Exploring Crypto-Anarchism: From Privacy to Cryptocurrencies and Beyond

A world without hierarchy is the ideal of traditional anarchism, a political philosophy against authorities that maintain unnecessary coercion over people. It often proposes a society without money as well, and that’s likely where it differs more from the Crypto-anarchism idea first proposed by the computer engineer and libertarian activist Timothy C. May in 1988.

Here’s a clue: it includes cryptocurrencies.

But the “crypto” part isn’t only for cryptocurrencies. Indeed, as you may have noticed already, Crypto-anarchism is a much older concept than cryptocurrencies themselves. The name comes from cryptography, a set of mathematical techniques and technologies designed to protect data confidentiality, integrity, and authenticity.

That’s the main goal of crypto-anarchism: to protect private information against higher authorities, using cryptography for that.

May visualized a future in which anonymity and financial freedom would come first for everyone. As it reads in his “Crypto-Anarchism Manifesto:”

“Computer technology is on the verge of providing the ability for individuals and groups to communicate and interact with each other in a totally anonymous manner. Two persons may exchange messages, conduct business, and negotiate electronic contracts without ever knowing the True Name, or legal identity, of the other.

Interactions over networks will be untraceable (...) These developments will alter completely the nature of government regulation, the ability to tax and control economic interactions, the ability to keep information secret, and will even alter the nature of trust and reputation.”

That’s just the starting point, though. This ideal would birth numerous interesting characters and technologies over the years —including cryptocurrencies.

Freedom, Privacy, and Decentralization

It’s easy to see why someone would deliver this political proposal. Mass surveillance is a global issue these days, as it’s been especially remarked after Edward Snowden exposed the global surveillance activities conducted by the US National Security Agency (NSA) in 2013.

So much power and knowledge could easily lead to civil rights abuses, as it already happened (and it’s happening right now) in numerous jurisdictions. China, for instance, is quite famous for its censorship, surveillance, and news manipulation.

Cryptography is the answer proposed by May to keep our privacy rights and freedom. By using these tools, it wouldn’t matter where you are, because your online data would be safe, and you would still be able to transact with others using decentralized money (not issued by a government or central authority).

Of course, decentralized money would appear later, with the first proposals (pre-Bitcoin) issued by remarkable cryptographers like Adam Back, David Chaum, Wei Dai, and Nick Szabo.

Names like these would be inscribed in a new movement based on Crypto-Anarchism, started by May along with John Gilmore, Judith Milhon, and Eric Hughes. It all started like a shared mailing list by sort-of libertarian cryptographers in the early 90’s, but quickly evolved into an activism movement to defend privacy: the Cypherpunks.

As we can see now in the Cypherpunk Manifesto (1993) by Hughes, they consider that the most efficient way to protect privacy is through crypto technologies.

“Privacy is necessary for an open society in the electronic age (…) We cannot expect governments, corporations, or other large, faceless organizations to grant us privacy (…) We must defend our own privacy if we expect to have any (…) Cypherpunks write code. We know that someone has to write software to defend privacy, and (…) we're going to write it.”

Cryptographic Tools

Crypto-anarchists and cypherpunks cryptographers have delivered a series of useful and generally free-to-use software tools to protect our privacy and freedom worldwide. Bitcoin, of course, is on the list —but it’s not even the first one, nor the only one.

To mention some important ones, Pretty Good Privacy (PGP), developed by Phil Zimmermann in 1991, is an encryption program that provides cryptographic privacy and authentication for data communication. It is widely used for securing email communications and files.

The privacy-focused Tor browser, even if originally developed by the US Navy, was quickly adopted and nurtured by cypherpunks. Signal, a popular encrypted messaging app, was developed by the cypherpunk Moxie Marlinspike. WikiLeaks, famous for publishing classified, censored, or otherwise restricted information and promoting transparency and government accountability, was founded by another cypherpunk: Julian Assange.

BitTorrent, which revolutionized P2P file sharing, was created by Bram Cohen, who was a participant in the original cypherpunk mailing list. Even Zooko Wilcox, the founder of Zcash (a privacy-focused cryptocurrency) is a supporter of this ideology.

