Sovereignism Part 2: Bitcoin, The Ultimate Offshore Bank

A 12-part essay series exploring the disruption of the nation-state and the subsequent amplification of individual sovereignty during the Digital Age. This series is based on the 1997 masterwork: The Sovereign Individual.

Digital High Seas

“Cyberspace is the ultimate offshore jurisdiction. An economy with no taxes. Bermuda in the sky with diamonds.” — The Sovereign Individual

International waters have historically been the greatest geographic safe haven from nation-states. Gamblers, pirates, smugglers, and other sinners seeking to engage in state-condemned activities willingly make use of this ungovernable territory. This oceanic realm is rife with high degrees of risk, reward, and self-responsibility. But exactly why is maritime law so different from the legal systems operating within terrestrial nation-states? A simple cost-benefit provides the root cause: given the sheer size and uninhabitability of the high seas, the revenues a taxing authority might hope to generate by establishing a permanent dominion there are far outweighed by the necessary costs of enforcement. Even assuming economic activity exhibited sufficient density on the high seas to justify a profitable tax regime, the cost of defending this monopoly from other profit-seeking states would need to be carefully considered. For these economic reasons, international waters are the ultimate “wild, wild west” where states expend tremendous resources just to protect their territorial monopolies from naval assault.

The waves of digital space are unconquerable, which makes it a domain of maximal individual sovereignty.
‘Nuff said.

Digital Offshore Banking

“When this greatest tax haven of them all is fully open for business, all funds will essentially be offshore funds at the discretion of their owner.” — The Sovereign Individual

In the 20th century, offshore banking became a preferred means of wealth protection. Insulation from seizure is in high demand by plunderer and plunderable alike, who both seek to shelter their funds from the confiscatory reach of others. Offshore banks are tax havens, social institutions that have existed ever since governments decided to finance themselves through unilateral taxation and inflation. But tax havens haven’t always been banks. Ancient Rome gives us the example of a tax-free port established on the island of Delos with the intention of undercutting competing jurisdictions and drawing economic activity into its harbors. The Delosian tax-free port was one of the original tax havens. Rhodes, a neighboring Greek island state, quickly lost trade to this tax-free port, and declined as a commercial power in the ancient world. An important lesson is available here: when properly armed with the optionality of competing service provider offerings, customers dictate the fate of markets. Clearly, customers always prefer to pay less for equal services. A similar principle pushes capital into the safest storehouses available in each era of history. In more recent history, banks have become bastions for safe capital storage.

Bitcoin is the catalyst of sovereignism.
As Bitcoin becomes more valuable, market actors are wising up to the importance of self-sovereign custody.

The End of Mass Extortion

“Power has always sought the readiest road to wealth by attacking those who were in possession of it.” — William Playfair

In its grandest arc, civilizational advance is centrifugal to sovereignty: as market exchange makes us more productive through innovation and more virtuous through acculturation, power radiates toward the periphery. As sovereignty becomes more symmetrical, decrees and force lose relevance relative to economic efficiency. As the returns on politics and (its natural extension) violence decline, socioeconomic systems tend to become free-forming and decentralized, since under such conditions it is more profitable to cooperate than confiscate. An extreme example of this would be ancient hunter and gatherer society, in which violence could only win you the spoils from a single victim or small village, and the symmetry of information (reflected in the relative sophistication of ancient tools and armaments) was quite high, meaning that armed conflict was typically as risky as it was potentially rewarding. Although highly decentralized, the drawback of this ancient socioeconomic structure was defined by the axiom “might is right,” meaning that individual sovereignty was frequently disavowed by anyone carrying “a bigger stick.” As the first private property right not requiring protection through the threat of force, Bitcoin makes decentralized yet non-violent socioeconomic organization achievable. A profound innovation for civilization — perhaps unequaled since the invention of “clock time” — this global, digital, non-state digital cash permanently alters the logic of violence.

Bitcoin is a metaphysical private property right that permanently alters the logic of violence.
Bitcoin optimizes the functionality of money.
Actual footage of the “trickle down effect” in economics.
The land of the free, except when it comes to money.

Sovereignists Set Sail

“Taxing authorities have grown accustomed to treating their taxpayers as a farmer treats his cows, keeping them in a field to be milked. In the digital age, these cows grow wings.” — The Sovereign Individual

Authority is a strong word: it implies the will power of some imposed over others. For taxation, authorities depend on taxpayers remaining in their terrestrial captivity or, at least, willingly complying with confiscatory edicts when living outside their legal dominion (see the worldwide tax regime of the US government, for instance). Nation-states depend on clearly defined and impermeable jurisdictional boundaries within which to monitor and tax economic activity. As taxation and inflation become more egregious, taxpayers are disincentivized from remaining inside (or, at least, complying with) jurisdictions. If too much commerce or capital exits a jurisdiction, tax revenues collapse, along with the wealth and productivity gains generated by the overly taxed economy. To maintain stability, parasitic tax authorities must be sensitive so as to not “kill” their hosts — the productive economies sustaining them. Throughout most of history, this economic struggle between tax authorities and taxpayers disfavored citizens due to their dependence on the private property rights, institutions, and the rule of law necessary for effective commercial interaction. Traditionally, all of these pillars of socioeconomic cooperation have been manipulable by force — the specialty of nation-states. The mutability of mankind’s representations of capital (assets), people (identities), and the relationships between them (property) gave the most successful wielders of coercion and violence free reign to twist the rules of the economic landscape to suit their politically determined agendas. Now, Bitcoin — an immutable, non-identity-based form of personal property — enables a separation from the central bank system of extortion by self-authoring sovereignists:

“The root of Authority is ‘Author.’ Authorities take authorship and write your role in their story. A sovereign individual is the protagonist of their own.” — Mike Hill

Analog age institutional authority now faces dissolution from an onrushing deluge of digital acid. With consequences comparable to the Gutenberg printing press, which broke the Church’s centralized chokehold on flows of knowledge, self-organizing networks like the internet and Bitcoin are dissolving nation-state strictures on commerce by giving mankind the means to permissionlessly port information and capital across spacetime, jurisdiction, and human mind. Tax authorities, which critically depend on their ability to restrict financial optionality for citizens, will now be forced to render ever-more valuable services to retain any revenue whatsoever. The power of individuals to “vote with their feet’’ by exiting fiat currency complexes leads to a world with a much greater emphasis on free choice and, therefore, smaller and less coercive governments and governance models. By re-localizing responsibility, sovereignism will result in a wide expansion of the sole human right: choice.

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Freedom Maximalist. Bitcoin is Honest Money — stack sats here: http://bit.ly/2THg4Jg Links To All My Work: http://bit.ly/3fG91KV YouTube: http://bit.ly/321Lzm0

Freedom Maximalist. Bitcoin is Honest Money — stack sats here: http://bit.ly/2THg4Jg Links To All My Work: http://bit.ly/3fG91KV YouTube: http://bit.ly/321Lzm0