{"id":3951,"date":"2017-02-17T06:56:03","date_gmt":"2017-02-17T14:56:03","guid":{"rendered":"https:\/\/www.privateinternetaccess.com\/blog\/?p=3951"},"modified":"2024-01-30T06:26:33","modified_gmt":"2024-01-30T14:26:33","slug":"how-cryptocurrency-will-cripple-todays-governments-and-they-wont-see-it-coming","status":"publish","type":"post","link":"https:\/\/www.privateinternetaccess.com\/blog\/how-cryptocurrency-will-cripple-todays-governments-and-they-wont-see-it-coming\/","title":{"rendered":"How cryptocurrency will cripple today&#8217;s governments &#8211; and they won&#8217;t see it coming"},"content":{"rendered":"<p><strong>Cryptocurrency will cripple governmental ability to collect taxes, and they won\u2019t see it coming. When it\u2019s already happened, expect major changes to take place in how society is organized on a large scale \u2013 but also expect governments to act in desperation to retain control.<\/strong><\/p>\n<p>As bitcoin launched in 2009, most early adopters saw its disruptive potential. While bitcoin has stalled for some time approaching a valid use of the term \u201cstagnation\u201d, cryptocurrency in a larger context is still just as disruptive. In 2011, I stated that bitcoin (cryptocurrency) will do to banks what e-mail did to the postal services. This is not just true, but it will be even more brutal to governments, and by extension, governmental services.<\/p>\n<p>Now, governments love anything that smells like innovation, because it means <em>jobs,<\/em> this magic word that smells of magic unicorns to anybody in government. Therefore, people who like innovation are nurturing this bitcoin thing, this cryptocurrency thing, this ethereum thing (as if governments made a difference, but still). Lots of startups in tip-of-the-spear financial technology means that their government may get a head start over <em>other<\/em> governments. They have no idea that cryptocurrency will radically scale back the power of government, not just their own one, but also all those other governments over which it seeks a competitive edge.<\/p>\n<p>Individual people in government can also love bitcoin because it gives them something to do. More specifically, it gives them something to <em>regulate<\/em>. Fortunately, other people in government see that this gives <em>them<\/em> something to do, which is to hold those government regulators with an overdeveloped sense of order somewhat in check. You\u2019ll hear no shortage of wannabe regulators saying that \u201cbitcoin is bad because it\u2019s being used in crime and contraband trade!\u201d, to which I usually respond, \u201cwell, bitcoin is a currency, so I mean you put it in relation to the US Dollar, which then\u2026 is <em>not<\/em> used in crime and contraband trade, is this the argument you\u2019re using to support your position?\u201d, at which point the discussion generally changes topic.<\/p>\n<p>This completely disregards the observation that bitcoin and cryptocurrency were designed to not submit to regulation in the first place. Well, at least not governmental regulation. It is heavily regulated \u2013 but by its source code, and by its source code alone.<\/p>\n<p><strong>The reason this will cripple today\u2019s governments \u2014 today\u2019s idea of what a government is and does \u2014 is because today\u2019s economy is built on one layer doing actual work and three layers of abstraction on top.<\/strong><\/p>\n<p>At the <strong>first and bottom layer<\/strong> of our economy are the <strong>individual people<\/strong> doing all the actual work.<\/p>\n<p>The <strong>second layer<\/strong> on top of the first is the abstraction we call <strong>corporations,<\/strong> which is a way to organize our economy and optimize transaction costs.<\/p>\n<p>The <strong>third layer<\/strong> on top of the second would be <strong>banks,<\/strong> which handle money for corporations and individual people in a middleman gatekeeper position.<\/p>\n<p>Finally, the <strong>fourth layer is the government<\/strong>, which takes advantage of the banks\u2019 gatekeeper position to siphon off taxes from money flows in order to fund itself and governmental services. In other words, layer four completely depends on layer three for its operations \u2013 or at least for the relative simplicity of funding its operations.<\/p>\n<p><strong>Now, what bitcoin and cryptocurrency do is make away with the banks \u2013 cutting them out of the loop entirely, making them redundant, obsolete, dinosaurified. This resulting absence of anything where banks used to be creates an air gap between the functional part of the economy \u2013 people and corporations \u2013 and governments who want funding.<\/strong><\/p>\n<p>The way governments want to tap all money flows in order to fund itself is not entirely unlike how the surveillance agencies want to tap all information flows in order to have an information advantage. In this way, the deployment of cryptocurrency is to tax collection what deployment of end-to-end encryption is to mass surveillance. The government can no longer reach into money flows and grab what it wants, but will be dependent on people actively sending it money. The government can\u2019t point a gun at a computer and have it give up its money; you can only make a computer <em>operator<\/em> feel very sorry for not voluntarily producing the keys to that money. So the government is no longer able to collect taxes without the consent \u2013 even if coerced and forced consent \u2013 of the people being thus collected.<\/p>\n<blockquote><p>The deployment of cryptocurrency is to tax collection what deployment of end-to-end encryption is to mass surveillance.<\/p><\/blockquote>\n<p><strong>Governments, and individual people in government, have no idea about this bigger picture. They\u2019re far to wrapped up in things-as-usual to notice. They won\u2019t see it coming until it\u2019s already happened.