Cryptocurrency is the Second Amendment of the Internetsarah c0nn0r
Feb 28 · 7 min readWhat problems are cryptocurrencies good at solving? In 2017, entrepreneurs and fortune 500 companies alike were rushing to integrate cryptocurrency tech into their businesses, only to realize that traditional centralized databases are generally faster, cheaper, and easier to manage, thus making the latter the superior solution to most problems. But the question remains: What is cryptocurrency tech uniquely useful for? This was a question I faced first-hand before deciding to develop the Ultranet, the first decentralized private marketplace that launched this week. My conclusion, which I cover in this article, is that platforms based on cryptocurrency tech are uniquely good at one thing in particular: not being shut down, a property known more formally as “censorhip-resistance.” And I will argue in this post that this property alone causes cryptocurrency tech to act as a “second amendment of the internet,” providing a check against information-based oppression that is analogous to how the right to bear arms acts as a check against physical oppression.
What is Censorhip-Resistance?Simply put, a database is censorship-resistant if it is resistant to being shut down and resistant to having its data tampered-with. For example, Bitcoin and the Ultranet meet arguably the highest bar for censorship-resistance because everyone who uses the software stores and serves a replicated copy of all the data, and as long as a single computer somewhere in the world is running the software, all that data is preserved. Additionally, these networks enforce strict rules through consensus that prevent their data from being tampered with. For example, you can’t print yourself free money with Bitcoin and you can’t mess with another merchant’s listings on the Ultranet, even though anyone can technically run a machine on these networks.
The fact that these networks are “unpermissioned,” meaning anyone in the world can spin up a machine and serve a copy of all of the data, is the key to their censorship-resistance, and distinguishes cryptocurrency platforms like Bitcoin and the Ultranet from so-called “permissioned” networks like those run by the major platform monopolies (e.g. Google, Amazon, Baidu, Alibaba, etc…). To elaborate, Amazon’s machines are managed and configured meticulously by a select group of engineers, whereas Bitcoin and the Ultranet don’t require any such configuration or centralization of control. This makes a database like the one that serves Amazon far easier to censor and/or corrupt than the one that powers Bitcoin or the Ultranet. In particular, to censor Amazon listings, all a government needs to do is apply pressure to the small group of people and/or machines that are known to be running the service, whereas to censor Bitcoin or the Ultranet a government must generally play a difficult game of “whack-a-mole” against every random person on the internet who decides to run an instance of the software. This is not to say that it is necessarily impossible to shut down the latter, but hopefully it’s obvious that it is significantly harder (hence why they’re referred to as “censorship-resistant” not “censorhip-proof”).
When Is Censorship-Resistance Useful?
The answer may seem obvious, but it’s useful when something is likely to be censored. Obviously, if we take this to be the sole benefit of cryptocurrency tech, which I don’t think is terribly inaccurate as a first approximation, then the technology’s applicability is vastly narrower than that of traditional centralized databases. And indeed, I think this is precisely what people had to learn the hard way after the crypto mania in ~2017 subsided (and what some people are still learning even today).
However, although not as broadly-applicable as centralized databases, I would argue that the role of cryptocurrency tech in our society is still extremely important because it is uniquely capable of producing tools that can fight oppression. A good case study of this is Bitcoin. Although opinions on Bitcoin can be mixed, I think it is safe to say that it would have been shut down fairly quickly after launching by the authorities were it not censorship-resistant (and indeed, other efforts like eGold and Liberty Dollar were shut down swiftly before Bitcoin). However, because Bitcoin was able to resist the initial attempts to shut it down, it now presents, in my view, one of the most powerful checks on the US’s dollar hegemony that exists today, and I view that as a very positive thing for our global society to have.
Similarly, the Ultranet, as the first private censorship-resistant marketplace, is a platform where all listings, orders, ratings, and all other marketplace data will persist as long as a single machine somewhere in the world is running the software, thus making it robust in the face of political turmoil or unfair trade practices implemented by hostile nation-states.
At a high level, a company running a traditional centralized database is like a city without any guns up against a government that is fully-armed. At any time, a government can exercise unchecked power over the operator of a centralized platform, and the operator’s ability to push back will be fairly limited. A cryptocurrency platform, on the other hand, effectively levels the playing field by eliminating a government’s ability to go after an easy-to-coerce choke point. For example, instead of simply being able to shut down Bitcoin the way it did with eGold and Liberty Dollar, the government was forced to have a conversation about whether or not checking its power is a good thing, putting in broad daylight what was once a closed-door conversation. And I believe a similar situation will occur with the Ultranet, which gives buyers and merchants an unprecedented ability to transact with one another without censorship.
But Won’t Cryptocurrencies Be Used Exclusively for Bad Things Then?
First, it depends on what one means by the term “bad.” For example, it’s often the case that what one nation labels as “freedom-fighting” is labeled by another nation as “terrorism.” Sometimes, these labels can be grey even within a single nation, for example in a dictatorship where the incumbent legitimately sees the opposition as undermining a nation’s order. As a result, generally, it seems more correct to say that cryptocurrencies increase “freedom” in a broad sense, which strengthens the voice of all actors, “good” and “bad,” in the same way the second amendment does. Nevertheless, at some level, one can ask the question: will cryptocurrency tech cause society to devolve into anarchy? My answer is a firm “no” for two reasons.
- Bad actors can still be caught and prosecuted.In a country with rule of law, bad actors who abuse cryptocurrency platforms can still be caught and prosecuted. For example, if someone uses Bitcoin to launder money and the government finds out, then that person can be apprehended and convicted of a crime through due process. The only thing that cryptocurrency tech does is weaken a centralized power’s ability to blanket-ban an activity by attacking a centralized choke-point (e.g. as was the case with eGold or Liberty Dollar), in the same way the second amendment prevents a government from coercing an unarmed population with ease. While one could argue this could result in an increase in the cost to find and prosecute people who abuse a platform, it simultaneously provides a check on governments that try to oppress their people through the censorship of information, acting as an almost perfect analogue to how the second amendment provides a check on governments that try to oppress their people through physical violence. In other words, the second amendment makes it harder, though not impossible, to apprehend criminals, but we deem the check it puts on centralized power to be worth the cost, and I believe the same is true of cryptocurrency platforms.
- Good actors tend to outnumber bad. Almost as a rule, any technology that makes it easier for good actors to do business simultaneously makes it easier for bad actors to do business. The key, however, is that the benefit to society of decreasing the friction for good actors generally vastly outweighs the cost of allowing bad actors the same benefit. Think about email, messaging apps, etc… and imagine how absurd it would be if we banned them because of the small amount of illegal activity that occurs on them. Moreover, I believe that part of the reason that good actors tend to outnumber bad stems from the fact that people in a developed society tend to take the concept of rule of law seriously, and so the use-cases that tend to emerge in the long run bias toward things that are within the scope of the law.
Image copyright Reuters Image caption The net independence plan is seen as a way for Russia's government to get more control over online life Russia has successfully tested a country-wide alternative to the global internet, its government has announced.It blocks access to many foreign internet services, which in turn has helped several domestic tech giants establish themselves.