Morality follows function and Bitcoin has made selective divestment a lot more functional.

When it comes to the qualities of crypto-currencies the majority of attention is given to its technical foundations when the most disruptive quality may be the most simple and obvious of all.

The most subversive effect to come from crypto-currencies will not be through deflationary qualities that fly in the face of central banking or preventing too-big-to-fail policies. It wont come from low fees that make micro-payments possible or its protocol that makes the financial services industry redundant. It wont be from providing a more democratic storage of value. It will not come through making you rich. No.

Crypto-currencies greatest impact is going to be the ability of individuals to partially choose the economy they function within.

 

There Are No More Riots, Only Opinions

Market value of private capital

Market value of private capital (% of national income) — “Capital in the 21st Century” Thomas Piketty

Gone are the days when collectives demonstrate the “right of might” that Einstein and Freud eluded to in their era. The #1 book selling on Amazon right now, Thomas Piketty’s Capital in the 21st Century, shows (in chart above) that the centralisation of wealth partially responsible for the rise of foregone socialist and communist movements has mostly recovered with wealth as centralised today as it was then. Yet the collectives that organise today (i.e. the Occupy movement) do so without the the might of then. Why?

Without getting too deep into the wealth-disparity debate I argue that the time for “right of might” in the street has passed because capitalism is actually effective in appeasing the majority. This can be seen in the handling of the recent economic crisis where in some places the defacto store of value for the middle class, housing, was considered too-big-too-fail and action was taken to protect it.

Despite the well-being of the majority the wealth debate continues because of conscious concern for the minorities left out. It just happens now without the pageantry of fire and picket. Today the will for might is placated by a once-in-every-4-years vote, the comfort of opinion collectives that provide physical or digital “i support xyz” wristbands or gets filtered into emotional but meaningless arguments carried out through polar opposite news corporations. News consumption is the processes of choosing an ideological team to cheer for but as a result ideology becomes a spectator sport and we cannot do much other than cheering. Or can we?

News consumption is the processes of choosing an ideological team to cheer for with the result being that ideology becomes a spectator sport and we cannot do much other than cheering.

The placation of the majority is a natural and positive effect of stability. With that the execution of might is more subtle and action will be more granular (able to choose when to act or not) and more accessible. In modern design it is said that form should follow functionThis applies to morality and idealism as well. In design this statement implies that when creating a door any modification or addition should have function — itself closely tied to intuition. For morality I apply this to mean that any desired action of an ideal must be within intuitive reach.

Humour me: More people act on concern for the environment due to wider accessibility of recycling bins. Greater accessibility enables more widespread action. But the ability to selectively act provides an even broader compound effect as wider adoption leads to more exposure. You may recycle when at home but are less likely to do so when walking down the street. An “activist” may criticise such inconsistency but this criticism is our religious gene getting the better of us. In-fact this impurity leads to broader adoption of the ideal itself. When you do recycle your child will become exposed to the question. If forced to consistency function dominates with people likely abandoning the ideal all together.

It is both accessibility and choice of when to and not to participate that is powerful. This is what crypto-currencies provide in a new way.

Using A Dollar Funds One Electron Of A Drone

We understand that the tax we pay directly supports the actions of the government we pay them to. This has been a constant for so long that anything but moral indifference to the act makes one appear departed from reality. Questioning this constant requires such effort that it is not possible for anyone but the most rich. This is unlikely to change. But the use of a governments currency also provides support for their actions. By how much I could not say but for the first time in history we can choose to sometimes not provide that support. With crypto-currencies this option has become more accessible than ever before. This is action through exit rather than vote.

Case In Point

To understand this take the Palestinian/Israel conflict as an example. The entire population in the Palestinian Territories use the Israeli Shekel as their base currency. Not only but Palestinians pay their taxes directly to Israel which can use their discretion in withholding these funds. The interest for an alternate economy within this group would be very strong. Further, there are many Israeli-Arabs (%20 of total population) that more directly identify with the day to day hardships that Palestinians are faced with. Add to this many left-leaning organisations of non-Arab Israeli’s and you are presented with a large collective that would all be interested in selective divestment from the Israeli Shekel.

Boycott is one thing. Sanctions are another. But choosing to selectively participate in an alternate economy from one you disagree with in the same manner you choose when to recycle a can is a matter of convenience but none-the-less powerful.

