On December 15, 2018, one of the co-founders of the Cypherpunk movement and prominent computer scientist Timothy C. May passed away at the age of 67. Among numerous other achievements, May was primarily responsible for shaping the conversation around the economic and legal freedoms implied by modern cryptography. The famous Cypherpunk mailing list in which these ideas were discussed, included contributions from Julian Assange, Nick Szabo, David Chaum, Adam Back, Hal Finney, Wei Dai, and countless other individuals.
Building Ideas into Infrastructure
In a turn of phrase, Peter Thiel recently drew up a convenient political framework for how to think of the last decade’s most-hyped technologies. In a conversation with Reid Hoffman at Stanford’s Hoover Institution, the billionaire co-founder of PayPal described cryptocurrencies as libertarian and artificial intelligence as the communist.
A few moments later, Hoffman, the creator of LinkedIn, matched with the following: Crypto is anarchy, and AI is the rule of law. But before breaking down the validity of these catchy platitudes, it should be noted that both founders are clear descendants of May’s line of thinking.
May envisioned an extreme degree of freedom, as expressed in his large collection of firearms, admiration for the works of Ayn Rand, and a political philosophy which was reduced to the phrase: “Keep your hands off of my stuff.”
More importantly, he believed that all of this could be achieved via advancements in cryptography, coupled with networked computing.
Recent examples of this include the way in which Venezuelans and Zimbabweans are escaping massive inflation in their country via cryptocurrencies. In nations where the value of a local currency is weighed by the wheelbarrow rather than counted by the bill, a deflationary monetary device such as bitcoin is readily sponsored by impoverished citizens.
Enthused by their inability to thwart the use of cryptocurrencies, the South American country eventually launched their cryptocurrency to navigate recent American legislation.
In a string of deterrents, President Trump barred American companies in May 2018 from purchasing Venezuela’s debt by adding new penalties to interested buyers. The block arrived following the “choreographed” election of Maduro’s second term and concerns over multiple “avenues of corruption” within the country’s political elite. Mike Pence rationalized the decision by saying that “the United States will not sit idly by as Venezuela crumbles and the misery of their brave people continues.”
Following the rise of the Petro, the state’s oil-backed digital currency, is akin to following ascending geopolitical Russian dolls. Venezuelan citizens are using bitcoin as an escape from Maduro’s inflationary policies, while Maduro is using the same technology to escape recent sanctions from the United States.
Both Russia and Iran have also been quarantined by similar American regulations and are inspired to create an equivalent native cryptocurrency. The consideration of a crypto-Rouble and Rial, respectively, means that the fiscal weaponry at the disposal of Trump is far less effective in getting these countries to bend. Herein lies the cypherpunk dream: A world in which governments compete less often with one another and more often with technologies that empower the individual.
Bitcoin makes people think long term. It makes them fearless of governments. It allows them to organize and coordinate. It gives them ressources to outlast government restrictions on wealth creation. It changes their mindset and allows them to believe and hope. Bitcoin is fuel ?
— Francis Pouliot ?₿ (@francispouliot_) December 14, 2018
China: Blockchain, not Bitcoin
At the opposite end of this, according to Thiel at least, is communism. Specifically, the Chinese Communist Party. Not only has the practical use of cryptocurrencies been almost entirely snuffed out, but China has also been experimenting with the fruits of artificial intelligence and their benefit to a massive surveillance state.
A report from 2015 indicated that a “video surveillance system had covered 100 percent of [Beijing]” which will contribute to the government’s techno-Orwellian “social credit” system in which citizens are given ratings based on behavior.
— hardmaru (@hardmaru) December 18, 2017
Interestingly, blockchain technology, that which backs cryptocurrencies like bitcoin and ether, will likely play a significant role in this mass supervision. President Xi Jinping hopes to use distributed ledgers to impose even greater control on the country through greater visibility of his nation’s financial activity. A centralized, digitized, and likely private blockchain that only allows a handful of participants to adjust information therein means that surveillance becomes even more granular to even fewer people in power.
To put the enthusiasm behind such a move into perspective, China alone filed 226 of the 406 international blockchain-related patents filed in 2017. The People’s Bank of China (PBOC) make up 68 of those patents leading commentators to speculate on the idea of a “Central Bank Digital Currency” soon to come.
Finally, and converse to the sliver of information that a crypto transaction needs, an AI-powered blockchain would demand vast amounts of data to operate, learn, and develop actionable conclusions. From this, Thiel’s curt headline-happy one-liner is fitting and easy to digest.
What’s Left to Do?
Within these frank boundaries, however, are some finer details that qualify myriad other political facades. Entrepreneurs, developers, and founders are all scrambling to shed the radical, freedom-fighting aesthetics of Bitcoin in favor of more packaged and manageable projects. With institutional investment on the tip of everyone’s tongue and a crushing bear market, this comes as no surprise.
For May, however, the game of crypto is zero-sum. He opined that the rise of these kinds of technologies was either going to lead to a Leviathan or an “anarchic-type system.” The current obsession with the financialization of cryptocurrencies and price slumps points to the former.
In an October 2018 interview with CoinDesk, May explained his distaste for the changing ideological landscape of the crypto space. He even went as far as saying Satoshi Nakamoto “would barf” at the thought of crypto today and that “all the noise about ‘governance,’ ‘regulation’ and ‘blockchain’ will effectively create a surveillance state, a dossier society.”
This distinction is key to understanding the value proposition of cryptocurrencies. For May, the question was never blockchain or bitcoin, but rather freedom or oppression. From this, groups like Paralenis Polis, the host of the annual Hacker’s Congress in Prague, are developing a much broader agenda based on the advancement of cryptography:
“The aim of the Institute of Cryptoanarchy is to make available tools for unlimited dissemination of information on the Internet and encouraging a parallel decentralized economy, crypto-currencies and other conditions for the development of a free society in the 21st century. The main motive for us is the belief that censorship is not a phenomenon only in ‘the distant dictatorial world.’”
While this vision, at current, does include the long-term survival of Bitcoin, May would likely discard the innovation as soon as it no longer served the idea that “two persons may exchange messages, conduct business, and negotiate electronic contracts without ever knowing the True Name, or legal identity, of the other” without the interference of a government.
And in an age where these intimate freedoms are always under threat, paying close attention to dissolving mechanisms of exploitation rather than hopping on the next hype cycle is far more valuable.