless society have become the new standard response to the world’s growing economic and debt problems. The vision may not be unified among global leaders, but it is part of an increasingly appealing menu of policy options they have proven more than willing to exercise.

Countries such as Cyprus, China and Argentina have already seen a surge in Bitcoin adoption as a means of circumventing capital controls. Immediately following the advent of a “deposit tax” and strict capital controls in Cyprus, Bitcoin saw a surge from $47 to $88 in just a week in March 2013 as foreign investors sought safe haven from the new policies. Similarly, China’s “sophisticated arbitrageurs” have used Bitcoin to circumvent the country’s strict capital controls, often through falsified trade invoices and offshore exchanges. Argentines flooded into Bitcoin in 2013 to hedge against the instability of the Peso. Since then, the overheated market has cooled. But as investment pours into the Bitcoin market infrastructure and related blockchain technologies, improvements could be around the corner.

Governments around the world committed to crackdowns on free market interactions may find the winds of change sweeping their authority from under them. When a crisis strikes, governments have usually reacted by removing existing options. Markets react by providing new ones. With technology empowering the average person today in ways that encumber restrictions, it is increasingly difficult to see how government will win out in the end.

The Changing Face of American Radicalism

Libertarians have chosen to walk an unusual path in American political history, but one that perhaps by accident may see them become the defining political force of the 21st century.

Whereas previous radical movements saw themselves as passionate defenders of the disadvantaged or virulent nationalists, the reawakening of libertarianism over the last decade has occurred in  the context of political and economic stability and relative prosperity. Provoked by a serious recession and an overall frustration with mainstream political ideas, the radical impulse that arises every generation or two was channeled not into flag-burning protests or calls to hippie communes but in bookish philosophers who were more inspired by the nuts and bolts of economic efficiency than calls to arms.

It's a nerd's movement for sure. But it could hardly be anything else. Using the state as an agent of radical political change has become passe after killing 100 million people in the 20th century. Violence as a means to justify utopian ends has, for all intents, fallen out of favor. But seeking political change through a democratic system designed to resist major shakeups is likely a futile endeavor under all but the most unusual circumstances. With the intellectual frontiers of politics closed, modern radicals need new territory to conquer and leave their historical impression upon.

So where does someone who is interested in dramatic changes invest his energy? Technology. This is where revolutionary ideas in human governance are taking root and the most significant breakthroughs in human achievement are currently underway.

Among the most promising of the seemingly ever-accelerating technological achievements is the blockchain. The potential in this new network system to radically liberate human interaction from government and institutional control all over the world in the next few decades is unprecedented in the human experience. While some of the sharpest minds in the tech space are working to realize its potential, even the IMF is beginning to take notice.

Unfortunately, the potential for digital authoritarians to seize control of the web and define internet behavioral and security norms is equally enormous and a battle in courtrooms, cyberspace and the media  will be required to determine the freedom of individuals to interact beneficially without coercion or other interference.

If the bloody work of the 20th century was figuring out the best possible political systems to maintain political stability and prosperity for human civilization, the work of the 21st century could transcend this entirely, empowering individuals through technological democratization and challenging the presumption that underpinned the much of the work of the 20th century: that governments know what is best. This could mean that in terms of human empowerment, constitutional democracy was only a crude prototype; the job of decentralizing authority and information begun by lawyers can be completed by programmers as laws governing interpersonal transactions enforced by violence evolve into benign, but impregnable scripts written by coders and enforced by the laws of physics and principles of mathematics.

Computer technology has inherently egalitarian feature, empowering individuals with easy access to unfathomably vast amounts of data that at one time required expensive teams of researchers and archivists to locate and maintain. But the blockchain could be the ultimate equalizer, replacing authorities with networked consensus verification. How that develops remains to be seen, but with the enormous amount of talent and capital dedicated to realizing positive outcomes, a significant impact seems well assured.

Modern libertarianism is perhaps by happenstance perfectly tailored to push against digital authoritarianism and both defend online freedom in the halls of power and define cyberspace intellectually as a free and open anarchic world. Currently, radical libertarianism is the only major political philosophy in the U.S. to have built distrust of traditional institutions into its core philosophy.That distrust enables libertarianism to position itself as the sole enemy of state control and protector of flourishing new technologies as well as the guardians of privacy and freedom. Friedrich Hayek anticipated this need in his exhortation to keep new technological capabilities from being misused by authoritarians in his classic essay The Road to Serfdom:  "While it is true, of course, that inventions have given us tremendous power, it is absurd to suggest that we must use this power to destroy our most precious inheritance: liberty. It does mean, however, that if we want to preserve it, we must guard it more jealously than ever and that we must be prepared to make sacrifices for it."

There is a significant chance that libertarians are anticipating a change in how government itself functions, and the relationship between the government and governed may never be the same if the concepts that underpin projects like Ethereum, Namecoin, Codius, Counterparty, Factom and iNation succeed.

The broader acceptance of libertarianism may be dependent on this technological experiment--political libertarianism seems unlikely to be able to garner majorities in congress or even in the most conservative state legislatures any time soon. Actuating an anarchist economy, entirely outside of regulatory control and with all of the crowd-sourced information efficiencies we now enjoy, is a grand experiment in liberty in a new technological context that could radically change the human experience.

This is why the two movements-- political libertarianism and techno-libertarianism-- absolutely need each other. One provides the justification, philosophical underpinning and political muscle. The other provides the necessary economic laboratory. Libertarians will always have a hard time outflanking progressives as advocates of the poor and disadvantaged, a source of immense political power for the Left. But as the bookish and rational advocates of tech freedom, they can not only help humanity achieve new frontiers in communication, they can do it without betraying core principles, stumbling over their own values or trying to out-compete "statists" on their own political turf. They can do this because they are at the cusp of a new frontier that is already free from political control; they begin the battle from the castle ramparts, rather than the moat.

Libertarians will of course continue to remain active on many political fronts, but tech freedom offers a unique opportunity to distinguish themselves from status quo politics and adopt a core set of issues that neither major political group has whole-heartedly embraced and the public does not generally comprehend. Given the flouting of laws and lack of respect for privacy by intelligence organizations and the evidently poor congressional oversight, it is an issue that could merit a much more significant commitment to change than simply lobbying congressmen, marching or donating money.

An electronic guerrilla war has already begun. Leading the charge are whistleblowers like Edward Snowden and Wikileaks. On the front lines are also innumerable hackers, journalists, bloggers, activists, government agents from all over the world, and even terrorist organizations like ISIS and al Qaeda. This is the battle that will shape the future of information technology and the winner will determine how free human communications will remain for future generations.