The industrial age gave us plenty and we are thankful. Above all we give thanks for networked computing: making possible our new information age. We are at the very beginning of this information era. There is a whole lot more to come and a side we are only just beginning to see, if we look hard enough.
The ‘digital revolution’ ushered us in. Information technologies and digital systems are now ubiquitous. The information age has necessarily given rise to the ‘information economy’. In this new economy, information is already a type of currency. But only now has currency become pure information. Indeed, with Bitcoin, value has become pure information.
So Bitcoin is an earth-shaking invention of the early information age, forged in mathematics. It’s a creation so strange that many still struggle to come to terms with its importance. For those who have already made the leap we are forced to re-assess everything.
But remarkable as Bitcoin is, it leads to an even more profound conclusion: that wealth too is information. And, as such, it can now exist entirely in one’s own head. From this remarkable idea we draw the most glorious of designs: the ‘Brain Wallet’.
It’s the best thing yet to come out of the Bitcoin space. A new generation of libertarians are daring to contemplate what was once thought impossible.
A Brief Definition:
A brain wallet is simply a unique, memorisable pass-phrase from which all private keys (and therefore Bitcoins) can be restored. The best current example is the Electrum wallet.
Anyone, anywhere, can download this free piece of software. By remembering 12 simple words a users wealth effectively exists only in that users head. It is simple in use but complex in design: a truly powerful concept.
Consider then, how is the state to confiscate wealth in this new information age?
Tragedy and a Thought Experiment:
In Hitler’s Germany, according to historian Gregg J. Rickman, “when it came to robbing Jews, very little was missed”. This is the most extreme example in modern history of a state gone mad.
Everything was confiscated, “Jewish bank accounts, insurance policies, securities, jewellery, property, businesses, pensions, art wine, books, manuscript and stamp collections…clothes, shoes, hats, household and business goods”, all taken by a tyrannical state.
All these things were goods: physical representations of ‘wealth’. In the case of bank accounts, the wealth was a claim on the ledger of a central body: easily seized by tyrants. Likely this wealth was earned over generations. Only to be gone in an instant of despotic madness.
In the pre-information age we could only rely on the physical world to represent wealth. That is all. As a result we were vulnerable to the tyranny of state. In the information age we have a new paradigm: the digital.
Now we can not only denominate wealth digitally, but also have it exist entirely in the digital realm. It’s a grand concept. And it’s here now.
A Modern Context:
In November the Bitcoin Foundation went to Washington. During this visit congress was formally introduced to crypto-currency.
The community watched with baited breath as the US began the process of learning Bitcoin. The same community was taken-a-back by a fairly benign response. Washington decided it would take no immediate action. For now, it would wait and watch.
Of course, it was clear that no one really understood the broader implications. As senator Carper put it, “I understand the words, but not the sentences.”
For the apparatus of state realisation will be a long process. It will dawn over time. For now they play the sheep. As they necessarily continue the wealth confiscation process they will reveal themselves as wolves.
Continued wealth confiscation is a certainty for the US and much of the Western World. Currently it is less brutal than the Nazi version. But it is a longer, more insidious process: a slow grind.
The future obligations of the US Federal Government are enormous. It has promised its citizens hundreds of trillions of dollars in welfare benefits, well into the future. To pay for these promises it has two options: print money or increase taxes. Both options are limited. You can’t tax more than 100% and you can’t print money forever.
As we gradually approach the conclusion of these two options the state will be left with no other choice. Direct confiscation and capital controls are coming. To some extent they have already begun.
There is already precedent for this in US history. In 1933 President Roosevelt exercised an obscure piece of authority. Bank safety deposit boxes were seized. Trade of gold and silver was prohibited. US citizens were ordered to hand over precious metals to the Federal Government.
Confiscation in the information age will be a challenge. The state will require new methods worthy of digital wealth.
Thought Police and Torture – Our Orwellian Future:
Computing advancements to brute-force hack pass-phrases will be met with equal development from hackers. This will be a difficult path for the State.
As a result, the state will necessarily resort to torture or ‘thought police’. These are their only viable options for wealth confiscation. The state is hard out of luck. With the brain wallet the information age has truly taken it up a gear.
Nevertheless, technology itself has no moral compass. It can’t. Only we can. The same advancements in science that provide for brain wallets also make mind reading possible. Thought police are an inevitable part of our future.
Research is already being conducted to extract images from subject’s minds. Even now we are able to hear a person’s internal monologue. This technology is primitive, but it exists.
In a perverse tit-for-tat, the State will continue to develop technology to read our thoughts and confiscate digital wealth. Hackers will also continue to develop technology for the people, to protect that same wealth.
As for torture, well that requires no technology. While restricted by constitutions, laws and international agreements these are only bits of paper. The state can and most likely will simply ignore those, as it has in the past.
A Great Hope:
To quote Arthur C. Clarke, “Any sufficiently advanced technology is indistinguishable from divinity”. We are entering a period of ideas unfathomable to even our parents. In some sense we already possess the power of the divine.
Bitcoin is one of these ideas. It is a technological marvel. As such it will necessitate equal technological marvels from states wishing to profit from our labour.
The information age is only just beginning. The majesty of this moment is tremendous. Enjoy the ride.
