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Crypto-anarchy does not require anonymity (oleganza.com)
43 points by oleganza on Dec 28, 2013 | hide | past | web | favorite | 35 comments

Cryptoanarchy is a means of organizing society under conditions of a very high defense/offense asymmetry (ie. if it costs Y resources to cause X harm to someone, the ratio Y/X is high). The greater that this asymmetry is, the more useful cryptoanarchy becomes. Cryptoanarchy is already becoming increasingly successful with reputation systems and private arbitration, and the reason is that we are increasingly living in a world where that is the case, since with the internet it's difficult to find people, action happens across multiple jurisdictions, and greater economic decentralization in some respects makes regulation more difficult. In fact, what is particularly interesting is that Y/X is not just high, it's sublinear - if I'm three times as powerful, it is much less than three times as hard to hurt me. Arguably, in the face of governmental attackers, Y is sometimes _not even an increasing function of X_ - since one's main defenses against an entity that is nearly all-powerful in the sphere of violent force are speed and privacy, and one's speed and privacy both reduce with size, it's easier for the government to nab a single $100 million foe than it is to nab a single $10000 foe. You can see this clearly with the DPR seizure. The more extreme that this condition becomes, the stronger an influence crypto-anarchic law protocols will have on society. That's the general principle; anonymity is only one aspect of it.

That is a very nice summary of the ideas, much clearer than the article itself.

I think that the problem with your claims about the defense/offense asymmetry is that it is based on abstractions that only exist because of the government. All of the reputation/private arbitration systems that exist online still exist in the context of nations with laws that prevent, for example, someone killing you because you posted a bad review of them. Or simply stealing your goods in person ("X robbed me in the street and stole my clothes. I would not do business with him again").

Once you have established an upper limit on the kind of offensive actions that can be taken, it is easy to bootstrap reputation systems. But I don't consider this as evidence that there is a high defense/offense asymmetry at a fundamental level.

There are several cryptoanarchist responses to that:

1. Some government-like mechanisms should definitely exist on the level of the physical world (this could be anywhere from Rothbardian private law to a concept of private cities to a more moderate vision of a Georgist government that taxes exclusively resources and perhaps even pays out a basic income). What matters is that these governmental mechanisms should/will stay out of trying to restrict human interaction.

2. We are already moving into a less materialistic society, and the trend will continue in the future. For myself personally, all of my physical possessions combined have a resale value under $1k and a replacement cost under $2k. If you mug me, you will get a moderately good cell phone, some cash in my wallet and maybe an old laptop, but not anything nearly worth the tiny risk that I or a bystander will be able to overpower you. When all wealth is stored in data or the mind, locked behind passphrases and encryption, physical crime simply becomes not all that interesting.

3. Contrary to Oleg's post, people's online identities should be cleanly separated from their physical identities, and it should be cryptographically difficult to make the mapping from the guy who wrote a bad review of you to the physical person living in a certain city.

You can feel free to choose which of these you find more and less convincing; I have my own opinions on the issue and certainly do not represent "the movement" as a whole to any significant extent. But you are correct that the high offense/defense asymmetry characterized by the (cryptoanarchists' vision of the) internet does heavily rely on existing infrastructure; if this were not true, then we would have been living in a society organized largely along cryptoanarchist lines for the past ten thousand years.

Depends on your definition of "anarchy" I guess. If your system is non-anonymous, you will get power structures arising amongst the participants that, in practice, will allow the more powerful participants to safely cheat the less powerful ones.

In fact this is already happening to a certain extent. Remember pirateat40's Ponzi scheme? Part of the reason it was so successful was because he got on board influential, trustworthy members of the Bitcoin community and they created an atmosphere where anyone who called out the scam was seen as a scammer themselves. Many of them got away scot-free.

Edit: also, it doesn't matter what kinds of peer-to-peer insurance or escrow schemes you come up with, sufficiently powerful participants can and will get people to carry out transactions outside of those safeguards. We've seen this on Silk Road already, where the big sellers managed to create a culture where handing the money over early and bypassing escrow was necessary for almost everyone.

