“Crypto anarchism could one day replace the nation state and rid us of bureaucrats… Central banks that steal our money will be a travesty of the past”
Nellie Bowles’ New York Times article paints a fascinating picture of a group of wealthy blockchain entrepreneurs who came from California to start a crypto utopia on the battered hills of Puerto Rico. Ordinarily, they would have to pay billions in state and federal taxes on their growing fortunes. In Puerto Rico, there are no federal personal income taxes, no capital gains tax, and business taxes are favorable – all while allowing you to retain American citizenship. These crypto investors fly in en masse to buy up airports and docks, taking over hotels, and museums while they debate whether they should form their own city called Puertopia or move into Old San Juan.
Brock Pierce, 37, leader of this crypto community, is not the first nor the last to generate a crypto utopia. Possibly, the most famous crypto state of all is the Free Republic of Liberland, a “society where righteous people can prosper with minimal state regulations and taxes” created in 2015 by President Vít Jedlička,.
Most Puertopians like to say that the tax incentive is only one piece that draws them to hurricane-torn Puerto Rico. Pierce, for instance, says. “If you take the MY out of money, you’re left with ONE.” Allegedly, his goals are philanthropic: to rejuvenate a battered state and to shovel $1 billion of his own funds into a charitable token called ONE.
Most of the crypto enthusiasts I spoke to about Puertopia, distrust Pierce. They pointed to his history of fraud, among other controversies, and to his capitalistic stint as executive-director of the wildly successful blockchain-for-business start-up, Block.One. Pierce happens, too, to be an early Bitcoin beneficiary of one Steve Bannon, who recently lauded cryptocurrency and blockchain technology as the “very heart” of populism. To claim that he and his followers are not in it for the money, sounds absurd.
Some others, mostly crypto anarchists, resonated with Pierce’s statements.
To understand them, I asked a finance professor in UCLA to explain their intentions.
Bitcoin comes with a philosophy that is variously called: anarcho-capitalism (or ancap for short), libertarian anarchy, or market anarchism. The radical libertarians who started the blockchain are very different from the more pragmatic geeks in Silicon Valley. Facebook, for instance, talks about connecting people, Google discusses making knowledge more accessible, Uber want to improve transit, and so forth. Cryptoanarchists, on the other hand, want nothing less than to tip the world upside down and to replace it with anarchy. While Silicon Valley is corporatist and amenable to government, the libertarians of the blockchain see neither states nor corporations as acceptable intermediaries. For them, it’s only independent individuals engaging in free market exchange.
“Government,” David Zimbeck of the BitBay decentralized marketplace told me, “is not needed. They don’t have our best interest at heart. They are known to literally make up laws for whatever they feel. Nobody should be forcing anyone to do anything… Law is perverted and immoral. So the key to saving everyone is to teach the citizens to exist without governments.” How? Through the Blockchain. How? By moving away from centralized government and central banks to a decentralized universe, where a group of individuals jointly control the flow and access of knowledge.
Small wonder then that Pierce spends his days broadcasting Charlie Chaplin’s 1940 “The Great Dictator,” to his group.
He finds inspiration in lines like “More than machinery, we need humanity.”
These radical nationalists want nothing less than a radically decentralized computational universe, where contracts and deals swirl through anonymous smart contracts.
But the situation is more complex than that.
The only way for each blockchain ledger to work is by majority consensus of all participants on that platform, and for majority consensus to take place you need, at least, one leader to harmonize the group and to mediate conflicts, among other matters. That’s called “governance” and all ICOs know they need to include some structure of platform governance for their company’s success.
As an article in The Atlantic pointed out, the danger lies in any one blockchain imposing radical control. An example would be a mandated DNA-test to accompany citizens’ blockchainification, where their ethnic origins would be attached to their records to screen participants. On some ledgers, blockchainification may be more benign than others. But in some places, all it takes is an authoritarian leader with enough power to create a hell. In all cases, this “decentralized utopia” turns into its own “government” that is far more “centralized” and authoritarian than most of the governments we live under today.
Pierce and his crew want to start a new city “to show the rest of the world what a crypto future could look like.” The article describes Pierce as someone who regularly performs rituals. He kisses the feet of elderly, he blesses crystals, he prays for Puertopia while circling a tree. More worrisome still, his followers venerate him: they see him as someone whose “force of …personality and spiritual presence are important to the group.”
His followers, largely male, say they have come to Puerto Rico to build a city free of government influence. How about authoritarianism?
It seems to me if Puertopia is led by someone like Pierce – I for one would rather pay my taxes than live there.