Coding Freedom; Can Blockchain Technology Help Build A Foundation For Real Democracy?

The 2008 financial meltdown and disclosures of secret documents in recent years exposed widespread government overreach and corporate fraud and abuse. As trust in traditional institutions began to sag, global uprisings were spawned to find solutions outside of electoral politics. In the midst of these deep systemic breakdowns of governance, a decentralized solution emerged with a breakthrough in computer science. As the revolutions on the streets began to wind down, perhaps nobody expected the rise of the blockchain. Bitcoin’s enormous potential for disruption is beginning to be felt in the realm of finance. Yet, currency is just its first application. The core of this invention is distributed trust that enables a platform for decentralized consensus at a large scale. Can this technology help lift us out of the crumbling old world and build a foundation for real democracy?

The ongoing global crisis of legitimacy signals a significant decay of Western liberal democracy. The seeds of this corruption go way back to the very founding of the United States. Political philosopher Sheldon S. Wolin (2008) identified “the framers of the Constitution” as “the first founders of modern managed democracy” and described how the Founding Fathers created a system that favored elite rule, giving exclusive rights to white male property owners. He pointed out how in drafting a new constitution, “they treated as axiomatic that a modern political system had to make concessions to democratic sentiments without conceding governance to ‘the people’ ” (p. 155).

Despite the founders’ success in helping throw off the yoke of royalty, this was a closed system that operated with its own inherent bias to protect privilege and power. The economic imbalance prevalent then was not addressed and was directly used to recreate age-old lever points of control. This translated into unequal political power, creating a wide gap between the Constitutional mandate as governing structure and the aspirations for rule by the people that was indicated in the preamble; “We the People”.

The highest law of the land in the U.S. was said to free the source of legitimacy from the authority of the church and the British Crown, placing it instead in the common man, with the principle of equality under the law. Yet, this attempt to embody the spirit of equality enshrined in the ideals of the Declaration of Independence faltered right from the beginning. In the often unacknowledged hypocrisy manifested in the founders’ denial of rights to Africans, indigenous people and women, this unredeemed colonial domination carried on. Contrary to the idea of consent of the governed, the reality was subjugation of blacks through slavery and natives through violence. With any sovereignty achieved through conquest, governments don’t require the consent of the conquered.

This unchallenged economic power as the engine behind the experiment of American democracy was exercised to manufacture consent of those afforded rights to participate in the political process. Although the First Amendment asserted the separation of church and state, this declaration of rights didn’t acknowledge the necessity to check and balance state control over money and thus failed to explicitly indicate the people’s right to freely express themselves financially with the currency of their choice. People didn’t have power to restrict Congress in money creation. Whether one was a descendent of slaves or of the owner class, individual liberty remained tied to this newly constituted governance.

Tyranny of Central Banks

What really lurks behind central command in this supposed land of the free? In tracing the history of money creation in the United States, attorney and author Ellen Brown (2007) revealed that the real trigger for the Revolutionary War was King George’s ban on the printing of local money in the American colonies. She described how after independence was won, the King’s economic subservience was not achieved by force but instead by the British bankers persuading the American people to take their paper money. Brown noted how the founder’s subsequent disillusionment with paper money led them to leave it out of the Constitution and that as a result “Congress was given the power only to ‘coin money, regulate the value thereof,’ and ‘to borrow money on the credit of the United States” (p. 48).

The founding father’s failure to define exactly what money was along with the lack of healthy parameters around its creation and control left a loophole within this system of representation for the shadowy forces to penetrate and later subvert the Constitution and further betray the ideals in the Declaration. The amorphous centralized creation of money has become a single point of failure that makes the entire system vulnerable to counter-party risk. This was seen especially in the Wall Street hijack of the monetary system with the passing of the Federal Reserve Act in 1913.

Former Goldman Sachs banker and author of the book All the President’s Bankers Nomi Prins described how the creation of the Federal Reserve was initiated at the turn of the 20th century to preserve American corporate supremacy, while creating stability and hegemony of major banks with deep ties to Washington. Ironically, in the home of the brave, the tyranny of the old world continued with central banks as the new Kings. Since then, every time new money was created, the people were now being charged with leverageable debt and interest. Fiat as legal tender by government decree created a kind of hidden rent-seeking royalty to maintain this throne of power.

