Decentralization and Bitcoin
Submitted by QTR's Fringe Finance
Authored By Emile Phaneuf III, American Institute For Economic Research
From the late-1980s until the early 2000s, the Cypherpunks – a group of cryptographers, mathematicians, computer scientists and activists – worked to build what they referred to as a crypto-anarchist “Galt’s Gulch in cyberspace.” This virtual place would be one where individuals from around the world could communicate and engage in commerce, with property rights protected, with contracts enforced, and with its own native digital currency. These Cypherpunks are widely credited to having significant involvement in the development of (or influence on) projects such as Tor, anonymous remailers, PGP for email encryption, OTR for chat encryption, BitTorrent, Wikileaks, the Silk Road market, and, of course, Bitcoin, both during the group’s formal existence and thereafter.
As Bitcoin’s very existence derives from the set of ideas to which these Cypherpunks adhered, it is worth exploring its anarchic roots.
According to Timothy C. May, one of the Cypherpunk founders and more influential members, crypto-anarchy was a concept deriving inspiration from the work of economist David D. Friedman, science fiction writer Vernor Vinge, and philosopher Ayn Rand.
Friedman’s book The Machinery of Freedom, first published in 1973 and now in its third edition, makes the case for anarcho-capitalism, exploring how various societies throughout history, to varying degrees, protected property, resolved disputes, enforced contracts, and provided defense without the state.
From Vinge’s work, May references the novella True Names. And, as it turns out, Friedman had an impact on Vinge’s thinking too. In an interview, Vinge cites Friedman’s The Machinery of Freedom as one of his own inspirations, stating that Friedman’s book instigated a profound “internal intellectual revolution.”
Friedman’s inspirations for anarchy
Where did David Friedman’s own anarchy come from? His influential parents Milton and Rose Friedman were certainly no anarchists.
In an email to me, he confirms that Robert Heinlein’s fictional novel The Moon is a Harsh Mistress was a primary influence. In an interview about the book Friedman states that it:
…provided a fictional picture of a society in which law and law enforcement are endogenous… done within the system… As far as I could tell, it was an internally consistent picture… That is as far as I could tell [from] reading it, there is no particular reason why that shouldn’t have worked under those circumstances… Once I was convinced that it was possible to have a society in which law and law enforcement were internal to the market system rather than imposed from the outside, that got me interested into the question of how one could do the equivalent in something more like the world I actually lived in.
Friedman is quick to point out that if he had more knowledge of history and anthropology at the time he may not have needed Heinlein’s fiction to arrive at these conclusions, as he later discovered there was no shortage of real world examples.
F.A. Hayek was another influence. In a recorded conversation, Friedman highlights Hayek’s “distinction between an organization and a self-generated order.” He (Friedman) was intrigued by the idea that “a market economy does not have a purpose” in the way that...(READ THIS FULL ARTICLE, FREE, HERE).
