Bitcoin loophole: “First they ignore you, then they laugh at you…”

HOME PAGE INSIGHTS COLUMN CRYPTO-ANARCHY: “FIRST THEY IGNORE YOU, THEN THEY LAUGH AT YOU…”
Crypto currencies are a controversial topic in the mainstream. Bitcoin and competitors are repeatedly criticized by regulators. This is how the digital currency can be used for terrible things. The financing of terror or the purchase of drugs and weapons are often cited as examples. But are crypto currencies really a threat to humanity – or a chance for a new beginning?

With the saying “First they ignore you, then they laugh at you, then they fight you, then you win” Mahatma Gandhi led India peacefully out of the British yoke. The principle of non-violent protest can also be applied to crypto currencies.

Bitcoin and the Bitcoin loophole Cypherpunks

Bitcoin loophole has its origin in the cypherpunk movement of the 20th century. The revolutionary discovery of asymmetric cryptography heralded a new era. For most people this development will have happened inconspicuously, but the importance of the new encryption method cannot be sufficiently emphasized. For the first time it was possible for people of all kinds to encrypt information in such a way that only the intended recipient could decipher the Bitcoin loophole.

At the beginning of the 90s the cypher punk Timothy C. May wrote the “crypto-anarchic manifesto”. May declared that a new era had dawned in which people could regain their true freedom and independence. In addition, May prophesied the implications of technological progress as a revolution in both the social and economic sense.

At the same time, he made it clear that this technology can and will also be used for bad things.

“The state will of course try to slow down and stop the spread of technology on the pretext of national security, the use of technology by drug dealers and tax evaders, and fear of social decay. Many of these concerns are justified; crypto-anarchy allows the free trade of state secrets and other illegal materials. An anonymous computer-controlled market will allow even hideous markets for contract killers and extortion. […] But that won’t stop the spread of crypto-anarchy.”

Bitcoin was a child of this movement and realized a fundamental principle of cypher punks. Last but not least, Satoshi Nakamoto published the first ideas on the Cypherpunk mailing list. Bitcoin is a state-independent means of payment for the time of the Internet. But Bitcoin does not fulfill all points of the vision of the Cypherpunks.

Transparency and opacity

Bitcoin is a digital currency whose transaction history – the so-called blockchain – is completely transparent. This means that anyone can use a block explorer to view the numerous transactions and draw conclusions about the network participants. But Bitcoin was only the first of all crypto currencies and above all solved the problem of “double-spending”. In the meantime, there are many alternatives and competitors.

Monero is the strong contrast to Bitcoin. Instead of a completely transparent blockchain, the Monero blockchain is completely opaque. In other words, an observer learns nothing about the network processes when viewing the blockchain. Nobody, except the involved parties, learns who is dealing with whom and how often. With this functionality, Monero is a popular means of payment for anyone who wants to keep their financial transactions secret.

This is not a distant vision, but a tangible reality.

The cat is out of the bag
Depending on your perspective, this development may seem good or bad. For the established financial elite, such currencies are offensive. Because our money has changed from a means of payment to a control system. Banks can not only see the payment flows of their customers, but also freeze accounts and censor payments. This is a considerable power, as in many places you are excluded from the economy if you do not have a functioning bank account. Monero takes control out of the hands of a small group of people and gives it back to users.

Like the Internet itself, this technology cannot be stopped. The Internet was designed to operate on the west coast even in the event of a nuclear strike on the American east coast. Bitcoin and Monero cannot be switched off in the same way. After all, crypto currencies consist of a global network of participants who individually execute computer code on their computers. In other words, the battle is already lost – or won, depending on the perspective.

“First they ignore you, th