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Governments are in the extortion-and-protection racket, as are some well-known
smaller ventures. Why do these major organizations spend effort on protecting,
instead of just extorting? Current protection rackets maintain a monopoly and
manage "their" resources for sustained yield. Without protection, their
revenues would decline through a tragedy of the commons mechanism. Other
rackets would threaten the same victims, piling extortion on extortion, until
the economic field is bare.
Crypto technologies promise to liberate us from government extortion and the
"protection" of victimless crime laws by enabling the growth of a new sphere
of economic activity based on voluntary, secret transactions. But are these
technologies so limited in their power?
New opportunities in the extortion industry:
Old problem: the victim may inform the police, making it risky to pick up the
money, which will likely be watched.
New solution: demand payment via cryptomoney.
Old problem: if you build a reputation for carrying out your threats,
parasitic competitors can issue threats in your name, collecting while your
reputation is good but destroying your reputation by not following through on
New solution: authenticate your threats and demands with digital
Old problem: you may be caught firebombing the house, shooting the victim,
slashing the victim's daughter's face, or whatever; if you subcontract to a
thug, the thug may be caught and inform on you.
New solution: use cryptomoney (and a reputation for paying) to hire thugs
while maintaining anonymity.
Old problem: providing protection, so that you keep a supply of economically
viable victims from whom to extort.
New solution: Please find one! If the government can't protect victims
from you, how can you protect them from competitors?
If this analysis is correct, then crypto technologies will make extortion
a highly profitable growth industry, making the security of property and
persons (outside tightly-knit walled communities?) incompatible with the
continued existence of free computer networks as we know them. Rather than
suffering from a single oppressor with an incentive to keep us productive, we
would become prey to an unbounded number, each competing to strip our assets
before they vanish. Society will surely suppress free networks once this
starts to happen; the harder it is to suppress free networks, the greater the
oppression will be.
Some objections and answers:
Q:Isn't it too bleak and pessimistic to believe that the best we can do is to
help our oppressors to maintain their monopoly on oppressing us?
A1: The Soviet Union was established as a result of a movement that aimed to
overthrow an oppressive order. Millions then died under an even more
oppressive order. This was bleak, but it happened anyway.
A2: Better one oppressor than many, all competing to be the first to kill and
eat the goose, knowing that they can't get the golden eggs anyway.
A3: Profit is a powerful motive, and conventional profitable activities are
imitated and expanded until demand saturates. Crypto-extortion should be
highly profitable, but the "supply" is delivered by force, so there is no
problem with competitors saturating the "demand" until the victims are drained
quite dry. This gives grounds for pessimism.
Q: Doesn't the enormous potential of this technology for expanding liberty
outweigh these theoretical dangers? What about our hopes and dreams, our
vision of a better world?
A: These hopes spring from a theoretical social and economic analysis of the
impact of crypto technologies, and cryptomoney in particular. The above line
of reasoning extends the same analysis. I hope it is wrong, and would be
greatly relieved to hear a convincing reason for dismissing it. If it stands,
the prospect seems to be either the destruction of society by free networks,
or the destruction of free networks by society. The longer we can postpone
this choice, the better.
Q: Won't cryptomoney be so hard to establish that there's no point in worrying
A: If so, then there is equally well no benefit in attempting to implement it.
The question is, are there any conditions for "success" that don't generate
disaster? Saying the gun probably isn't loaded isn't an argument for putting
it to your head and pulling the trigger.
Q: Isn't it too late to stop these technologies?
A: For public key communication (secrecy and authentication), probably yes.
For cryptomoney, possibly no. Most of the benefits of crypto technology seem
to come from the former, and most of the danger of an extortion explosion
seems to come from the latter.
Wishful thinking in the pursuit of liberty is no virtue; realism in the
defense of imperfect liberty is no vice. Free-lance oppression isn't freedom,
and I don't want it.
P.S. Your neighbor didn't pay me, and his house is ash. Will you pay me? All I
ask this month is $100, which you can well afford. (Next month is negotiable,
and I can't speak for my competitors.)