Financialization of Everyday Life

As the authority of the church weakened over time, the merger of the state with private banks created a new state sponsored religion of market fundamentalism. This market theology, based on worshiping the gods of capital and wealth accumulation became the dominant logic dictating human interaction and expression. The financialization of everyday life has stifled the First Amendment; the flow of information as the currency of democracy. Corporate consolidation of the media created a monopoly of content production and distribution. With commercial interests hijacking electoral politics, the idea of unlimited growth bypassed democratic consensus and a doctrine of profit at any cost came to shape incentive structures for mainstream society.

In Democracy, Inc. Professor of journalism, David S. Allen (2005) astutely pointed to this conflation of corporate and civic values that undermines the public sphere. Professionals have become a new class that guards access to patronage networks of single-minded corporate power. Corporatist incentive structures have become an invisible force of governance to regulate people’s actions through enforcing self-censorship, making acts of dissent more difficult. One’s rights under the First Amendment in the U.S. have increasingly come to require implicit permission from what has now become a corporate state, exercised only on their terms.

The unruly cowboy economy has then morphed into rabid corporatism in its crusade for the ‘New American Century’. First it was railroads and oil companies. Then came drug cartels, arms manufacturers and investment banks like Goldman Sachs. Now in the digital age, companies like IBM, Apple and Google have gained significant political power. This insidious growth of corporate mergers with nation-state apparatus has reached a tipping point, expanding out into the world in the form of corporate led globalization.

The Creation of a Perfect Market

What can check this seemingly unaccountable power? Bitcoin as the countenance of the blockchain has entered the belly of the beast of predatory capital and is beginning to break the bond of the interlocking power of corporations and state. With its essence of digital scarcity and distributed computing, this innovative technology performs the production of money and clearing of transactions that traditionally have been handled by central banks.

With unprecedented currency crises and BRICS countries moving away from dollar hegemony, the illusory world of the fiat house of cards now teeters on the verge of collapse. The world’s most powerful computing system corrects the erroneous math of inflated Proof-of-Government Decree and can increasingly become a safe haven for those in places like Argentina whose currency is subject to rampant hyperinflation. The frictionless flow of this stateless currency offers a way out of the oligarchic incentive structures paved by the parasitic rent-seeking petrodollar.

What is this disruptive force that challenges the monopolized markets? Bitcoin’s unprecedented autonomous flow is enabled through its algorithmic consensus. This was put into practice through a spontaneously emerging computer network around the world, harnessing massive hashing power.

What instigated this swarm of miners? Silicon Valley tech entrepreneur and author Andreas Antonopoulos acknowledged how the creator of this technology Satoshi Nakamoto not only invented new currency, but gave us the world’s first perfect market. Antonopoulos described how Bitcoin mining is built around a valuable currency and the basic economic principle of risk and reward. He also explained how it is designed with an incentive to work honestly. Based on the principle of game theory to create fairness, miners engage in a broadcast math competition known as ‘proof of work’. Each 10 minutes, problems are solved by chance and whoever solves the problem wins a fixed number of bitcoins. Difficulty is adjusted according to demand with a tight feedback loop every 2 weeks, keeping the mining always profitable.

No one entity controls this Satoshi market and what governs it is the underlying operating system of mining software that generates unpredictable, unrepeatable random numbers. It is through the chaos created in the hashing that each new bitcoin is conceived and the life of the ecosystem is sustained. The protocol of algorithmic consensus is enabled through the miners’ willingness to let go of the urge to control and place the outcome at the mercy of the Satoshi dice. Through each player’s commitment to subordinate their will to this spontaneous force of the market, the underlying core of the technology becomes operational and the blockchain’s distributed trust provides a new foundation for equality that is fundamentally different than existing models of representation.

The Descent and Ascent of Man

The founders of American democracy conceived the idea of governance based on a particular vision of man. Philosopher Jacob Needleman (2003) described how in the underlying creation of law and the American Constitution, “the meaning of democracy was rooted in a vision of human nature as both fallen and inwardly perfectible” (p. 9). This was true to the conception of man’s nature put forward by naturalist Charles Darwin. Most are familiar with Darwin’s theory of genetic mutation, natural selection and the survival of the fittest from his work, The Origin of Species. But his second work, The Descent of Man was largely ignored, in which he argued for the higher nature of man based on innate altruism and love.

