If you are libertarian-minded you likely reacted with glee at the invention of Bitcoin and the flood of projects that followed. Many continue to speak of this technology as holding the promise of a decentralized and distributed future.
I don’t want to rain on that parade because I am sympathetic but I think we need to avoid such wishful thinking and take a more realistic view.
Cryptocurrency and distributed ledger technology are no panacea. They cannot guarantee liberation. They are tools and as with any tool they can be used for a variety of purposes.
Cryptocurrency and blockchain tech could liberate people from monopolized forms of money and the control of bureaucrats, but it could also become a financial panopticon tracking every exchange- an all-seeing eye.
It is a surveillance tool potentially far more complete and systematic than any other form of money.
Actors in both public and private capacities are already utilizing blockchain forensic tools to track people and transactions. The ability to track is only going to progress as this technology develops; AML and KYC (Anti-Money Laundering and Know Your Customer) laws will hasten this progress.
Allowing this once-distributed technology to be a centrally controlled legal tool eliminates and undermines the whole value proposition crypto offers. The early innovators and adopters intended an apolitical alternative to centrally managed and politicized forms of money. If these digital assets are politicized, a major use, purpose, and intention will be radically changed, and this technology will be reduced to a mere trinket of speculation and control.
A future where Fedcoin or something similar is the only legally acceptable digital tender is conceivable and it goes without saying that it would be a great loss for privacy and civil liberty. The scope of control would be greatly expanded. It would be feasible to simply block certain unregistered or black-listed wallet addresses from accessing the blockchain, thereby denying people the ability to exchange whether they are a political minority, a “radical” or a “criminal.”
With our dollar-based system, at least we can exchange anonymously with physical currency (cash) and it’s important to ensure that the same option continues to exist in the cryptocurrency space.
The ability to transfer into and out of these digital assets without having to comply with AML and KYC regulations is important for preserving the value and relevance of the entire cryptocurrency project. This is not to say that these regulations should be avoided entirely. If they bring in institutional money and usher in new users, that’s fine and well but we also need pay cards, ATM’s, and exchanges that facilitate trade and adoption without requiring much personal information.
How all this ultimately turns out will be determined by the dominant values and beliefs held by the people using and developing these projects. If you care about cryptocurrency and it’s potential to radically alter how we live, consider that the invention of these digital assets is just another step in the age-old fight for economic freedom and spiritual maturity.
It’s going to require more than cryptocurrency to achieve a harmonious future; it’s going to require spiritual and cultural evolution.