BitcoinYesterday I wrote an op-ed to express my dislike for a “cashless society” where everyone is under constant surveillance 24/7, from the cradle to the grave. I concluded that we must continue using cash for as long as we can, until that make it illegal altogether, and in the meantime establish Bitcoin as the anonymous, untraceable e-cash that it was always meant to be. While rejoicing to see (regulated versions of) the Bitcoin economy going mainstream, we must protect the Bitcoin underground.

The New York Times reports that the checking account of a restaurant owner was seized by the IRS solely because she had deposited less than $10,000 at a time, which they viewed as an attempt to avoid triggering a required government report. What happened to the legal right to presumption of innocence, the principle that one is considered innocent until proven guilty?

Although the Constitution of the United States does not cite it explicitly, presumption of innocence is widely held to follow from the 5th, 6th, and 14th amendments. But these days the Constitution is going out of fashion. All over the world, peaceful law-abiding citizens are more and more harassed by governments that are losing their grip on society, and contemporary reality.

After this precedent, more and more small business owners will understand that the only way to avoid similarly unacceptable violations of their privacy and Constitutional rights is not to deposit cash in the bank. Bitcoin is a convenient alternative way to store money privately, provided the bits are truly anonymous and untraceable and can be exchanged for fiat easily and quickly anytime.

Well, you are thinking, isn’t that what exchanges are for?

Wrong. The only way for an exchange to operate in a given jurisdiction is to submit to the regulations of the local authorities. If the local authorities want any “suspicious” (according to their own definition, or whim) transaction reported, the exchange must comply. So the restaurant owner is back to square one.

The only sensible thing for the restaurant owner to do is to find somebody to exchange bits for cash, no questions asked, and no paper trail left. If there is a lot of money involved, that will be illegal, and the restaurant owner will have to take precautions not to be caught.

My conclusion is that we need to protect the Bitcoin underground of anonymous transactions and untraceable exchanges. Yes, the Bitcoin underground will be used by criminals as well, but so are electricity and public transportation. I prefer a small (and manageable) risk of being harmed by criminals to the certainty of being harassed all the time by the “benevolent” nanny state.

We Need a Declaration of Independence of Bitcoin

Free InternetIt’s useful to make a parallel with the history of the Internet. The Internet started as a free new world in cyberspace. The true, subversive nature of the Internet, a powerful and disruptive enabler of cultural, social and political innovation, evolution, and revolution was very clear in John Perry Barlow’s Declaration of the Independence of Cyberspace:

“Governments of the Industrial World, you weary giants of flesh and steel, I come from Cyberspace, the new home of Mind. On behalf of the future, I ask you of the past to leave us alone. You are not welcome among us. You have no sovereignty where we gather… We are creating a world that all may enter without privilege or prejudice accorded by race, economic power, military force, or station of birth. We are creating a world where anyone, anywhere may express his or her beliefs, no matter how singular, without fear of being coerced into silence or conformity. Your legal concepts of property, expression, identity, movement, and context do not apply to us. They are all based on matter, and there is no matter here…”

Initially, the governments and the financial powers, Big Business and Big Government (I often call them “the bankers and the bureaucrats”) let the free Internet be because they didn’t understand it. Then the bankers realized that they could use the Internet to sell us more useless things, send us more spam, advertise their Ponzi scams online, and the bureaucrats realized that they could use the Internet to read our private letters, monitor our online behavior, and keep us under control (I am afraid that may explain the current wave of state open-mindedness about regulated Bitcoin as well).

So the bankers and the bureaucrats let us have Google, Youtube, Twitter, and Facebook. But when it was clear that the Internet was beginning to hit them where it hurts – the wallets of the bankers, and the sanctimonious, self-righteous control freakery of the bureaucrats – they started to fight back. With all the weapons and all the money, they started to take control of the once free Internet, with the results that we all know.

Expect the same and worse for Bitcoin: the bankers and the bureaucrats will fight to death to keep their money and their power. Now they are letting their own, sanitized and regulated version of Bitcoin go mainstream – but that’s not the Bitcoin that Satoshi Nakamoto and the Extropian thinkers Nick Szabo, Wei Dai and the late lamented Hal Finney wanted, or Barlow. We need a Declaration of Independence of Bitcoin.

Also read: The Extropian Roots of Bitcoin

The best thing that we can do is to protect the Bitcoin underground from the bankers and the bureaucrats, and make sure that underground networks of anonymous and untraceable cryptopayments, based on altcoins (e.g. Darkcoin) and anonymizers (or new privacy-oriented sidechains), continue to exist. And sooner or later, with the decentralized and distributed technology of the blockchain, we will take back the Internet from the bankers and the bureaucrats.

What do you think? Comment below!

Images from Shutterstock.