Are smart contracts a "dumb idea" for cryptoanarchy?

Smuggler: Non-attribution is the core concept of Cryptoanarchy. It means that actions, data, objects etc cannot be attributed to a person by a third party. That is what the cryptography part of Cryptoanarchy is primarily about. The moment actions cannot be attributed to a person anymore, the whole system of rulership by threat, judgment and punishment breaks down. However, this also leads to problems, because we do not know yet how to have justice and security without attribution. We rely on attribution because we always had it, and never had to think about what happens if we don’t. I believe that many negative issues of non-attribution can be overcome while keeping the positive aspects. This requires work, ingenuity, discovery. We’ll have to figure it out by thought and experiment. But my hunch is that we will be able to deal with it well enough one day.

This is from “Why cryptoanarchy is not a revolutionary movement”, an interview with Smuggler and Frank Braun, two longtime cryptoanarchists. I like it because it succinctly summarizes the design objectives of cryptoanarchy (no attribution means no rulership) and its greatest challenge (no attribution means no punishment of bad actors that should be punished).

Smuggler had previously given a sort of return to cryptoanarchy basics talk that I found enlightening. In particular, his framing of rulership as an OODA loop (a military strategy framework for combat operations):

  1. The subject makes an action

  2. The other observes the action (Observe)

  3. The other attributes that action to the subject (Orient)

  4. The other applies norms and judgments to decide whether the subject should be punished (Decide)

  5. The other punishes the subject (Act)

Whereas “classical anarchists” attack D and A (actions are observable and attributable but no longer punishable), cryptoanarchists attack O and O (actions are no longer observable and attributable and thus not punishable).

It’s easy to see how attacking observation and attribution with cryptography subverts rulership (or “archy”), thus cryptoanarchy. But what happens next? If punishment relies on observation and attribution, cryptoanarchy yields a system with no form of justice.

From the same interview (emphasis mine):

Tatjana Adamov: Wouldn’t you say it’s ironic that cryptoanarchist ideas seem totalitarian, when at the same time their proponents claim to fight for liberty and freedom?

Frank Braun: I think the label “Cryptoanarchy” has been watered down a lot in recent years, because it became “en vogue”, in large parts due to the blockchain craze. In my view “Cryptoanarchy” was always about anarchy (as in “no ruler”) by the means of cryptography, most importantly technologies that provide anonymity. Very important here are anonymous communication and payment methods, because these technologies strike at the root of the repression of what in my view are fundamental human rights: Freedom of speech and freedom of transaction. Cryptoanarchy is about providing more freedom for the people that want it, without interfering with the lives of others. Devising anonymized means to kill people for a “good cause” (assassination markets) is not Cryptoanarchy, it is just plain evil. Using technological tools to start a revolution is not Cryptoanarchy either, it is the imposition of a new method of rulership on a ruled population. Revolutions, with the help of technology or not, have two big problems: The new ruling class coming into power after a revolution is usually worse than the one it replaces. It seems to be impossible to create a “better” system when you start with ethical dubious means (a revolution implies that). And even more importantly, what if the revolutionized population doesn’t want to be revolutionized? Who gives you the right to change their system of rulership by force? Cryptoanarchy is about creating a parallel alternative which does not destroy the surrounding power structure and tries to live in harmony with it. There are many successful historic examples of this (ethnic minorities with their own communities, legal structures, business frameworks, etc.). Cryptoanarchy simply brings this concept into the technological and virtual sphere, although it also has a big physical aspect to it. Of course, if “Cryptoanarchy” would spread wide and far this would have secondary consequences on the surrounding structures, as every major technology shift has. But it doesn’t force anything on anyone.

To Braun, technologies are not cryptoanarchic in and of themselves; if they are used for “plain evil” or to bring a new ruling class into power, they are not cryptoanarchic. Whereas Smuggler’s definition of cryptoanarchy was clinical (the use of cryptography to realize anarchy, specifically by attacking attribution), Braun’s requires a subjective filter (it must also be “providing more freedom for the people that want it, without interfering with others”).

While he does not state it explicitly, it is the inability to punish that makes him sensitive to the net effect on freedoms. Without a way to punish, technologies that attack attribution can lead to systems with even more rulership than before. Because of this risk, Braun emphasizes the importance of cryptoanarchy as a “parallel alternative which does not destroy the surrounding power structure and tries to live in harmony with it.”

In sum, cryptoanarchy is about subverting rulership by attacking observation and attribution (colloquially known as “privacy and anonymity”) using cryptography so long as it provides more freedom for the people that want it, without interfering with others. The big challenge with cryptoanarchy enabling technologies is that we don’t have a good way to punish bad actors. Because of that, we should build these systems as alternatives, not revolutions or disruptions1.

So are smart contracts dumb? Braun thinks so:

Tatjana Adamov: How do you two relate to the whole blockchain, smart contracts, anti banking ideas?

Frank Braun: Short answer: Smart contracts are a dumb idea. Long answer: If you produce software that automatically rules over humans with the goal of efficiency (that’s what smart contracts are) you are producing technological totalitarianism. There is no human anymore that could bend the rules and there isn’t even any authority to appeal to left. If your social score is too low to get on the airplane then that’s that. This is not a glorious technological future without intermediaries, it’s dehumanizing technology in action. I think being “anti-banking” focuses too much on the wrong issues. Banks are not the major problem.

But what Braun means by “smart contract” is technological totalitarianism, where humans are ruled solely by a system of smart contracts. Smart contracts are just a tool (like privacy technology) and can be used for good or evil. Automation isn’t inherently bad just like privacy isn’t inherently bad. But what is certainly clear (and something I will be more conscious of in the future) is that smart contracts are not inherently cryptoanarchic.

  1. There are three interesting assumptions to explore here. First, that attacking observation and attribution are the most effective way to subvert rulership. Second, that punishment and judgment are impossible without attribution (Smuggler thinks no). And third, that building “alternatives” rather than “disruptions” is a viable way to increase freedoms.