Cryptocurrency as a tool for defending liberty
With the Federal Reserve bracing itself, and to an extent, capital markets, for a belated assault on inflation, more eyes and interest are turning toward cryptocurrencies as a means to hedge against fiat money’s ongoing problems.
But crypto could play a much larger role globally, particularly for those living under authoritarian governments that have no qualms about destroying liberty or property.
As Cato’s Nicholas Anthony writes, crypto could be the key to liberty for these people, and many more. Consider how they bolster property rights:
Cryptocurrencies, and the blockchains they are built on, also have a role to play in preserving property rights. Not only do the qualities described above preserve individual ownership, but cryptocurrencies can also play a direct role in enforcing contracts.
Enforcing contracts is one of the few roles a limited government should take on. However, despite it being a fundamental role of government, not all governments enforce contracts effectively. Contracts hold little value where governments are compromised by corruption. Worse yet, even where the rule of law is upheld, contract enforcement can be prohibitively expensive. Through smart contracts built with cryptocurrencies, however, the role of enforcement no longer rests with the government alone.
As noted by Brian Armstrong, “Smart contracts move enforcement from the courts to the blockchain.” In short, a smart contract is a digital contract where the underlying code requires conditions to be fulfilled before the contract can be executed and automatically enforced. Unfortunately, smart contracts have many challenges to overcome if they are to gain widespread use. However, even with those challenges in mind, it is already clear that they have a beneficial role to serve in preserving property rights in developing and advanced nations, alike.
A particularly useful feature in those nation-states where the biggest criminal gang…is the government.