With this understanding, they installed their own security code of checks and balance of power. Through distributing power among the three branches of government, the creators of constitutional government aimed to safeguard the system from potential tyranny of man’s fallen nature; unbridled greed, personal bias and interests of select groups. Yet history has shown that from the beginning, this system of governance was launched on a fragile foundation.

The major bug within this form of representative government that caused a fatal system error was basing systemic accountability on trust in select individuals. To a large extent, this made the promise of the Declaration of “All men are created equal” hollow words not able to match up with reality. With government secrecy in the form of over-classification and corporate propaganda, those in power can conceal not only motives but also their actions, making the system of checks and balances virtually ineffective. Here Bitcoin’s distributed trust offers a new form of accountability and a better way to secure the system.

Accountability through Distributed Trust

The core invention of the blockchain addresses the inherent weakness of this trust model by making corruptible human nature accountable through cryptographic proof. All men are inherently corruptible and instead of trusting a handful of elected officials and particular institutions, Bitcoin’s trust by computation places accountability within the rule of consensus and guarantees the integrity of the system by removing the necessity of trusting any one group or individual.

The algorithmic rules that bind the bitcoin miners are built and maintained through incentive structures based on a realistic assessment of man’s potential to act non-altruistically. Pursuit for self-interest is not itself a bad thing. It only becomes destructive when it loses relationship to the whole and individual actions are carried out without consideration of others and society at large.

In the mining competition, all players can act out of self-interest. Yet, the reward for playing by the rules is higher than potential gains one may achieve by attacking the network, so each one learns to self-regulate their personal desires and work so to not unduly benefit from the altruism of everyone else. Whenever the system begins to centralize and people act with a narrow sighted pursuit without consideration of the whole ecosystem, they quickly come to realize they might kill the goose that lays the golden eggs. So far, each time miners get close to a concentration of a mining pool known as 51% attack, they voluntarily move away to keep the system healthy and decentralized.

This distributed trust provides a better system of accountability where there is no need for any one person or group to hold another accountable. All who choose to join simply commit to the rule of consensus and through each playing honestly, undue self-interests are naturally regulated.

Taming the Beast

In the kleptocracy of the current global empire, naked greed seems to have dragged much of the world into a rogue state of despotism. Man’s unaccounted fallen nature that creates and grabs for levers of power has crystallized into a dragon of the world. With never-ending military intervention in the Middle East, cheap sweatshop labor exploitation in Southeastern Asia, and corporate government hijack bills like TPP and TISA trade agreements, unredeemed Anglo-American imperial power continues its legacy of colonization. The genius of the blockchain’s distributed accountability offers a creative solution to the growing problem of this voracious beast.

In a decentralized organism, one’s self-interests cannot easily remain isolated. With the distributed ledger, they are placed in an interdependent context where individual’s actions tend to bring benefits to the whole network. What appears at first glance as self-serving acts of investors and speculators actually contribute to the development of the system at its early stages. Contrary to criticism, the perceived expensive mining is providing crucial checks and balances for transactions and the global level security of the system.

Honest account and acknowledgment of individual pursuit for personal gain within this system mitigates potentially destructive forces such as greed and desire that tend to careen out of control and compromise entire systems. Instead of trying to deny or eradicate man’s lower attributes, by maintaining a conscious relationship to the potentially dark side of human nature, those wild unruly beasts that are socially destructive can be tamed. Characteristics that are often considered negative in society such as risk taking, calculated selfish acts and profit motives are guided to serve a shared vision of larger society.

Through individuals freely choosing to work honestly in the Bitcoin ecosystem, the beast within each one of us can be placed inside the cage of the mining ring and accounted for in each transaction. The global mind of the world’s largest supercomputer network takes charge of the drive for competition with complex abstract calculation, digesting many ruthless and callous aspects of human nature. This in return can free humanity from forces of aggression and the logic of conquest and creates a space for people to work altruistically. Out of the torrents created through globally spread computers, the torus of the new heart grows and with every beat helps expand the collective good will of the people throughout the entire network.

