Chapter 66 12.6 Fear of the stealth economy

The very nature of digital money—intangible, fast-spreading, cheap, and globally pervasive—may well create a hidden economy that cannot be erased.This is much more serious than just laundering money for drug trafficking.In an online world, where the global economy is rooted in decentralized knowledge and decentralized control, electronic money is not an option, but a necessity.When Internet culture flourishes, so will quasi-money.The electronic matrix is ​​destined to be a hard hinterland of the hidden economy.The Internet is so hospitable to electronic cash that once it is embedded in the links of the network, it is likely to be irreversible.

In fact, the legality of anonymous digital cash has been in a gray area from the beginning.In the United States, there are strict regulations on the amount of physical cash transactions that citizens can use: You can try to deposit $10,000 in cash in a backpack.And what will be the government's limit on the amount of anonymous digital cash?The tendency of all governments is to demand full disclosure of financial transactions (to secure their share of the tax money) and to discourage illegal transactions (like the war on drugs).The prospect of allowing untraceable trade to flourish in a federally funded network is deeply troubling if the government really thinks about it.Of course they wouldn't do that.A cashless society feels like corny science fiction, and the notion reminds every bureaucrat stuck in a sea of ​​paper of the unfulfilled predictions of a paperless society.Eric Hughes, maintainer of the cypherpunks mailing list, said, “The really big question is how far can money move around the network before the government requires reporting on every little transaction? Because if If the circulation is large enough to exceed a certain threshold, then the aggregated currency may provide an economic impetus to stimulate cross-border currency issuance services. At that time, it does not matter what a country’s government does.”

Hughes envisions the emergence of several electronic money institutions in a global network.Vendors act as travelers check companies.They issue e-money for an additional fee of, say, 1%.You can then use Internet Express Checks anywhere this currency is accepted.But somewhere on the global internet, a stealth economy may well be seeing its dawn, perhaps funded by the governments of struggling developing countries.Like those old-fashioned Swiss banks, these digital banks can provide transactions that are not reported.Paying bills in Nigerian Naira at home in Connecticut is no more difficult than paying in U.S. dollars if you do the transaction online.Hughes said, "The interesting market experiment is to wait until the market is balanced and see how much the difference in fees for anonymous currencies is. My guess is that it may be 1 to 3 percentage points higher, and the upper limit is about 10 percentage points. This number will is the first real measure of the value of financial privacy. There is also a possibility that anonymous money will be the only money.”

Perhaps the most important consequence of the sudden grassroots takeover of the otherwise mysteriously forbidden realm of cryptography and codes has been the availability of usable electronic money.Electronic currency in daily life is a new use that has never appeared in military encryption technology.There must be many potential applications of encryption that have been overlooked because of the cypherpunks' own ideological leanings, and they will probably not be discovered until encryption enters the mainstream -- and it certainly will. So far, encryption technology has derived the following results: digital signatures, blind certificates (for example, you have a diploma, the certificate says you are a doctor, but no one can compare this certificate with other certificates with your name on it. certificates, such as those you get from driving school), anonymous e-mail, and electronic money.These "partition" technologies will flourish with the prosperity of the Internet.

Encryption wins because it is the necessary counterforce to prevent the Internet from connecting unchecked.Left alone, the internet will connect everyone and everything.The Internet says, "connect."The password does the opposite, saying "disconnect".Without some power of separation, the whole world would freeze into an overloaded mess of connections without privacy and information without filtering. The reason why I can listen to the views of the cypherpunks is not because I think anarchism is a panacea to solve all problems, but because in my opinion, encryption technology makes the overwhelming knowledge and data generated by the network system Be civilized.Without this tame spirit, the Internet would become a life-stripping web that would kill itself with its infinitely multiplied connections.The network is the yang, and the cryptomolecules are the yin, a tiny, hidden force capable of taming the explosive interconnections of decentralized, distributed systems.

Encryption allows for the necessary loss of control hive culture craves to remain nimble and agile in the evolution toward ever-deepening tangles.