“The monopoly of truth is upstream of the monopoly of violence.”
— Balaji Srinivasan

Anarcho-Tyranny.

It’s a term we brought up yesterday to describe a system in which bad actors get rewarded and good actors get punished.

The prime example is San Francisco, where the Uber driver — who’s just trying to make a living — has to contend with increasing regulatory red tape, outrageous parking tickets, getting his car towed arbitrarily, getting his windows broken and life threatened by crazed ramblers, and being forced to pay an ever-increasing tax bill…

Meanwhile, the criminal who broke his window and threatened his life doesn’t just get off scot-free, his lifestyle is subsidized — perhaps in more ways than one — by the Uber driver.

Only a tiny minority of criminals and politicians see this as a desirable system. Unfortunately, in the short term, it might continue to sweep through the United States nonetheless.

If true, there are three ways this could play out.

One, complete chaos. (Which usually just becomes tyranny by popular demand.) Second, tyranny. Or third, with an entirely new system that reasserts and preserves, rather than violates, free speech, free markets, equality of opportunity, privacy, voting rights, shared prosperity, and provably equal treatment.

Crypto has the potential to be that tertium quid, Latin for the “third way” — a popular concept in Medieval alchemy. Alchemists used the phrase to describe the process wherein you add two undesirable elements (lead and coal, for example) to create a third thing… something completely new and desirable (gold).

Consider, anarchy and tyranny, though undesirable in their extremes, hold within them two desirable attributes — chaos and order. As the hip-hop duo Jedi Mind Tricks said in their otherwise unenlightening song Heavy Metal Kings: “Without order, nothing exists. Without chaos, nothing evolves.”

How does crypto combat drastic chaos and tyranny by using their better elements against them? It’s simple. It does so by reasserting the very thing that both of these things, in their extremes, deny: self-ownership.

Changing the Logic of Violence

Consider that Chairman Mao’s violent legacy crumbled when a few small farmers began conspiring to keep a portion of their grains.

That’s all it took.

And the government only found out about their scheme because their production miraculously skyrocketed.

It increased so dramatically — and during a time when many starved — the government decided not to kill them for their betrayal to Communist ideals.

This was quite the ‘great leap forward’ given, previously, any act of entrepreneurship — even the thought of it — was punishable by death.

Instead, the government began opening up and allowing more people to capture the value they created. (Of course, China never completely let go of its tyrannical roots.)

Consider the outcome:

Because of crypto, for the first time in history, no matter the situation…

Billions of people worldwide now have the opportunity to take custody of their wealth and capture more of the value they create — even those who’ve never had a bank account.

They get to keep a portion of what they earn without interference. And, if done correctly, do so in a way that cannot be confiscated or stolen.

If we think about how keeping a small amount of grain — a measure of wealth in Maoist China — can help massively increase prosperity in a small village…

Imagine what kind of innovation and prosperity can be unlocked by an entire world having this option.

The mere existence of this option in the world could radically change the way governments govern.

Why? Because Bitcoin and crypto have created a conception of rights based not on the power of violence, but on the power of cryptography, math, and shared truth.

Truth creates Trust

Today, we operate under a scarcity of trust but an abundance of computation.

Crypto networks have the power to take what is abundant (computation) and turn it into systemic trust — immutable ledgers we can all agree on.

In this scenario, violence becomes more costly. In fact, at a certain point in the adoption curve, the logic of violence flips: political violence becomes cost-prohibitive whereas cooperation becomes the most lucrative path forward.

Put in simpler terms, the only way to win is to play the game.

As Balaji Srinivasan put it, “The monopoly of truth is upstream of the monopoly of violence.”

Again, the amount of innovation and prosperity that could be unlocked by this single leap forward — apart from what else crypto can provide — is impossible to understate.

Beyond chaos and tyranny…

There is crypto’s tertium quid.

More on that… and what it might look like… tomorrow.

Chris Campbell
For Altucher Confidential