Symmetrical and asymmetrical power
Symmetrical power is defined by the risk being proportional to the potential gain. This automatically translates into “the bigger guy wins”. Example 1: security of the physical gold, which is easily confiscated by the state and is now largely held by central banks. Example 2: second amendment in US. Militia formed by armed citizens is going to lose against same-sized army professionally organized by the state.
Asymmetrical power is defined by the risk being significantly lower than the potential gain. Example 1: state-organized army. The generals and politicians bear virtually zero risk, while reaping all the gains. Example 2: Bitcoin. It is significantly cheaper for individuals to protect their bitcoins against large-scale confiscation, than to perform such attack.
It is easy to see that asymmetrical munitions will always win over symmetrical munitions.
There is an interesting difference between the armies and Bitcoin, though. Armies are asymmetrically powerful in the hands of their leaders at the large socialized expense: maintaining loyalty of the citizens who have to pay ever-growing taxes. Costs of running Bitcoin are measurable and adjusted by the market, without the use of coercion, voluntarily supported by the expanding entirety of the Bitcoin users (who pay for the inflation and fees).
Success of the army means expansion of the empire and further concentration of the power in the hands of the state. Success of Bitcoin means that wealth spreads further instead of being confiscated and concentrated, diminishing relative coercive power of every individual.
We can now formulate the crypto-anarchy conjecture:
- The traditional political process is application of symmetric power and will not scale down empires.
- Second amendment and militia are also symmetrically powerful and will not protect people from empires.
- Empire’s asymmetrical power towards its population expands until it destroys the economy it feeds on.
- Bitcoin being asymmetrically secure is better than any other known tool in protecting individual’s wealth.
- Dynamic of the (4) vs (3) means that Bitcoin may cause the state run out of money before the economy is destroyed.