Rule of Democracy

The pure flow unleashed through Bitcoin’s perfect market begins to free the will of individuals from the rule of a small minority who claim authority over entire populations. As a result, it could release the First Amendment right that was locked by corporate proprietary. This technology beyond borders can empower individuals by placing the source of legitimacy with the common people. With Bitcoin as the new First Amendment app, people can freely exchange, transact and financially associate with one another without asking permission from anyone. This helps revitalize values and ideas that have been devoured by corporatism.

A spontaneous swarm is created through aligning self-interests with the principle of consensus. Out of the creative chaos of this autonomous movement of individuals, new social forms are organically emerging, based on voluntary consent of all participants in the system. This creates the rule of true democracy, where the lines between those who govern and the governed flatten, and to represent comes to mean to serve. In the blockchain’s decentralized world, miners and developers who take their place in traditionally understood positions of representation are directly tied to the interests of users, as their satisfaction is manifested in wider adoption that creates more value. By taking an oath to algorithmic consensus, they hold themselves accountable to the demands of a more humanized market.

The Declaration of Independence was a promise and the Constitution was meant to be its fulfillment. Now, as the shredding of the Bill of Rights continues, there is an urgent need to create a better system. Necessity is the mother of invention and builders of the new world are rising to the occasion, striving to meet the challenge by coding freedom. The Founding Mothers of this breakthrough innovation were the accumulated efforts of the many embodied in the anonymous creator Satoshi Nakamoto. Satoshi represents the wisdom of the common people. Upon an open source code that can be checked and modified, transparency of governance is ensured, while lack of ownership allows the system to stay open with equal access to apps for all end users.

With objective laws of mathematics that can be applied and amended through peer-to-peer review and decentralized consensus, this system can be perfected to realize the ideal of the Declaration; that all nodes are created equal. Upon this robust decentralized platform, new apps are built and seemingly insurmountable problems can be solved through people around the world working together.

The blockchain revolution has already begun changing the world as we know it. A tsunami of innovations from Silicon Valley are creating new jobs and resuscitating the dying economy of a fiat world. Creative non-violent acts of a growing global network can redeem true enlightenment ideals of freedom, equality, and fraternity, which are at the same time universal democratic virtues.

The founders of the Constitution conceived it as a system that allows individuals to struggle with two opposing impulses working within. In the eyes of Thomas Jefferson, government was to be “a shell, an armor, a protective structure that would allow and perhaps, in subtle ways, even support the growth of moral power within the individual members of the society” (Needleman, 2003, p. 166).

A piece of mathematics enshrined in computer code can become the foundation stone for real democracy. This creates a sanctuary for individual liberty against the tyranny of states, of corporations or any other third party that tries to break the circle of distributed trust. This liberty is not understood simply as free markets, but as the freedom of each person to choose their own path of self-determination and let their inner conscience guide their lives.

Bitcoin flows, splitting into ever more divisible bits across borders wherever there is a thirst for freedom, becoming the electric cord that links all liberty-loving men and women around the world. Wider adoption furthers decentralization and can lead to creation of a free society where each strives toward higher ideals of altruism and self-fulfillment.

Earth view taken by US Astronaut Terry Virts, Flight Engineer for Expedition 42 on the International Space Station Jan. 30, 2015 by NASA/Terry Virts.

Nozomi Hayase

Nozomi Hayaze, Ph.D., is a writer who has been covering issues of freedom of speech, transparency, and decentralized movements. Follow her on Twitter.


  1. Jean Chicoine

    Very interesting article. Keep on spreading the good news.

  2. JJ

    Nice work Dr. Hayase. Give me Bitcoin or give me death!

  3. JJ

    Excellent work, Doctor Hayase. Give me Bitcoin or give me death!

  4. Per "wertigon" Ekström

    I’ve been thinking about how to solve two very hard problems lately.

    The first is the DNS-is-centralized problem – the internet is today dependent on a centralized and very vulnerable service. If DNS should disappear everyone should disappear.

    The second one is the problem of how to distribute public keys in a way that makes the key available to everyone, yet guarantee that the public key to [email protected] really is from Alice and not Trudy?

