Technology is the ultimate manifestation of science. It’s the process of transforming natural resources such as matter and energy into valuable tools. Technology is a powerful force that inevitably changes the world without permission; usually for the betterment of mankind. However, technology is neutral; and the neutrality of such a powerful force is precisely what leads us to humanity’s greatest responsibility, which is the use of technology for good. It’s the same burden carried by the great Jedi who wield “The Force.” And much like how “The Force” can be wielded by the dark side, technology can be wielded by its own variance of the Sith. This article will explore the dark side of technology; while also examining the light side that gives us hope.
Some time in 2018 The Communist Party in China announced a plan to implement mass surveillance on its citizens. According to an article by Matthew Carney, the political party in power is dubbing this operation “social credit” and it intends on being fully operational by 2020. Social credit can be thought of as a personal scorecard (out of 800 points) for each of China’s 1.4 billion citizens. People with top citizen scores get “VIP treatment at hotels and airports, cheap loans and a fast track to the best universities and jobs.” However, those with lower scores “can be locked out of society and banned from travel, or barred from getting credit or government jobs.” How will they track all this? As the article points out, “surveillance cameras will be equipped with facial recognition, body scanning and geo-tracking to cast a constant gaze over every citizen.” In other words, the social credit system is similar to what you might see in a Black Mirror episode on Netflix.
For the sake of this article, powerful, controlling parties will be referred to as the King. The King’s ultimate goal is to control the people. The means for the King to achieve this goal is the dark side of technology. In fact, the history of human civilization tells many stories of the King using the dark side of technology to control people. Throughout most of human history, these technologies were weapons such as spears and swords, and later gunpowder. So the idea behind mass surveillance isn’t a new concept. At its core, mass surveillance is a technology that enables control. Mass surveillance is simply a modern technology used by the King to control the people.
The social credit system has potential to be one of the most dangerous technologies of our lifetime, and it doesn’t end with China. All the Kings of the world will follow suit because mass surveillance is the King’s greatest means of controlling people in the 21st century. But as pointed out in the beginning of the article, the morality of technology depends on its use, and there are many technologies that enable powerful use. Cash is quite possibly humanity’s most powerful technology combating the dystopian nature of mass surveillance.
Cash has two important first-order properties:
1) cash is a bearer instrument; and
2) cash is peer-to-peer.
A bearer instrument means that the owner of the asset is the one with physical possession. The bearer nature of cash is also what makes it peer-to-peer. Unlike cars and houses, cash is not registered under people’s identities. This eliminates the need for third parties like banks and title companies because cash immediately transfers ownership when one person hands a $20 bill to another person. The simple peer-to-peer transfer of a bearer instrument has two very important second-order effects: the resistance to censorship and the preservation of privacy. To summarize, cash has two important first-order properties: it’s a bearer instrument and it’s peer-to-peer. These two properties have two significant second-order properties that provide humans with an incredible force that combats the dark side of technology, and those two second-order properties are censorship resistance and privacy. Cash transactions are not tracked (private) and cash transactions cannot be shut down by a system (censorship resistance).
Just like how technology enabled the evolution of the King’s ability to control humans throughout history, technology has also enabled the evolution of money. Humans first relied on the barter system, or trade. But this system had one major flaw known as the coincidence of wants problem. In order for a person to trade his cattle for a fur coat, he needed to rely on a circumstance where the person with a fur coat coincidentally needed cattle. Humans solved the coincidence of wants problem by developing the technology of money. Money started by taking the form of random objects such as seashells. Then in the 7th century B.C., the Lydians (“the founders of money”) improved the technology of money by using coins in the form of gold and silver. And for most of human history, gold was the predominant form of money. This later evolved to paper money. All of these manifestations of money, from seashells to paper bills, are considered cash because they’re peer-to-peer bearer instruments.
What happened next?
The advent of the Internet and the digital economy enabled a transformation into a potential cashless society. Cashless societies are plagued with an inherent trade-off; they sacrifice privacy and censorship resistance for digital convenience. I am not criticizing digitization; instead, I’m acknowledging one of its greatest consequences- the death of cash. This is one of the more radical transformations that not enough people are talking about, and it’s happening right beneath our collective noses.
This leads me to a statement that I believe few people on Earth are even aware of, which is the following: in the current financial system, it’s impossible to have cash on the Internet. But what about the $1,000 I see on my online Chase checking account? This is not cash. As mentioned above, cash must be a bearer instrument and cash must be peer-to-peer. The money in your online Chase checking account is not a bearer instrument because it’s tied to your identity. It’s also not peer-to-peer because there is a third party (Chase) that keeps records of everyone’s identity and they enforce the rules of the system. The third party rule enforcers aren’t a threat for most Americans, but that’s not the case for the third party rule enforcers in North Korea, Venezuela, or even China and Russia. True cash can’t cease to exist when your bank’s servers go down. True cash can’t shut down because you forgot to tell your bank that you’re traveling to Europe. True cash transactions can’t be monitored and tracked by China’s social credit system, and they can’t be shut down if the King decides it’s no longer money. The inability to possess peer-to-peer bearer instruments on the Internet leads to many negative consequences, particularly the empowerment of the King over the people. By sacrificing our ability to conduct private trade without censorship, cashless societies enable mass surveillance and centralized power. As pointed out by Jerry Brito in “The Case for Electronic Cash,” if there are no bearer notes and all money is in the form of deposits, then central parties can more easily impose negative interest rates.
So is there a solution? Can cash exist on the Internet?
The inability to possess bearer instruments on the Internet is a computer science problem. Is there a way to reconcile the bearer and peer-to-peer principles of cash with the convenient properties of the digital world? Satoshi Nakamoto solved this this problem with the invention of Bitcoin. Bitcoin is the first manifestation of peer-to-peer digital cash. Through the use of public key cryptography and a decentralized, coordinated consensus network (which solved the double spend problem), Bitcoin allows users to exchange digital bearer instruments without the need for a third party. This allows humans to exchange peer-to-peer, censorship resistant money.
It’s impotent to note that in its current implementation, Bitcoin is a fully transparent, pseudonymous system. This means the network is not sufficiently private as people can track ownership and conduct surveillance. However, privacy technologies are being developed in Bitcoin and other crypto protocols such as ZCash and Monero. And because Bitcoin is an open-source technology, it can adopt working privacy features as long as the community supports it. Having said that, in its simple, yet elegant current form, Bitcoin still paved the way for the ownership of digital, peer-to-peer bearer assets, and the implications of this are enormous. In “How Bitcoin functions as property law”, Eric Chason states, “Satoshi Nakamoto has created a form of property that can exist without relying on the state, centralized authority, or traditional legal structures.” Cryptocurrency researcher Hasu goes a step further and says, “The bitcoin network, and, by extension, its money token enable the highest form of property rights of any socio-economic institution in the history of man.” Quite frankly, this is crypto’s largest value proposition- the ability to allow individuals to have ownership of digital assets free from the control of the King. This allows individuals to attain self-sovereign digital identities, digital currencies, and digital user experiences.
This post explored the King and one of his most powerful adversaries. This exploration then led me to reflect on the irony plaguing the most popular aphorism in economics- “Cash is King.” For cash cannot be King because cash kills the King.
 “The Case for Electronic Cash: Why Private Peer-to-Peer Payments are Essential to an Open Society” by Jerry Bito.