The inevitable collapse of governments and the surge of cryptosocieties.
History has been a long tale where the strongest individuals have been the rulers and the weak ones the ruled. Historically, the rulers have been able to decide what is right and what is wrong. They exercise their power through fear and coercion with the goal of making the members of their society do whatever they wish them to do.
As time passed and populations grew, it became very unpractical for the rulers to exercise power directly. Something needed to be done in order to outsource the coercion: incentives or rewards needed to be given to selected individuals to make them dispatch violence in the rulers’ desired way. The incentive was, of course, money in any of their forms: goods, gold, silver, notes, precious metals, any form of value.
At this point, the necessity of rulers to have direct access to the sources of income became obvious. In fact, they have been controlling gold mines and oil fields several times throughout history. To be able to rule, rulers needed to coerce, and to be able to coerce rulers needed money.
Time passed, new systems of governance were created, and rulers were substituted with nation-states institutions represented by governments and democracies based on the concept of sovereignty. Rulers were not controlling the money supply anymore — immutable institutions from governments were.
Governments, having the control of finances, started to issue paper money that was originally backed by gold, afterwards backed by nothing. An implicit consensus was created: citizens of nations recognized that government-issued money had value, and that money was legitimate, if and only if they issued it. This kind of money (what we nowadays call fiat) was based on trust.
It’s commonly said that governments get their power through people’s legitimization, using votes, to choose their representatives. However, what makes the nation-state institutions the strongest ones of all, able to persist for centuries? They are able to preserve their power, given that, now more than ever, governments have direct access to as well as control over the money supply and people’s finances; therefore, they amass and are able to exercise the biggest concentration of power ever imagined.
Controlling the money supply and regulating primary markets of money, like banks, gives governments the power to select who should and who shouldn’t be part of the nations’ economies. It makes them able to follow, track and control the market and the transactions happening at all times, giving centralized governments and their central banks (institutions in charge of issue capital) an unprecedented power over their populations, a complete unbalance of power.
However, with the surge of cryptocurrencies, central banks, together with private banks will inevitably collapse.
Centralization of the money supply is over. “Illegitimate” ways of creating money supply are starting to appear everywhere as cryptocurrencies invade the digital world, and there is no way governments can stop them, because they live in anonymous, decentralized and privacy-centric blockchains.
Cryptocurrencies keep growing and at the time of this writing have accumulated a total market capitalization of around 500 billion USD. Progressively, and sooner rather than later, as services massively start accepting cryptocurrencies as payments, cryptocurrencies will become mainstream. Gradually, service providers will be forced by fierce competition, to choose as their best strategy to not declare to the tax administrations any gains (or less than the required) from cryptocurrencies. This will be easy to do as it has absolutely no possible punishment, given that it’s technically impossible to prove that somebody made an income using privacy-centric cryptocurrencies. Literally, there will be no way to enforce tax declaration.
Governments will become deprecated.
Governments will issue every time less fiat or its value will collapse given its low usage. At the same time, for the reasons mentioned before, they will be unable to collect taxes from their citizens. Governments will lose control of the nations’ finances and together with it, their power.
Cryptocurrencies are a threat to governments, to regulations, to the status-quo, to the centralization of power in all aspects.
After governments collapse (because they will), several questions will arise about the restoration of the so needed governance. Among them:
How do we maintain order in a financially-decentralized society without the need for a government?
Do we need a new executive power that enforces laws and regulations?
How do we guarantee funds for it if we need to?
Introducing subscription-based governance.
Imagine having to subscribe to the (crypto)society of your choice, having a hugely diverse pool of options to decide. Any citizen that wants to belong to a cryptosociety will have the need to pay a flat fee for a membership. This fee will be streamed by the second, guaranteeing that none of the parties can get rid of the other one in an unfair and advantageous way. These memberships guarantee voting rights to their members about decisions that can influence how things work in the cryptosociety, using a real liquid democracy as described by the democracy.earth foundation: a system where completely anonymous, secure and auditable votes can be delegated or directly voted. A person that doesn’t pay the subscription fee could have no rights to get benefits from the society (universal basic income, health access, pension, etc.) or may have minimum rights/benefits, therefore paying a subscription is greatly incentivized.
Different packages could be offered, where each package gives different rights to different citizens. Citizens decide which package to choose. You will be able to change societies whenever you want, given that governance won’t be based on physical space anymore. You can belong to a cryptosociety that spans multiple physical and digital sectors at the same time. At the same time, a cryptosociety will consist of a set of institutions where every member can select representatives for them. Votes will be units of trust that you can give to representatives and revoke at any second. When representatives have no majority of votes they will simply be replaced by other candidates with bigger support whom will have immediate power, given that smart contracts will allow them to exercise it instantly.
Will we lose all the universal rights that were so hardly obtained by years of spilled blood when governance is supervised by blockchains?
Hardly, however transformations will need to be done to achieve this. Tax collection will need to be disrupted because there will be no way for any central authority to keep its citizens accountable for paying their taxes using the old models. Subscription fees will be a fair replacement for them.
Taxes have been, throughout history, the leverage to maintain a more fair society, by guaranteeing budgets for building infrastructure, hospitals, universities, paying pensions, police, courts, jails and enforce regulations to make sure that powerful people are not taking advantage of less powerful folks.
How can we guarantee regulations then?
Regulations will still exist; new executive powers will be born from liquid democracies, and they will have the economical means to enforce law. However, differently than now, they will be very well incentivized to make the right and best decisions, given that the citizens will have the real power to revoke their financial power instantly.
Current democratic institutions try their best to maintain a power balance in societies, however they tend to become weak with the passage of time, what usually ends up in authoritarian regimes as seen in many examples over the last years. When authoritarian regimes feel threatened, they make use of the centralized financial control at their disposal given by long-standing institutions on their advantage, using taxpayers’ money for their own survival objectives and issuing money at their will, leaving millions of citizens in poverty and unempowered, as their money is literally stolen from them.
Cryptosocieties won’t allow this. Welcome to the decentralized era.
Please feel free to leave your thoughts/comments.