16. Crypto Anarchy

THE CYPHERNOMICON: Cypherpunks FAQ and More, Version 0.666, 1994-09-10, Copyright Timothy C. May. All rights reserved. See the detailed disclaimer. Use short sections under "fair use" provisions, with appropriate credit, but don't put your name on my words.

16.2. SUMMARY: Crypto Anarchy

16.2.1. Main Points

16.2.2. Connections to Other Sections

16.2.3. Where to Find Additional Information

16.2.4. Miscellaneous Comments

16.3. Introduction

16.3.1. "The revolution will not be televised. The revolution will, however, be digitized." Welcome to the New Underworld Order! (a term I have borrowed from writer Claire Sterling.)

16.3.2. "Do the views here express the views of the Cypherpunks as a whole?"

16.3.4. Early history of crypto anarchy

16.4. The Crypto Anarchist Manifesto

16.4.1. Unchanged since it's writing in mid-1988, except for my email address.


The Crypto Anarchist Manifesto

Timothy C. May tcmay@netcom.com A specter is haunting the modern world, the specter of crypto anarchy. Computer technology is on the verge of providing the ability for individuals and groups to communicate and interact with each other in a totally anonymous manner. Two persons may exchange messages, conduct business, and negotiate electronic contracts without ever knowing the True Name, or legal identity, of the other. Interactions over networks will be untraceable, via extensive re-routing of encrypted packets and tamper-proof boxes which implement cryptographic protocols with nearly perfect assurance against any tampering. Reputations will be of central importance, far more important in dealings than even the credit ratings of today. 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 technology for this revolution--and it surely will be both a social and economic revolution--has existed in theory for the past decade. The methods are based upon public-key encryption, zero-knowledge interactive proof systems, and various software protocols for interaction, authentication, and verification. The focus has until now been on academic conferences in Europe and the U.S., conferences monitored closely by the National Security Agency. But only recently have computer networks and personal computers attained sufficient speed to make the ideas practically realizable. And the next ten years will bring enough additional speed to make the ideas economically feasible and essentially unstoppable. High-speed networks, ISDN, tamper-proof boxes, smart cards, satellites, Ku-band transmitters, multi-MIPS personal computers, and encryption chips now under development will be some of the enabling technologies. The State will of course try to slow or halt the spread of this technology, citing national security concerns, use of the technology by drug dealers and tax evaders, and fears of societal disintegration. Many of these concerns will be valid; crypto anarchy will allow national secrets to be trade freely and will allow illicit and stolen materials to be traded. An anonymous computerized market will even make possible abhorrent markets for assassinations and extortion. Various criminal and foreign elements will be active users of CryptoNet. But this will not halt the spread of crypto anarchy. Just as the technology of printing altered and reduced the power of medieval guilds and the social power structure, so too will cryptologic methods fundamentally alter the nature of corporations and of government interference in economic transactions. Combined with emerging information markets, crypto anarchy will create a liquid market for any and all material which can be put into words and pictures. And just as a seemingly minor invention like barbed wire made possible the fencing- off of vast ranches and farms, thus altering forever the concepts of land and property rights in the frontier West, so too will the seemingly minor discovery out of an arcane branch of mathematics come to be the wire clippers which dismantle the barbed wire around intellectual property. Arise, you have nothing to lose but your barbed wire fences!

16.5. Changes are Coming

16.5.1. Technology is dramatically altering the nature of governments.

16.5.2. Dangers of democracy in general and electronic democracy in particular

16.5.3. The collapse of democracy is predicted by many

16.5.4. Depredations of the State

16.5.5. Things are likely to get worse, financially (a negative view,though there are also reasons to be optimistic)

16.5.6. Borders are becoming transparent to data...terabytes a day are flowing across borders, with thousands of data formats and virtually indistinguishable from other messages. Compressed files, split files, images, sounds, proprietary encryption formats, etc. Once can almost pity the NSA in the hopelessness of their job.

16.6. Free Speech and Liberty--The Effects of Crypto

16.6.1. "What freedom of speech is becoming."

16.6.2. We don't really have free speech

16.7. The Nature of Anarchies

16.7.1. Anarchy doesn't mean chaos and killing

16.7.2. Leftists can be anarchists, too

16.7.3. Anarchic development

16.7.4. The world financial system is a good example: beyond the reach of any single government, even the U.S. New World Order, money moves and flows as doubts and concerns appear. Statist governments are powerless to stop the devaluation of their currencies as investors move their assets (even slight moves can have large marginal effects).

16.8. The Nature of Crypto Anarchy

16.8.1. "What is Crypto Anarchy?"

16.8.2. "Anarchy turns people off...why not a more palatable name?"

16.8.3. Voluntary interactions involve Schelling points, mutually- agreed upon points of agreement

16.8.4. Crypto anarchy as an ideology rather than as a plan.

16.9. Uses of Crypto Anarchy

16.9.1. Markets unfettered by local laws (digital black markets, least for items that can be moved through cyberspace)

16.9.2. Espionage

16.10. The Implications-Negative and Positive-of Crypto Anarchy 16.10.1. "What are some implications of crypto anarchy?"

16.10.3. The Positive Side of Crypto Anarchy

16.10.4. Will I be sad if anonymous methods allow untraceable markets for assassinations? It depends. In many cases, people deserve death--those who have escaped justice, those who have broken solemn commitments, etc. Gun grabbing politicians, for example should be killed out of hand. Anonymous rodent removal services will be a tool of liberty. The BATF agents who murdered Randy Weaver's wife and son should be shot. If the courts won't do it, a market for hits will do it.

