Bitcoin and the Blockchain Are Firmly Anchored in Anarcho-Capitalist Visions of a Hyper-Capitalist Society

Discussion

Ian Bogost:

"Bitcoin is an expression of extreme technological libertarianism. This school of thought goes by many names: anarcho-capitalism (or ancap for short), libertarian anarchy, market anarchism. Central to the philosophy is a distrust of states in favor of individuals. Its adherents believe society best facilitates individual will in a free-market economy driven by individual property owners—not governments or corporations—engaging in free trade of that private property.

Imagining the end of both nation-states and corporations is even harder than imagining the end of capitalism itself.

Anarcho-capitalism is far more extreme than Silicon Valley’s usual brand of technological individualism. For one, the tech sector’s libertarianism is corporatist in its bent, and amenable to government, if in a strongly reduced capacity. And Silicon Valley takes a broader approach to the liberating capacity of technology: Facebook hopes to connect people, Google to make information more accessible, Uber to improve transit, and so on.

The ancap worldview only supports sovereign individuals engaging in free-market exchange. Neither states nor corporations are acceptable intermediaries. That leaves a sparsely set table. At it: individuals, the property they own, the contracts into which they enter to exchange that property, and a market to facilitate that exchange. All that’s missing is a means to process exchanges in that market.

Ordinarily, money would be sufficient. But currency troubles market anarchists. The central banks that control the money supply are entities of the state. Financial payment networks like Visa are corporations, which aren’t much better. That’s where Bitcoin and other cryptocurrencies enter the picture. They attempt to provide a technological alternative to currency and banking that would avoid tainting the pure individualism of the ancap ideal.

This makes Bitcoin’s design different from other technology-facilitated payment systems, like PayPal or Apple Pay. Those services just provide a more convenient computer interface to bank accounts and payment cards. For anarcho-capitalism to work in earnest, it would need to divorce transactions entirely from the traditional monetary system and the organizations that run it. Central banks and corporations could interfere with transactions. And yet, if individuals alone maintained currency records, money could be used fraudulently, or fabricated from thin air.

To solve these problems, Bitcoin is backed by mathematics instead of state governments. The Bitcoin “blockchain” is a shared, digital record of all the transactions (or “blocks”) that have ever been exchanged. Every transaction contains a cryptographic record of the previous succession (the “chain”) of exchanges. Each one can thus be mathematically verified to be valid. The community of Bitcoin users does the work of verification. To incentivize the onerous work of cryptographically verifying each transaction in the chain that precedes it, the protocol awards a bounty—in Bitcoin of course—to the first user to validate a new transaction on the network. This is the process known as “mining”—a confusing and aspirational name for what amounts to computational accounting.

There’s a lot more detail that I am omitting. But the key to Bitcoin is that the network distributes copies of one common record of all Bitcoin transactions, against which individuals verify new exchanges. This record is the blockchain, which is sometimes also called the “distributed ledger”—a much more elucidating name. This is the missing element that’s supposed to allow the hypothetical anarcho-capitalist techno-utopia to flourish." (https://www.theatlantic.com/technology/archive/2017/05/blockchain-of-command/528543/)