Bitcoin and the Decentralization of Society

In response to Jamie Dimon’s criticism of bitcoin, John McAffee spoke of cryptocurrencies as emblematic of a paradigm shift: “The blockchain is, even now, ushering in a new economic and social paradigm that will rival, if not exceed, the impact that agriculture had in human society.”

People have been talking about the potential of decentralization to revolutionize economics for a long time, but no one knew how to “solve the problem of distribution required to power these decentralized systems” — that is, until the advent of the blockchain, which is “capable of melding ‘decentralized’ and ‘distributed’ into a single unit,” rendering centralized authority unnecessary.

Bitcoin represents decentralization in the realm of economics. How will decentralization work in the realm of politics, or the structure of society itself? The question of decentralization in politics is not necessarily separate from the question of decentralization in economics. In Marxist and critical theory, the economic structure of a society is the base upon which the “superstructure” of culture is built. As the economic base becomes more decentralized via the increasing prevalence of cryptocurrencies, the superstructure — the institutions and culture of society — will become more decentralized as well.

Money is power. If money is regulated by a central bank, then power will be concentrated in the hands of those who control the banks. If the big banks are cut out of the equation by bitcoin, then they will no longer control the circulation of money, and hence they will lose power. In this sense, the decentralization of money and the decentralization of power are the same thing.

Decentralization and democracy go hand in hand. Power was once concentrated in the hands of an absolute monarch. Then monarchs were forced to share their power with nobles, who were in turn forced to share their power with democratically elected officials. In the federal system, power is not centralized in a single national government, or in state governments. The federal government and the various state governments share power with each other. Even within the national government, power is split among three separate branches.

This history, which those who favor democracy call progress, is the history of ever increasing decentralization. However, many people think this trend has reached maturity with representative democracy, and any further advance would be undesirable. After all, the obvious next step is direct democracy, characterized by its critics as mob rule. As the saying goes, “Direct democracy is two wolves and a sheep voting on what’s for dinner.”

Our representatives must forgive us if we do not share their concern. Such fears accompany every step in the evolution of society. Monarchs probably warned that everything would fall apart without a powerful ruler. Nobles probably warned that everything would fall apart if commoners were given a seat at the table. In each case it is obvious that the scaremongers’ real concern is the preservation of their own power. We might say that representative democracy is one wolf and two sheep, and the wolf gets to decide what’s for dinner.

The buck does not stop with representative democracy. The forward march of decentralization must continue. As Max Stirner wrote in The Ego And Its Own, the French Revolution saw power wrested from the hands of the individual monarch and placed in an impersonal State. This was a necessary progression, but it was only an intermediary step. We simply traded one master for another — and, in Stirner’s eyes, the new master was not necessarily better than the old:

The monarch in the person of the “royal master” had been a paltry monarch compared with this new monarch, the “sovereign nation.” This monarchy was a thousand times severer, stricter, and more consistent. Against the new monarch there was no longer any right, any privilege at all; how limited the “absolute king” of the ancien régime looks in comparison!

We must come full circle back to the individual — or rather, to individuals. Power must rest in the hands not of a single individual, but of each and every individual. That is the endpoint of decentralization (unless we want to give power to the cells that make up our bodies). Only then will people be free.

Decentralization is at the heart of several influential political movements. The headless suit in the logo of the hacktivist collective Anonymous symbolizes the group’s decentralized nature, as there is no central nervous system calling the shots.

Similarly, Occupy Wall Street, Black Lives Matter, and antifa have no centralized leadership. Yet they seem to leave much to be desired. Decentralization leaves these movements vulnerable to infiltration and sabotage. The distribution problem had to be solved for decentralization to work in economics. There are still problems to be solved to allow decentralization to work in politics.

Just as blockchain technology is used for monetary transactions, it could be used for voting and other forms of decision making. It could enable direct democracy. Rather than voting for senators and congresspersons to “represent” (make decisions for) us, we could use our smartphones to vote directly on the decisions. Just as the blockchain prevents fraud in monetary transactions, it could prevent election fraud. And just as the blockchain keeps transactions anonymous, it could keep votes anonymous.

At this point, it seems that it is not a question of if technology will further decentralize power in our society. It is only a question of how and when.


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