What do I mean by “selective”? I figure I eat at a restaurant about 4 to 8 times a week. For the foreseeable future I will eat at a Bitcoin accepting establishment at least once a week. I encourage you to join me (Berlin, Zurich, Jerusalem — when i’m there). You can perceive this action as no more meaningful than wearing a cure cancer wristband. In some sense it is exactly that. Such selective action makes me feel better. But with crypto-currencies it does have actual impact on some governments actions.


tl;dr Have a cause? Riots are yesteryear. Make any action accessible or forget it. Crypto-currencies present new methods for partial and selective protest. “Using One Dollar Funds One Electron Of A Drone.” Building minor alternate economies from within is as selfish as wearing a “i support xyz” wristband but with actual impact.

(Deutsch)

We are entering the “Information Age” but not at the hands of Apple, Google, Microsoft, Twitter, or Facebook though they each have their role. No, if one wants to observe when we reach the apex of this era they would be advised to study the participants of and ideas cultivated on the Cypherpunks mailing list nearly 20 years ago. The list was open to anyone and was the stomping grounds for such people as Julian Assange (Wikileaks). It was the breeding ground of decentralized banking systems, anonymous currencies and anonymous network technologies. Many of these systems very recently left their incubation phase and have the potential to reshape social structures with weight akin to that of the “Industrial Revolution”.

The people in this room hope for a world where an individuals informational footprints — everything from an opinion on abortion to the medical record of an actual abortion — can be traced only if the individual involved chooses to reveal them; a world where coherent messages shoot around the globe by network and microwave, but intruders and feds trying to pluck them out of the vapor find only gibberish; a world where the tools of prying are transformed into the instruments of privacy.

There is only one way this vision will materialize, and that is by widespread use of cryptography. Is this technologically possible? Definitely. The obstacles are political — some of the most powerful forces in government are devoted to the control of these tools. In short, there is a war going on between those who would liberate crypto and those who would suppress it. The seemingly innocuous bunch strewn around this conference room represents the vanguard of the pro-crypto forces. Though the battleground seems remote, the stakes are not: The outcome of this struggle may determine the amount of freedom our society will grant us in the 21st century. To the Cypherpunks, freedom is an issue worth some risk.

Steven Levy describing a Cypherphunk gathering. Wired Magazine, 1993 (archive)

In the 80s and 90s cryptography was considered a weapon by most governments, including the US. The latter tried to restrict its export to anywhere but Canada. This was absurd because it assumed that only American scientists knew how to build strong cryptographic systems and also because enforcing such a law was impossible. The truth was that the US depended on cryptographic systems developed by European scientists, among others, as much as they did on their own. Cypherpunks knew this and many of them were, after all, the same minds that created these systems. They took to printing the algorithms in books and t-shirts, which were difficult to classify as weapons whose export could be restricted. By the 90s governments too realized these restrictions were baseless and immensely counter productive to their own security and removed the export controls. However, the Cypherpunk list and community that developed during that period remained active.

While “cryptography” sounds too scientific to be at the pinnacle of freedom or revolutions, today, we are starting to see that it is becoming intertwined with both. One of the ideas developed from within the list was anonymous networks. Specifically Tor, “The Onion Router”. This network is used by dissidents in such places as Syria and Iran to communicate anonymously online about crimes against humanity. For this reason the project is sponsored in part (archive) by the US government. During the Arab Spring when Mubarak’s regime shut off access to the Internet in Egypt Tor saw a spike of traffic (archive) and was one of the only ways that the Egyptian people could still access and communicate online. Tor is also used by such organizations as Wikileaks and Openleaks to protect whistle blowers and expose secrets in the west and for this reason the US Justice Department is conducting a secret investigation on one of the Tor developers; invoking state secret laws to obtain email and other private details without due process.

Inherent in the DNA of any technological system is a scientific method of consistency. While western justice and social systems sway, bevel and try to inherit consistency they rarely formulate without flaw. When I was young my parents, devout Christians, decided Jesus was a Jew and if he kept the Sabbath on Saturday than so should we. Initially we avoided all use of electricity, as commanded by rabbinical law. For a 12 year old digital native this was quite a hardship. After a year they decided turning on lights was acceptable and it was not long before the TV was permissible. For all the hardship it was this inconsistency that bothered the most. Eventually I learned that this inconsistency was the most beautiful trait of my parents; what exposed their humanity.