Without a doubt, more crypto tools are coming from more developers worldwide, considering that the data privacy software market is projected to grow from $2.76 billion in 2023 to $30.31 billion by 2030. And that’s only outside the open-source world.

Some Concerns

It's important to recognize that no system, whether centralized or decentralized, is immune to criminal activities. Crypto-anarchism is no different, and May admitted it in his Manifesto as well.

It’s a bit worrisome, even, because he just states that crypto tools will change our society and preserve our privacy, but they’ll also bring crimes to the table.

“The State will of course try to slow or halt the spread of this technology, citing national security concerns, use of the technology by drug dealers and tax evaders, and fears of societal disintegration.

Many of these concerns will be valid; crypto anarchy will allow national secrets to be traded freely and will allow illicit and stolen materials to be traded. An anonymous computerized market will even make possible abhorrent markets for assassinations and extortion.

Various criminal and foreign elements will be active users of CryptoNet. But this will not halt the spread of crypto anarchy.”

No obvious solution is offered there to this potential issue, but we could check the traditional anarchism approach to crimes —or how they prefer to address it: society's harm. For anarchists, that distinction is important: victimless actions like smoking weed, stealing food from the wealthy, or sharing state secrets, considered crimes by governments, wouldn’t be punished in an anarchist community.

Only serious harm like murder, rape, or violence would require attention by some security volunteers.

In this specific case, we can wonder how crypto-anarchism (and cryptocurrencies) would address harmful risks like terrorism financing, money laundering, or all kinds of illegal markets in the Darknet.

For now, the answer is clear: we still need to work with centralized authorities and share some of our information if we want a safer world. However, this could change in the future, with new decentralized ways of compliance.

Decentralized Compliance

Decentralized compliance solutions are emerging in response to the challenges of regulating decentralized financial systems. Technologies like Self-Sovereign Identity (SSI) systems provide individuals control over personal information, allowing selective disclosure for compliance, verification, or reputation.

Ledger forensics tools, such as those offered by companies like Chainalysis, facilitate the analysis of transactions to address compliance concerns.

In that way, the public and pseudonymous nature of most cryptocurrency chains would be an advantage to trace misbehavior among participants without fully compromising privacy.

In addition, utilizing smart contracts and decentralized governance mechanisms can provide tools for creating self-executing agreements and transparent decision-making processes. This can help ensure that decentralized systems are used responsibly and ethically.

The terms are discussed by all parties prior to signing, and the outcome can be enforced by the code itself. Besides, on-chain governance processes contribute to self-regulation, allowing token holders to participate in decision-making.

These solutions aim to balance the principles of decentralization with the necessity of compliance in an evolving regulatory landscape, providing a foundation for responsible and transparent decentralized financial ecosystems.

Obyte as a Tool for Privacy and Freedom

As a ledger without middlemen, Obyte is aiming to be an incarnation of crypto-anarchist and cypherpunk ideals of freedom, privacy, and decentralization.

First of all, the whole ecosystem is based on a Directed Acyclic Graph (DAG) structure that eliminates the central figures of miners and validators and replaces them with much less powerful Order Providers (OP).

No one needs “permission” to transact in the Obyte DAG, and their transactions can’t be impeded, censored, or stolen. Once a transaction is made, it’ll stay forever on the DAG, without middlemen’s approval.

Besides, Obyte offers the best of both worlds: a transparent ledger where to transact with public tokens, and the option to use privacy coins like Blackbytes to preserve full confidentiality.

These privacy tokens can be traded P2P only, and only the involved users will keep the transaction data on their own devices.

If someone tries to find a trace of them in the public ledger, they’ll find nothing.

Self-sovereign ID is also available in the Obyte ecosystem in the form of attestations. They’re an internal feature on the wallet, where anyone can quickly verify their real name, email, GitHub account, or investor status. After verification, they won’t need to share personal data with third parties, but just the attestation itself.

By offering full decentralization, user control, privacy features, smart contracts, resistance to censorship, and global accessibility, Obyte could be a powerful tool to preserve your freedom and online rights.

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