The Nation-State is rapidly moving out of its element. This is a point I made on a few occasions. We are seeing the world altered due to technology, a shift that is making this form of governance obsolete.
Over the last few decades, we saw how impotent this is becoming. With each new iteration, whether it be globalization, the Internet, or an international crisis, we see how ill-equipped the Nation-State is to deal with what arises.
In our personal lives, governments serve as the ultimate gate keepers. They are the ones who decide what we can participate in.
Blockchain, of course, changes this.
Permissioned States
Governments are nothing more than permissioned states. Engagement with them means that we are granted access as they determine. They operate in a manner providing permission to people's lives through their rules, regulations, and laws.
Few take the time to truly consider how much the governments act as gatekeepers for all of us. Most of our lives are permissioned. Consider for a second all the things we need to register or get approved before we can do something.
This is not only at the direct level. Ponder how companies require permission in some for to provide services to people. For example, if you want to give an entity some money for a return, in most parts of the United States, that institution requires a banking license. Without that, you are not allowed to engage with that institution.
Probably the greatest boost in this area came with the advent of broadcast television. In most countries, broadcasters are required to get permission from the government to be on air. They need a license for the frequency and then have to adhere to the rules set down. Break those rules and adverse consequences will occur.
Another thing many are not willing to admit but this gives the government authority over what people see. Whatever is being broadcast is constantly monitored by the government agencies. If there is something that is unacceptable, it gets removed.
Every industry deals with this. Any engagement with an entity is done so only with the approval of government.
Hence we see how much of our lives are permissioned.
The Rise Of The Corporation
The corporation certainly changed a lot of things, especially multi-national ones. No longer was a company under the rule of one Nation-State. Instead, it had to deal with a multitude of them. As globalization took place, this meant that these entities were dealing with a host of regulations from many different governments.
While this caused a problem for many decades, since the corporations were still subservient to the governments, we saw a switch in the past couple decades. The rise of technology companies have altered the dynamic with many governments.
In short, these institutions have so much power they are actually becoming equals. This is something that governments are resisting yet they do not seem to be making much progress. Their ability to control the likes of Facebook and Google are rather limited.
The introduction of the Internet provided a sea of freedom. While this was initially in the hands of the users, it was quickly usurped by the corporations taking over. Thus, we have a forum which does not provide users much freedom but grants it exclusively to the corporations. For them, the Internet is a wonderful venue since governments cannot really affect them.
Suddenly, the governments have some competition when it comes to being the gatekeepers in people's lives. Of course, this does not help the average person since there is simply another entity exerting control.
Blockchain To The Rescue
One of the most impactful aspects to the introduction of Bitcoin is the ability to operate without permission. With the creation of permissionless blockchains, a new world is starting to open up.
Here again, we see issues for governments. Many still feel that governments are going to be able to withstand the onslaught that is going to take place but it is very unlikely. In short, governments are not designed to deal with the problems they are going to encounter.
With blockchain, gatekeepers are obliterated. If something is permissionless, that means anyone is free to utilize it. We also see how no single person or entity is in control. Consider how much that changes the entire system of interaction.
Over the next decade, we are going to see more transactions moving to blockchain. This means less is operating within the system. As tokenization take holds, the "registering" process is usurped. Simply posting on a blockchain provides a clear path of ownership/transfer of assets. There is no need for government in this equation.
We see the battle taking place right now. Governments, and their associated agencies, are trying to maintain control of this arena. They want to bring all transactions under their regulation and control. This goes against the very nature of the technology. Blockchain is designed to operate without government permission.
Let us look at setting up a blockchain-based business. There are no occupational licenses required since it is a digital entity. To transact, obviously some type of financial arrangements are required. Of course, to get a digital wallet on a permissionless blockchain is simple and has no approval process. Also, people are free to transfer assets to whomever is desired without government oversight. Through the online process, there are no employment forms to fill out or withholding to deal with. If there is a fee (tax), it is done at the time of transaction, eliminating the need to file returns.
In short, one simply can set up and get operating. Nobody can deny participation or operation.
This obviously is a threat to governments.
Starving The Beast
The hunt for taxes is something every government engages upon. It is one of their primary focuses. No matter what level, governments always seek to squeeze more money out of the population. It is a beast that has to be fed.
Unfortunately, over time, the appetite grows.
When it comes to taxation, once you step passed the political and ideological stupidity, we realize that corporations have a sweet deal. Think back to them having to deal with many different governments. There is one advantage to that: taxation.
Corporations, for decades, we able to benefit from tax havens. Since they are global in nature, they can opt for the regulations they operate under. They were able to shift massive parts of their businesses to those areas that provided the best tax rates.
One thing they were not able to overcome is the fact that they were hit based upon where they were headquartered. Having a physical presence in a particular country meant denial of being there is impossible. Yet this is changing as companies opt not to have a physical presence.
While all this is good for corporations, who tend to pay little to no tax, individuals are not so lucky. They are not multi-national but physically located somewhere under the control of the Nation-State. It is fairly easy to see where one is living and working. This is what establishes the tax basis that one operates under.
Simply opting for another set of tax regulations elsewhere that are more favorable to the individual is not open to most. It is why individuals always end up bearing the brunt of the tax burden (especially the middle class since the wealthy exempt themselves).
Here again we see blockchain coming to the rescue. At present, we might not have the most ideal solution but it is coming.
One of the problems that governments have with these permissionless systems is they are also semi-anonymous. People do not have to provide information, hence they can be whomever they want to be. Of course, this is only "semi" since the on and off ramps are fully under government control (licensed) and end up providing an identification which can be followed.
That will not be the case in the future. There will be development that occurs which makes it impossible to follow what people do. A larger layer of privacy is coming, something governments will fight. However, like all things technological, they will be impotent against it.
Which means they are going to have a tougher time collecting their precious tax dollars. We can already see the nightmare ahead of them and it will only get worse. Plus, in a networked world, people are free to opt for whatever regulations they operate under. This is going to become the norm, with the idea of being subject to rules based upon physical location becoming absurd.
Naturally, all of this is hard to fathom since we all operated under this system since the day we were born. However, blockchain destroys gatekeepers and governments are the epitome of this.
Therefore, it is only logical that they will meet their demise as a result of this. We know it is only a matter of time as this technology spreads.
For further reading on this subject:
How Blockchain And Cryptocurrency Will End The Nation-State
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