Inconsistency will always exist in social systems but much like in religion we are cursed with the idea of obtaining absolutism. That it is possible to make a unified theory of perfection be it in relation to sin or justice. In technology any inconsistency in a theory is called a “bug” and one that can be remedied. As technology and social intuition become more entwined it becomes an attractive laboratory to pursue more perfect theories. The experimentation this has inspired is already creating friction between new and old models. The results are often difficult for social structures to respond to using traditional tools.

As an example consider the brief history of file sharing. When the first popular music sharing system arrived, Napster, it took time before the company was eventually shut down. By then technology and collective intuition had evolved with it to the point that this did not matter. New systems popped up in other jurisdictions and eventually new protocols were developed that decentralized responsibility from any single entity (bittorrent) making it near impossible to shut off. Today while Sony or Virgin Records will send thousands of 900€ fines per day to kids found to be downloading music it will have absolutely no effect on how commonplace this act will continue to be. Our intuition had already evolved. So too have business models evolved with it to turn this intuition into a benefit and not a harm.

Wikileaks is itself just the Napster of its field (“making governments more transparent”). The people that want those involved arrested or killed lack the foresight to see that there are many more stages of evolution here. They also fail to see that it is the imbalance of such reactions that actually pushes the stages of this evolution further and faster. Openleaks is a slightly less centralized system which is another step. We have yet to see what the truly decentralized equivalent will be.

The evolution of socially progressive technology requires a market. Twitter did not create a market for communicating at 140 characters. Facebook or Myspace did not create a market for social networking. Rather, people already had the desire for these forms of communication but lacked the tools. One can apply this to Wikileaks, anonymous currency or even Tor hidden services. There is a current effort (archive) to incriminate Julian Assange and close Wikileaks. This will not have the desired effect, reason being that there is now a market for this type of information.

Jay Rosen, professor of journalism at NYU, stated eloquently why this market exists when he said the watchdog press had died. As an example he gave the failure of the press to question the U.S. when it went to war in Iraq with a false case, explaining that they lost legitimacy: “The legitimacy crisis extends from the Bush government itself to the American state as a whole and the American press and the international system. Because all of them failed at one of the most important things that a government by consent can do which is reason giving.

To understand how the markets for subversive technologies evolve consider the history of the Internet Domain Name System (DNS). When you put “wikileaks.org” into your browser this name is translated to a server address. The control of this system is managed by ICANN, a governing body ultimately controlled by the US government. In the 90s a heated international debate started concerning how the US government would use this power. They assured people that they would not use it for political gain and were only interested in maintaining the openness of the Internet.

Fast forward to last year when the US Department of Homeland Security (DHS) started shutting down websites (archive) by manipulating this system (archive). When did ICANN change its motive of protecting the openness of the Internet to managing grievances of US corporations? When did the DHS move away from its focus of protecting borders from terrorism? It is in response to this action that developers have started working on different systems that would not just remove control of the name system from the US hands: Namecoin, p2pdns and others would remove control from any centralized authority.

The idea of decentralizing power through code can be found in other Cypherpunk ideas. Consider anonymous currency. 3 weeks ago I purchased nachos and 3 drinks for friends and myself at Room 77, a restaurant in Berlin near Schönleinstrasse, using the anonymous currency bitcoin. Bitcoin allows participants to exchange services and purchase goods without either party having to reveal their true identity. This is akin to cash, also an anonymous currency.

I obtained the currency by purchasing it using a pseudonym and a prepaid credit card. You can purchase from individuals online but I used a Bitcoin to Euro exchange website instead. At the restaurant, after finishing the meal and a discussion about Corporate Social Responsibility vs Shared Value we went to the counter. You can pay with a few clicks using a smart phone but my phone is anything but smart. So I opened my laptop, started the bitcoin client and took the restaurants bitcoin address. I transferred 10BTC (about 30€) to Room 77’s bitcoin address, waited a few seconds for the cashier to confirm the transfer and then left. When I got home I realized I forgot to leave a tip so I transferred another 2BTC. The subversive element of bitcoin lay not as much in the nature of transaction as it does in how it is structured and controlled.

The value of bitcoins are determined by common market principles. However, unlike Fiat currencies where a central bank can print or remove money from circulation to influence this market, the central bank for bitcoin is peer-to-peer and decentralized. No one can create or manipulate bitcoins without the consent of every participant in the system. To misquote economist Milton Friedman, with bitcoin “we are [not] all Keynesians now”.

Purchasing nachos with this system felt much like receiving my first email. Despite its flaws, the idea of anonymous and distributed currency has the potential to effect central banking in the same way email affected the postal service.