    Then I thought about, hey, can’t this be solved using a blockchain database?

    The way I’ve understood it is that BitCoin is a public ledger with a strict set of mathematical wizardry guaranteeing that the correct person and only the correct person may edit his or her account. So if it is a ledger, it should be possible to make this into a database of some sort.

    One still has the problem of trust though, thus some sort of voucher system will be unavoidable. But I do believe the blockchain can create a failsafe authentication database given time. There is however one more hurdle to overcome;

    How to reward “miners” of the blockchain in an inherently non-profit system. It works in BitCoin because you get a financial reward for it, but what reward can you get for a distributed blockchain database? If you do not get any rewards to run a miner, then few will mine, and as a result the network becomes very vulnerable to 50% attacks from, for instance, governments and large corporations.

    That I believe is the toughest nut to crack.

    1. Nozomi Hayase

      Centralized servers are a major problem. You might be interested in the innovation of MaidSafe. They are trying to create a truly decentralized internet by using a token (safe coin) as reward.

      If you find a way to solve these two problems, please share them with me. I am interested.

      1. Anonymous

        “… An alternative way of organising the internet is being built as we speak: an internet where no one is in control, where the government can’t find you or shut you down, where big tech companies aren’t able to learn everything about you. A decentralised net that is both private and impossible to censor…”

      2. Uno Hansson

        “…An alternative way of organising the internet is being built as we speak: an internet where no one is in control, where the government can’t find you or shut you down, where big tech companies aren’t able to learn everything about you. A decentralised net that is both private and impossible to censor…”

    2. Guy

      The first problem has been solved by NameCoin I believe.

  5. James O'Keefe

    The blockchain tech has uses and cryptocurrencies certainly have merit, but Bitcoin is deflationary and encourages people to hoard, rather than spend. No chance of a fourteen trillion dollar bailout of the 1% ala 2009-2010, but Bitcoin certainly favors early adopters and those who manage to stock up on the currency before the next price spike. Combine the blockchain with a unit of measure of an hour of human effort (we all live the same 24 hours/day after all) and we could get something really interesting and liberating.

    1. Per "wertigon" Ekström

      (Disclaimer: I Am Not An Economist, only an Engineer)

      It should be possible to create a cryptocurrency (inflatecoin?) with the following rules:

      1. Each year, 0.5 % of the current total OR 0.5% of 1 000 000 coins (whichever is greater) will be created.

      2. Depending on how much money is traded in the inflatecoin system, that value will decrease or increase. The goal is to keep the money circulating at a certain speed, like, say, 2.5x the total amount of coins should be traded each year. (exact number should be set by an economist)

      3. If less than 2.5x coins circulate, then there will be even more coins added that year. If more than 2.5x coins circulate, then there will be less coins added that year. This “inflation rate” is set in a bi-weekly pattern together with the difficulty.

      Of course this would require a couple of simulations and opens up the system to some abuse patterns like traders circulating money back and forth to artificially control inflation, but yeah, it should be possible to make an inflationary altcoin.

    2. Nozomi Hayase

      It’s very simplistic to see Bitcoin’s monetary design as deflationary in the way many modern economists use the term. For instance, Bitcoin has fixed monetary units, yet at the same time it can be infinitely divisible (bitcoin can be divided up to 8 decimal points and more if consensus is reached). This is a totally new monetary design that never existed before.

      I find it a pity that so many intelligent people judge Bitcoin at first glance without understanding this technology with its merits.

      It is important to see this perceived deflationary feature (or more accurately its design to go up in fiat value per unit as it is more widely adopted) in relationship to the development of the technology itself. Blockchain technology is a public asset ledger, and as I stated in the article, currency is just its first application. Creator Saotshi Nakamoto found a way to bootstrap the entire operation around a valuable currency.

      This design bias toward early adopters is actually a vital incentive structure. It functions as rewarding any people that take risks that benefit the whole system. I don’t know what process it took for him to come up with the concrete numbers for rewards, but I am sure he or she examined the existing system and dealt with the question: What would it take for people to be willing to shift from the old system to this brand new system? in other words how much do miners have to be paid to do the work of maintaining the system.

