by Wendy McElroy
February 17, 2018
Unlike the communities traditionally associated with the word “anarchy”, in a crypto-anarchy the government is not temporarily destroyed but permanently forbidden and permanently unnecessary. It’s a community where the threat of violence is impotent because violence is impossible, and violence is impossible because its participants cannot be linked to their true names or physical locations.
— Wei Dai
A February 6, 2018 headline in Reason magazine warned, “Governments Hate Bitcoin and Cash for the Same Reason: They Protect People’s Privacy.” The ensuing article spun off a quote from U.S. Treasury Secretary, Steve Mnuchin, “One of the things we will be working very closely with the G-20 on is making sure that this doesn’t become the Swiss numbered bank accounts.” Mnuchin rejects decentralized crypto as payment, investment, or savings systems because it cannot be easily tracked by government.
Privacy is the battleground upon which cryptocurrency will ultimately rise or fall. The engine of crypto, the blockchain, is founded on the premise of anonymity or pseudonymity. The blockchain was specifically designed to obsolete “trusted third parties,” such as central banks, which act as data-collection centers for government.
Wei Dai and Mnuchin may seem to be polar opposites on privacy, but they are saying much the same thing, although their conclusions are antithetical. Privacy prevents violence.
For Wei Dai, this is a good thing. Privacy is overwhelmingly positive for individuals because it empowers and protects them against government. Privacy can cloak genuine acts of violence or fraud, of course, just as free speech can promote lies; every tool can be a weapon. More often than not, however, the violence prevented is wielded by government against those who flaunt authority: tax evaders, dissenters, regulation breakers, gray or black marketeers, drug dealers and users. Government punishes scofflaws, whether or not the laws are just or despite the fact that participants consented. To cryptoanarchists, like Wei Dai, no crime has occurred unless a person is injured or property is damaged. The violence occurs when a third party forcibly intervenes between consenting adults or people minding their own business.
For Mnuchin, privacy’s role in preventing violence is a bad thing because he administers government coercion against peaceful individuals. Of course, he does not call it violence; he calls it law enforcement. That doesn’t change the fact that government agents are pointing guns at peaceful scofflaws, not at the behest of any participant, but over their objections.
Otherwise stated: Wei Dai praises privacy for promoting a society of “anything that’s peaceful.” Mnuchin excoriates privacy for the same reason.