<\/strong><\/p>\n<p>When this happens, there will be no shortage of people in government who suddenly want to regulate cryptocurrency \u2013 only to find out it will be as effective as regulating gravity. When this happens, government as we know it will be redefined from a coercive Colossus able to take what it wants and do what it wants into a construct that actually depends on people <em>wanting<\/em> to fund it. This will be a very interesting time to live in. While today\u2019s governments will see themselves as getting crippled, I suspect most citizens will regard it as unquestionably healthy that governments will actually begin to depend on the approval of the people at large.<\/p>\n<p>We\u2019re just beginning to see the changes to society that the Internet brings. This is one of them.<\/p>\n<p>(Note: I write <em>cryptocurrency<\/em> and not <em>bitcoin<\/em> on purpose here, just as I\u2019d prefer proclaiming the success of <em>social media<\/em> over the success of <em>Myspace<\/em>.)<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Cryptocurrency will cripple governmental ability to collect taxes, and they won\u2019t see it coming. When it\u2019s already happened, expect major changes to take place in how society is organized on a large scale \u2013 but also expect governments to act in desperation to retain control. As bitcoin launched in 2009, most early adopters saw its &hellip; <a href=\"https:\/\/www.privateinternetaccess.com\/blog\/how-cryptocurrency-will-cripple-todays-governments-and-they-wont-see-it-coming\/\" class=\"more-link\">Continue reading<span class=\"screen-reader-text\"> &#8220;How cryptocurrency will cripple today&#8217;s governments &#8211; and they won&#8217;t see it coming&#8221;<\/span><\/a><\/p>\n","protected":false},"author":3,"featured_media":3952,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_stopmodifiedupdate":false,"_modified_date":"","footnotes":""},"categories":[15,130],"tags":[],"class_list":["post-3951","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-cryptocurrency","category-governments"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.9 (Yoast SEO v26.9) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>How cryptocurrency will cripple today&#039;s governments and they won&#039;t see it coming<\/title>\n<meta name=\"description\" content=\"Cryptocurrency like bitcoin stands to make tax collection difficult if not impossible. 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How much taxes can a future government collect from _willing_ payers?\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.privateinternetaccess.com\/blog\/how-cryptocurrency-will-cripple-todays-governments-and-they-wont-see-it-coming\/\" \/>\n<meta property=\"og:site_name\" content=\"PIA\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/privateinternetaccess\/\" \/>\n<meta property=\"article:published_time\" content=\"2017-02-17T14:56:03+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2024-01-30T14:26:33+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.privateinternetaccess.com\/blog\/wp-content\/uploads\/2017\/02\/Calculator-Tape-1280x720-istockphoto.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1280\" \/>\n\t<meta property=\"og:image:height\" content=\"720\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Rick Falkvinge\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@http:\/\/twitter.com\/Falkvinge\" \/>\n<meta name=\"twitter:site\" content=\"@buyvpnservice\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Rick Falkvinge\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"5 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/www.privateinternetaccess.com\/blog\/how-cryptocurrency-will-cripple-todays-governments-and-they-wont-see-it-coming\/#article\",\"isPartOf\":{\"@id\":\"https:\/\/www.privateinternetaccess.com\/blog\/how-cryptocurrency-will-cripple-todays-governments-and-they-wont-see-it-coming\/\"},\"author\":{\"name\":\"Rick Falkvinge\",\"@id\":\"https:\/\/www.privateinternetaccess.com\/blog\/#\/schema\/person\/8153559f44e1b6f9738dd6c7d33046a4\"},\"headline\":\"How cryptocurrency will cripple today&#8217;s governments &#8211; and they won&#8217;t see it coming\",\"datePublished\":\"2017-02-17T14:56:03+00:00\",\"dateModified\":\"2024-01-30T14:26:33+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/www.privateinternetaccess.com\/blog\/how-cryptocurrency-will-cripple-todays-governments-and-they-wont-see-it-coming\/\"},\"wordCount\":955,\"commentCount\":29,\"publisher\":{\"@id\":\"https:\/\/www.privateinternetaccess.com\/blog\/#organization\"},\"image\":{\"@id\":\"https:\/\/www.privateinternetaccess.com\/blog\/how-cryptocurrency-will-cripple-todays-governments-and-they-wont-see-it-coming\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.privateinternetaccess.com\/blog\/wp-content\/uploads\/2017\/02\/Calculator-Tape-1280x720-istockphoto.jpg\",\"articleSection\":[\"Cryptocurrency\",\"Governments\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/www.privateinternetaccess.com\/blog\/how-cryptocurrency-will-cripple-todays-governments-and-they-wont-see-it-coming\/#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.privateinternetaccess.com\/blog\/how-cryptocurrency-will-cripple-todays-governments-and-they-wont-see-it-coming\/\",\"url\":\"https:\/\/www.privateinternetaccess.com\/blog\/how-cryptocurrency-will-cripple-todays-governments-and-they-wont-see-it-coming\/\",\"name\":\"How cryptocurrency will cripple today's governments and they won't see it coming\",\"isPartOf\":{\"@id\":\"https:\/\/www.privateinternetaccess.com\/blog\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.privateinternetaccess.com\/blog\/how-cryptocurrency-will-cripple-todays-governments-and-they-wont-see-it-coming\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/www.privateinternetaccess.com\/blog\/how-cryptocurrency-will-cripple-todays-governments-and-they-wont-see-it-coming\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.privateinternetaccess.com\/blog\/wp-content\/uploads\/2017\/02\/Calculator-Tape-1280x720-istockphoto.jpg\",\"datePublished\":\"2017-02-17T14:56:03+00:00\",\"dateModified\":\"2024-01-30T14:26:33+00:00\",\"description\":\"Cryptocurrency like bitcoin stands to make tax collection difficult if not impossible. 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