Most anarchists are fully aware that power structures are inevitable. Defining anarchy as their absence is a little silly.

I like thinking of the goal of anarchism as "smaller power structures that you can more easily swap out."

Policemen, public school teachers and alike will be the first ones to notice prices rising faster than their salaries. They will the first to change jobs or become largely corrupt on all levels (like it was in Russia after the fall of the Soviet Union). Bureaucrats will smell the approaching panic and, instead of trying to retain control over the employees, will privatize as much public goods as possible, again, exactly like during the fall of the Soviet Union. People will see how all promised public services are either abandoned or stolen,

I may be reading this wrong, but it seems the author sees the scenario above as preferential to the current system. I am no libertarian, but how can 90s Russia be a good example for a society? Do people saying something like that sometimes leave their abstractions and ask people who were on the ground back then? average life expectancy fell more than 5 years between 1989 and 1994.

> I may be reading this wrong, but it seems the author sees the scenario above as preferential to the current system.

I think you are reading this wrong. The author describes a likely outcome under the assumption that some modern societies share characteristics with the former soviet republic.

Transitional period may have some similarities to USSR fallout, but it's 1) transitional 2) has major difference: in USSR all production was centralized and run by the government officials. In modern Russia everything is very private and only very few services are run by state (and very far from satisfactory).

When teachers and cops run from government, they will find jobs and prosperity in the wealthy private market where people pay and save in bitcoins.

Governments will probably always be able to tax land ownership, given that the register of deeds defines it. Enforcement is easy: if the tax doesn't show up, change an entry in the register and auction off the land. Georgists and geolibertarians claim it would be beneficial to tax only land, maybe someday we'll see if they're right.

For the time being, a carbon tax would be another option. Charge by the ton at the major sources (eg. coal mines) and it'll be fairly easy to administer. Of course that'll have the side benefit of hastening the demise of fossil fuels, removing that source of revenue, but it could ease the transition at least.

This is the future, a combination of land and resource taxes (including negative resource taxes like carbon taxes) that fund a post-scarcity Basic Income.

The ability to seize money doesn't seem necessary for taxation to work. For example, the government could simply throw you in jail or seize your physical assets if you fail to pay taxes.

The point is that seizing physical assets and keeping you in prison costs a lot more than collecting money.

All you have to do is set an example, though. Most people who don't want to pay taxes pay their taxes every year without ever having to be jailed.

Because government can cheaply seize their assets from their bank accounts without much hassle. When 90% of wealth is owned outside of the banks, you'd need to go door to door without clear idea how much you can possibly extract. After every successful seizure people only get smarter and protect their wealth even tougher.

You don't have to extract a dime. Shoot people who fail to pay whatever you estimate they should, even if they would have had to borrow or steal in order to make the payment - inability to pay would be no excuse. Make sure the payment is a reasonable, manageable amount if someone, for example, consents to being monitored, or opens their books to whatever extent the "attacker" would like. If they don't consent, greatly overestimate their income, maybe even as a statutory default assumption of income.

You wouldn't have to shoot very many people at all to maintain whatever amount of control you wanted over other people's lives.

Cheap enforcement isn't necessary because the government can create enough disincentive that most people will simply pay the tax. The whole point of the lack of anonymity in Bitcoin is that the government CAN have an idea of how much money you owe in taxes and they can simply throw you in jail (or take your house, car, etc) until you pay. Yes, that's pretty expensive for the government, but they don't have to do it to everyone. Faced with those consequences, most people would just pay.

Yeah but it costs you everything.

To support cops and prisons, government will need to pay in money that they have to seize in the first place. Currently governments do not have any money at all, they have to print it every day to pay their bills. When economy switches to bitcoin, cops will switch occupation well before government finds efficient way to collect bitcoins to pay them. Simply because private sector will be much wealthier by that time.