While some of the systems discussed on the Cypherpunk list are leaving incubation phase others still are waiting for the first line of code to be written. In 1997 Jim Bell, a student of electrical engineering at MIT, wrote a paper titled “Assassination Politics” (archive). He was inspired by Freud’s description of power structures:

The superior strength of a single individual could be rivaled by the union of several weak ones. “L’union fait la force.” [French; In union there is strength.] Violence could be broken by union, and the power of those who were united now represented law in contrast to the violence of the single individual. Thus we see that right is the might of a community.

Sigmund Freud, letter to Albert Einstein 1932

Assassination Politics was an idea for a system that uses anonymous networks and currency to allow participants to place a bet guessing the time of death for someone. The winnings are awarded to whomever made the most accurate guess. As the potential winnings grow the likelihood increases that a professional assassin would place a bet. Who would know the time of death for, say, the Syrian dictator Bashar Assad? His God, an assassin or perhaps his cook? The publication of his paper brought a great deal of scrutiny from the FBI. He was eventually imprisoned for tax evasion in 1997 and remains in prison to this day.

At this point one may have the impression that Cypherpunks were Anarchists, in the modern sense of the word, blindly bent on the destruction of power structures. Rather, the large majority were intellectual observers with the distinct difference of having an acute understanding of technology and discrete mathematics. As it was a public list, anyone could participate and you can find archives of the discussions online.

Recently I have been working on a theater project with Rimini Protokoll (archive) titled “Herrmann’s Battle”, inspired by the play “Hermannsschlacht” written by Heinrich von Kleist. In this play, still running, we explore subversive technologies. We show how hitmen offer their services in exchange for Bitcoin: 5000€ in bitcoin as a setup fee, 20000€ upon completion. We also describe a modification on Jim Bells’ original idea.

Imagine a market where you place a bet on the time of death for someone but have to choose between Bashar Assad or Julian Assange. In this model the winnings would be given to whoever guesses most accurately the time of death for the target that currently has the highest price on their head. While some may have little issue with putting 10 Bitcoins on Assad they have to consider and compete against other groups, perhaps government institutions, that would rather see Assange the target. In this way the idea of morality itself takes on characteristics of a competitive globalized market.

I present these ideas not for dramatic effect and not because I believe they should exist. Rather, I present them to show the extent that technology could effect society. The extent that it will, and how it will depends on how well we understand collective intuition and the markets that support such ideas and if we can find ways to respond that acknowledge the peoples desires rather than only reacting to protect existing models of “right and might”.

In 1988 one Cypherpunk accurately described the effects of anonymous networks and currency and other technological developments that we are starting to understand today:

A specter is haunting the modern world; the specter of crypto-anarchy

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.

The Crypto-Anarchy Manifesto, Timothy C. May, 1988 (archive)

If asked what my opinion is of these developments, despite how it sounds, I see some reason for measured optimism and perhaps necessity. Remzia Suljić, one of the experts in the Rimini Protokoll theater production, after one performance was asked how she felt about exposing her experiences on stage. She answered: “I lived through 3 years of systematic isolation, humiliation and eventual massacre in Srebrenica of which the European people noticed only a few days of”.

Today we are more aware and exposed to such events and problems of the world. In the past 20 years we have watched technology completely change the way we communicate, consume and define a sense of community. The latter taking formations that are no longer tightly tied to geographical social definitions. It is likely this that has brought about the demand for equality from people that we are witnessing today.

When the uprising took place during the 2009 elections in Iran the people of the world were watching intensity. Every hour news sites were updated with the latest information from twitter or other sources. Google had a dedicated page for videos coming out of Iran. And then Michael Jackson died. We still have some ways to go until our awareness turns into meaningful action. In this case I do not see distribution of power as the problem or solution. Rather the issue lay in distribution of responsibility.

This entire discussion has focused primarily on decentralization of “Cathedral” based definitions of power and the role of technology therein. What we have not touched, and the reason for my cautious optimism; the reason i feel technology as a whole might make us more aware collectively is that inherent in any decentralization of power, from Freud to Assange, is the decentralization of responsibility. We cannot contemplate one without being aware of the other. I can understand questioning this theory and I wholly agree these technologies bring justifiable concerns, but those that respond instead with fear I would argue that my fantasy has as much of a chance as your fear.

In A Cypherpunk’s Manifesto (archive) written in 1993 by Eric Hughes, one of the founders for the list, he said “Cypherpunks write code”. Much of the code is yet to be written.