The Satoshi Revolution – Chapter 4: Kiss a Computer Engineer Today (Part 4)

The Satoshi Revolution: A Revolution of Rising Expectations.
Section 2 : The Moral Imperative of Privacy
Chapter 4: When Privacy is Criminalized, Only Criminals will be Private
by Wendy McElroy

Kiss a Computer Engineer Today (Chapter 4, Part 4)

If you care about liberty, the nonaggression principle, or economic freedom in general you should do everything you can to use Bitcoin as often as possible in your daily life.”

— Roger Ver

Every time I turn on a light switch, I want to kiss an engineer. I cannot make light in the darkness, but they can. I can do so at the flick of a switch only because they have created the FM that makes it happen without my needing to know how. (FM = F***ing Magic, which is what much of technology seems to me). Fortunately, I married an electrical engineer and computer zealot, so I am able to express a lot of gratitude on a regular basis.

What does the foregoing commentary have to do with cryptocurrency? Everything. The coders who drive crypto technology are like the engineers who make light happen. Their hands are on the engine of the most powerful freedom force of our time: the blockchain and the crypto that flows through it. I am a passenger on this wild ride; I don’t pretend to be anything else. Or, rather, I do have something to contribute. Some of those who are technologically-steeped are blind to the social implications of what they’ve created. That’s a shame, because more lights have been switched on than they realize.

The first crypto creators were anarchists who understood the social, political FM of it all. Satoshi Nakamoto was an anarchist visionary who knew its revolutionary potential, and he wanted to develop it slowly so Bitcoin could accommodate changing circumstances. When Wikileaks adopted Bitcoin, the careful development was swamped by a sudden popularity that had a path of its own. With every new ICO offered, with exchanges that report its every breath to the government, with every step into the mainstream swirl, crypto forgets its roots. It risks losing them altogether.

Returning to the Roots

The transformation of society caused by cryptocurrency is vast and complex, which makes it difficult to sketch. It can be glimpsed in microcosm, however, by looking at a small slice. Consider one issue: authentication. It sounds like a dry and almost sterile topic, but its implications are vast.

Authentication is the process of verifying something or someone to be true, genuine, or valid. It is the backbone of modern finance -– credit checks, background information, references, government credentials — institutions want to vet people within an inch of existence before opening an account or transferring a dollar from one hand to the other. The reason is clear. Government demands a complete accounting of who everyone is and of every cent they own. Government approval and authentication of identity is the modern form of financial reputation. Without government authentication in the form of documents and bureaucratic approval, few things are (or were) financially possible.

The opposite of the authentication of identity used to be true in economic exchanges. In days of barter, or direct trade, the question of identity was not important; character was not necessarily important. A chicken was a chicken was a chicken. It did not matter whether the seller was a devil or a saint, as long as chicken was healthy and fat. A buyer examined chickens, looked at horses’ teeth, and squeezed tomatoes. The authentication focused on the good being traded rather than upon the people involved. There was no need to confirm identity – only to confirm the quality of goods. At a swap meet, what does it matter if the person selling you cheap vegetables is a ex-con, a priest, or is sex worker on the side? You examine the vegetables. You authenticate the commodity, not the seller. Thus, barter offered anonymity.

Modern life requires more sophistication than barter can supply. It is not possible to send money overseas, to cash a paycheck, to acquire a home loan, or to conduct most financial necessities without going through institutions that focus on authenticating identity, rather than authenticating the good being transferred – namely, money. And it is relentless. The banking system endlessly invades privacy for its convenience and advantage, at the expense of customers.

Cryptocurrency reverses the authentication process. It takes authentication back to the barter stage of verifying goods while, at the same time, providing the sophistication of modern finance. Users of the blockchain can be anonymous or pseudonymous, which is the opposite of being authenticated. The focus is all on the “good” involved: that is, the crypto. If the blockchain accepts or authenticates the crypto, then no real identities need to be involved. A bitcoin is a bitcoin is a bitcoin. The people don’t matter.

All the anonymity advantages of barter are present in crypto, along with the incredible power of modern finance. The blockchain offers the same sophistication as central banking. Money speeds across borders; it purchases real estate; it allows investment, and all without demanding authentication of identity. In other words, and to be repetitive, cryptocurrency preserves the enormous anonymity of barter while providing the sophistication of complex finance.

The “trusted third party” problem was always code for “the central banking problem.” Satoshi rejected it because banks are the choke-point at which authentication switches from goods to people. To acquire necessary financial services, people must be documented, registered, and reported to government. But the blockchain substitutes for central banks. It becomes an automatic clearinghouse that requires no authentication of identity. It is an exchange of value – that is, crypto – with no privacy violation.

One of the keys to financial freedom is where the authentication is vested. Is it vested in the individual or in the good itself.

Of course, government is trying to reverse the authentication process in order to make it all about identity rather than about goods; or, rather, it wants to document both aspects of financial exchanges. The push to regulate exchanges is an example. It converts them from expressions of the free market into arms of the government, which function in the same manner as banks. The enrollment process for exchanges like Coinbase, for example, are now as grueling and invasive as any bank. That’s the future governments want for cryptocurrency: the extensive authentication of identity and of transactions.

Everyone should kiss a computer engineer today. Until Satoshi Nakamoto and the anarchist ilk with whom he ran, no one imagined there would be a sleek, compartmentalized method to financially empower the individual. It is the blockchain. It is an elegant solution to the third party problem that allows people to be anonymous, or close to it, while conducting financially sophisticated transactions.

As someone who has spent a lifetime in the humanities, especially in history, it took me by surprise that human freedom would not come from a mass of people taking to the streets under banners reading “Truth, Justice, Freedom.” It would come from computer radicals and cryptographers who code.

[To be continued next week.]

Reprints of this article should credit bitcoin.com and include a link back to the original links to all previous chapters

Wendy McElroy has agreed to ”live-publish” her new book The Satoshi Revolution exclusively with Bitcoin.com. Every Saturday you’ll find another installment in a series of posts planned to conclude after about 18 months. Altogether they’ll make up her new book ”The Satoshi Revolution”. Read it here first.