>To support cops and prisons, government will need to pay in money that they have to seize in the first place.

Why? A government could declare Beanie Babies the dominant currency if they wanted. All they have to do is say that you have to pay your taxes in Beanie Babies, and that all of their court judgments are only settleable in Beanie Babies. You will be rushing to buy treasuries denominated in Beanie Babies and paying for them in bitcoin.

No economy is going to switch to Bitcoin completely overnight (assuming such a switch happens at all), there is plenty of time to figure out how to collect taxes on Bitcoin income before the government needs those taxes to function.

I don't understand how the title relates to the content. Some handwaving about the cost of "cheating" (or vs. the cost of something else that I'm going to assume is "not cheating") wrapped in a bit of libertarian science fiction?

If I can figure out who someone is who is spending cryptocurrency in a way I don't like, can't I just pay someone to make them transfer their bitcoins to me, or just kill them? If I have 1000x more bitcoins than they do to pay assassins and bodyguards, how could they resist me?

Can someone who is more in tune with this sort of theory explain it to me? Am I understanding anything here?


I dislike 'boxes,' but if I had to characterize myself I would suggest that I could be described as cryptoanarchist and voluntaryist in terms of my thought processes and philosophies which I appreciate helping to put into practice.

On the subject of "crypto-anarchy does not require anonymity," I would certainly state that it does not, but systems which emanate from a crypto-anarchistic perspective should preserve the choice or ability for people to make decisions about anonymity and identity generally, regardless of how you personally perceive of or define identity.

This is part of what is discussed in the ABIS protocol.

You can read the whole proposal here:



The type and amount of taxes which states will be able to collect may change, but the whole apparatus isn't going away any time soon. Taxes on real property and excise taxes on physical goods would still be pretty easy to collect even if something like bitcoin were used for nearly all commercial transactions.

Wow, this may take the cake for most hilariously absurd bitcoin article.

Let's see who laughs in 5 years. Do you have an economical counter argument?

I'm pretty sure you will reject "Bitcoin is just a fad" out of hand.

Before you throw too many numbers back at me, realize that billions of dollars were spent on Beanie Babies, even back before the last decade of US fiat erosion.

I keep hearing about these beanie babies as a comparison - is there a whitepaper describing how that revolutionary payment system worked?

Otherwise it would be really stupid to use it as comparison to Bitcoin.

It seems he just wanted to draw a parallel between two "manias". I have no idea what will happen to Bitcoin, but it sure does look like a mania. I do see the benefits too, of course.

Most Bitcoins are purchased as a speculation, expecting their value to go way up. It's possible that the gold rush is already over, but it's also possible it's only beginning.

I wasn't really drawing a comparison. I was pointing out that fads can involve a lot of money (so arguments about lots of money being involved are not good arguments against something being a fad...).

Hopefully you will at least concede the logical possibility of a stupid or wrong or meaningless whitepaper.

In five years the world will be exactly the damn same as it was five years ago (2008). What is it about tech that makes people believe that sociological change happens at absurd time scales?

I'm a fan of bitcoin but I don't think it's scalable enough yet to make such a large change, since every full peer has to see every transaction. A possible solution is for most people to use offchain transactions, with service providers who use onchain transactions to settle balances periodically. But then you have centralized services that can be attacked by governments. Or you put them behind Tor but then it's pretty scary trusting them with your money.

Then again, I'm not a millionaire because in 2009 I thought bitcoin wasn't scalable. Maybe they'll solve it before it's a problem.

It's already not a problem. Look at all those wallets on mobile phones: they never store the whole history and yet the keys they keep are completely safe.

You forgot to mention , in detail, all sorts of attacks nation states could make on bitcoin itself and how would bitcoin respond, realistically.

>> Let's see who laughs in 5 years

Hah :P

It's nice to see yet another sane person on HN, by the way.

In this thread: some fantastically deluded individuals.

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