The Real Problem With Digital Currencies and Privacy/Liberty

The readily observable problems with digital currencies is that they have two major weak links. The first is the exchangers who convert cash to e-currency and e-currency back to cash again. “Authorities” target these exchangers and the system fails (see the story of e-gold.com). If the “authorities” do not shut them down they then regulate them and privacy is eliminated (see goldmoney.com).

The second major weak link is that the e-currency must be defensible and the asset that backs* the e-currency must be verifiable. Systems like Pecunix are excellent but if they were to achieve a meaningful size they (and the businesses that store their gold for them) would come under attack by world powers. These power-hungry “rulers” would attack anyone who threatens their control of the monetary system.

The real problem is the widespread lack of understanding of property rights and individual liberty. It is the pagan faith and belief in “external authority” as described by Rose Wilder Lane in her book The Discovery of Freedom. What is needed is a powerful network of individuals who respect property rights and are willing to defend them. This “territory” is where the asset that backs the e-currency would be stored and defended. The individuals of this territory would reject and repel attempts to violate these property rights. The “territory” need not be centralized if it can be defended. E-currencies like Bitcoin have attempted to address these issues but they still face many challenges.

The ultimate territory is in the individual minds and in the actions of the masses who have learned, understand, and appreciate what property rights and liberty are all about. An excellent source for this knowledge is Robert LeFevre’s The Philosophy of Ownership. The ultimate state of individual awareness is described as “autarchy” or “self-rule” (see  A Way To Be Free).

One man alone cannot defend his property but when he and his neighbors have matured to the point where they understand, respect and appreciate property rights; and when they can outnumber (or outsmart) the plunderers, they can then repel the attacks of the aggressors.

The answer is Autarchy (and self-defense tech).

*UPDATES: It has become clear that bitcoin is a scarce and useful commodity in and of itself and therefore needs no “backing”. Title of article has been updated to include the word “Liberty”. The mention of “self-defense tech” has been added as well. I consider bitcoin to be a powerful form of self-defense tech if used correctly.