      The level of everyone’s moral development/power is different. Sure it would be great if we have thousands of Gandhis and Martin Luther Kings who are simply dedicated to the betterment of humanity and are willing to work for free, but realistically most people need a balance between self-sustaining and altruistic interests.

      I would imagine if Satoshi were to broadcast to the world the idea of “building a public asset ledger” without this reward mechanism in place, it would have been hard to attract so many intelligent and innovative people from so many industries in the way the Bitcoin ecosystem has. Bitcoin has now achieved a global level of security that can’t be compromised by any nation-state or corporation. It has attained global level recognition as the first transnational national currency. This is fueling innovation and creating more jobs.

      All of Bitcoin’s success in its 6 years of existence could not have happened without this incentive structure inherent in currency’s design.

      Once the infrastructure is built and technology matures, it would be possible for people to use Bitcoin more as a store of value and create new transactional currencies on top of it. As I understand with the development of side chains, this is not that hard to do.

      Also it is important to note Bitcoin and Blockchain can’t be separated. Without Bitcoin, there is no blockchain. I highly recommend you watching Andreas Antonopoulos explain this. He is the man to go to when it comes to understanding Bitcoin!

  6. Rick Falkvinge

    I am utterly fascinated by your ability to connect Darwin to bitcoin, via statecraft and accountability. This was a heavy piece that took time to digest, but so worth it.

  7. Harry Alffa

    I offer my solution to financialisation, and 1st step to changing the entire system :-

    Questions and Protests against the idea answered here :-

    A couple of corrupt economists :-

  8. Dave

    There is a fundamental weakness inherent in the concept of a blockchain, and that’s its requirement of energy, in the form of electricity. The robber barons could reassert their power by cutting off all of our electricity, if they really wanted to.

    1. Anarchos

      Well, what about free market fixing that problem and not corporativism which make this fundamentally a state problem. Corporations are incorporated under state law.
      Create an open ended world like the internet with businesses in the energy sector and we would not have this problem.

      Check out a movie called take back your power and the above mentioned Technocracy Rising by Patrick Wood.

  9. Marcus Cake

    I would like to suggest a distributed approach to the issues raised in this article. I’ll begin with Network Democracy (democracy), Greek Wisdom (country), European Wisdom (regional integration) and the resulting mesh which becomes the global village.

    Network Democracy is a subset of Network Society. Network Democracy is the combination of Government Wisdom, Governance Wisdom (Industry) and Democracy Wisdom. Network Society comprehensively empowers people across every sector within society. It also empowers people beyond their own activities. People in a Network Society can have a profound impact on global governance with citizen participation around the world. Network Society enables real-time citizen participation and contribution across government, industry, democracy and corporations. Rather than citizen participation with a single vote for a political party or a yes/no question, technology can enable citizens to participate and and contribute daily on individual issues in industry, government, democracy across any organisation, institution or global project.

    Greek Wisdom Network applies the Network Society development model to deliver the “1 Greece in 1 Global Village” objectives of ‘Minimum Life‘, Economic Transformation, Government Transformation and to accelerate the evolutionary Shift from Industrial Economy to Network Society. Zero Marginal Cost Networks (internet, blockchain, wisdom networks, etc) and the resulting Network Society development model offer a superior, efficient, effective global and costless means to organise society (sectors, countries and the Global Village) and focus community wisdom on society outcomes and a Minimum Life for everyone.

    European Wisdom Network applies the Network Society development model to deliver the “1 Europe in 1 Global Village” objectives of Unity, Economic Transformation, Government Transformation and Network Society. Zero Marginal Cost Networks (internet, blockchain, wisdom networks, etc) and the resulting Network Society development model offer a superior, efficient, effective global and costless means to organise society (sectors, countries and the Global Village) and focus community wisdom on society outcomes and a Minimum Life for everyone.

    Let’s build a ‘Global Village’ with less than 50 networks (each network managed by less than 30 people). The mesh of networks empowers 7.3bn to organise, participate and contribute across countries, sectors and institutions around the world. Our ’One page plan restores transition, evolution, wisdom, prosperity and peace’! We all have a role to play in a country, sector or institution to drive ‘Punctuated Reform‘ and the transition to a Global Village in 2 years!

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