While the Bitcoin community is usually willing to accept anyone with open arms and no political discrimination, the reality is that there is certainly a political aspect to the technology surrounding cryptocurrencies. The politics of Bitcoin are rather supportive of a more voluntary government, and there isn’t really any way to get around this issue. While bitcoins or other cryptocurrencies could definitely be used as the main form of currency to support basically any form of government, the difference with this type of money is that it requires permission from the people. This means that the increased popularity of Bitcoin does not mean that we’re entering an age where there is no government; however, some governments will find it more difficult to suppress the rights of certain individuals who do not wish to opt-into the law of the land.
The main issue that some governments are going to face when it comes to Bitcoin or some other form of future cryptocurrency is that people can more easily hide their income and sources of revenue when they use this type of money. In most developed countries, a lot of the financial transactions in one’s daily life are basically hosted in the cloud. Edward Snowden famously stated that he had access to anyone’s email account when he was working on the NSA, which is one of the main issues with hosting private data in centralized cloud services. When you give your personal information, private messages, or financial activity over to a third-party, it’s important to realize that the company hosting the data and the government in that local jurisdiction also have access to that data. Many people in the United States already avoid taxation by working for cash under the table, but this form of tax evasion could explode when it’s also applied to transfers of value over the Internet. As new innovations in the cryptocurrency space are created to enhance financial privacy, the chances of getting caught are lowered dramatically. What’s going to happen when people are able to store value in a brain wallet for basically no cost as opposed to setting up a Swiss bank account? Bitcoin basically democratizes the ability to hide money from the taxman.
As taxation becomes more voluntary over time, we could see a situation where people decide to opt-out of the system. When your options are hiding your financial activity and taxable income rather easily or handing over 30-50% of your money to a government that has policies you don’t agree with 90% of the time, finding a reason to pay taxes becomes difficult. More people view taxation as nothing more than theft on a yearly basis, largely thanks to the rise in popularity of certain political figures, such as Ron Paul and Daniel Hannan. In addition to a majority of the population not wanting to pay for endless wars, throwing people in jail for non-violent crimes, warrantless spying, and a litany of other issues found with modern governments, they may also decide to find their own solutions when it comes to helping the less fortunate gain access to basic necessities, such as food, healthcare, shelter, and education. It will be interesting to see how much government spending people in different countries are willing to accept when they actually have a choice when it comes to the amount of money they’re going to send the government.
As government becomes more voluntary due to the prevalence of Bitcoin and other new technologies related to cryptography, it’s possible that the people will decide to find their own solutions for local issues. Just because the overall role of government could be largely diminished does not mean people aren’t going to find solutions for real issues that still exist. When you’re talking about the difference between government and locally organized communities, the differences between the two can become blurry rather quickly. Instead of national healthcare systems, could we see local communities organize their own distributed autonomous healthcare systems? Could someone create a fair autonomous organization for the distribution of welfare or unemployment insurance at a local level? In reality, how are you going to stop people from creating their own distributed autonomous governments by using platforms such as Ethereum, Open Transactions, and Bitcloud? At the end of the day, we may come across a situation where many of the basic functions of government are still in place. The only differences are that bureaucrats are going to be replaced by code and people will actually have a choice between different types of automated governments and societies. If the controllers of the current system are able to prevent free people from making their own decisions, then there’s always the idea of creating new, startup countries through seasteading.