16.10.5. on interference in business as justified by "society supports you" arguments (and "opting out)

16.11. Ethics and Morality of Crypto Anarchy

16.11.1. "How do you square these ideas with democracy?"

16.11.2. "Is there a moral responsibility to ensure that the overall effects of crypto anarchy are more favorable than unfavorable before promoting it?"

16.11.3. "Should individuals have the power to decide what they will reveal to others, and to authorities?"

16.11.4. "Aren't there some dangers and risks to letting people pick and choose their moralities?"

16.11.5. "As a member of a hated minority (crypto anarchists) I'd rather take my chances on an open market than risk official discrimination by the state...Mercifully, the technology we

are developing will allow everyone who cares to to decline to participate in this coercive allocation of power." [Duncan Frissell, 1994-09-08]

16.11.6. "Are there technologies which should be "stopped" even before they are deployed?"

16.11.7. "Won't crypto anarchy allow some people to do bad things?"

16.12. Practical Problems with Crypto Anarchy

16.12.1. "What if "bad guys" use unbreakable crypto?"

16.12.2. Dealing with the "Abhorrent Markets"

16.12.3. "How is fraud dealt with in crypto anarchy?"

16.12.4. "How do we know that crypto anarchy will work? How do we know that it won't plunge the world into barbarism, nuclear war, and terror?"

16.12.5. It is true that crypto anarchy is not for everyone. Some will be too incompetent to prepare to protect themselves, and will want a protector. Others will have poor business sense.

16.12.6. "But what will happen to the poor people and those on welfare if crypto anarchy really succeeds?"

16.13. Black Markets

16.13.1. "Why would anyone use black markets?"

16.13.2. Crypto anarchy opens up some exciting possibilities for collusion in financial deals, for insider trading, etc.

16.13.3. Information Markets

16.13.4. Black Markets, Informal Economies, Export Laws

16.13.5. Smuggling and Black Markets

16.13.6. Organized Crime and Cryptoanarchy

16.13.7. "Digital Escrow" accounts for mutually suspicious parties, especially in illegal transactions

16.13.8. Private companies are often allies of the government with regards to black markets (or grey markets)

16.14. Money Laundering and Tax Avoidance

16.14.1. Hopelessness of controlling money laundering + I see all this rise in moneylaundering as an incredibly hopeful trend, one that will mesh nicely with the use of

 - why should export of currency be limited?
 - what's wrong with tax evasion, anyway?

16.14.2. Taxes and Crypto

16.14.3. Capital Flight

16.14.4. Money Laundering and Underground Banks

16.14.5. Private Currencies, Denationalization of Money

16.14.6. Tax Evasion Schemes

16.14.7. "Denationalization of Money"

16.15. Intellectual Property

16.15.1. Concepts of property will have to change

16.15.2. Intellectual property debate

16.16. Markets for Contract Killings, Extortion, etc.

16.16.1. Note: This is a sufficiently important topic that it deserves its own heading. There's material on this scattered around this document, material I'll collect together when I get a chance.

16.16.2. This topic came up several times on then Extropians mailing list, where David Friedman (author of "The Machinery of Freedom" and son of Nobel Prize winner Milton Friedman) and Robin Hanson debated this with me.

16.16.3. Doug Cutrell summarized the concerns of many when he wrote:

16.16.4. Abhorrent markets

16.16.5. Dealing with Such Things:

16.17. Persistent Institutions

16.17.1. Strong crypto makes possible the creation of institutions which can persist for very long periods of time, perhaps for centuries.

16.17.2. all of these "persistent" services (digital banks, escrow services, reputation servers, etc.) require much better protections against service outages, seizures by governments, natural disasters, and even financial collapse than do most existing computer services-an opportunity for offshore escrowlike services

16.17.3. Escrow Services

16.17.4. Reputation-Based Systems

16.17.5. Crypto Banks and the "Shell Game" as a Central Metaphor + Central metaphor: the Shell Game

16.17.6. cryonicists will seek "crypto-trusts" to protect their assets + again, the "crypto" part is not really necessary, given

  trustworthy lawyers and similar systems

16.18. Organized Crime: Triads, Yakuza, Mafia, etc.

16.18.1. "The New Underworld Order"

16.18.2. "Is the criminal world interested in crypto? Could they be early adopters of these advanced techniques?"

16.18.3. crypto provides some schemes for more secure drug distribution

16.19. Privately Produced Law, Polycentric Law, Anarcho-Capitalism

16.19.1. "my house, my rules"

16.19.2. a la David Friedman

16.19.3. markets for laws, Law Merchant

16.19.4. the Cypherpunks group is itself a good example:

16.19.5. I have absolutely no faith in the law when it comes to cyberspatial matters (other matters, too).

16.19.6. Contracts and Cryptography

won't sign such contracts are free to sue--but will of course have to pay more for health care. and frivolous malpractice lawsuits have increased operating costs. (Recall the her psychic powers were lost after a CAT scan. awarded her millions of dollars. Cf. on liability laws.)

16.19.7. Ostracism, Banishment in Privately Produced Law

16.19.8. Governments, Cyberspaces, PPLs

16.19.9. No recourse in the courts with crypto-mediated systems

16.19.10. Fraud

16.19.11. PPLs, polycentric law

16.20. Libertaria in Cyberspace

16.20.1. what it is

16.20.2. parallels to Oceania, Galt's Gulch

16.20.3. Privacy in communications alters the nature of connectivity

Revision #2
Created 23 June 2022 04:00:11 by c0mmando
Updated 23 June 2022 04:01:51 by c0mmando