The Soft Power of Decentralization – Hacker Noon

The fifth rendition of The Hackers Congress Paralelní Polis (HCPP18) opened on October 5, 2018 in Prague, Czech Republic. The three-day event welcomed a fusion of developers, artists, politicians, and activists into one cryptic-centric location to discuss the year’s theme: New Order.

BTCManager originally published a curated mix of content here, here, and here.

Two Sides of a New Order

The opening press conference held on the first floor of the Institute of Cryptoanarchy gave audience to Panama Papers lawyer and freedom fighter Adolfo Linares and the founder of DADA Beatriz Ramos. The two helped organizers grapple with the thematic issues of emerging technologies and the ways in which they are providing novel ways to rethink current systems. Admittedly, it’s a slippery slope, but in the midst of the Czech elections happening simultaneous to the conference, the semantic discussion couldn’t have been more timely.

As a citizen of Panama and an active member of the legal and monetary community therein, Linares described the encroaching dangers of a “supra-national governing body.” Specifically, he referred to the Organisation for Economic Cooperation and Development (OECD) and the “fascist” state controls they have attempted to place on the central bank-less island country. “They can’t stand an ‘unregulated’ country like Panama,” said Linares. “They want the whole world to look like one place and for every place to be treated in the exact same way.”

Beatriz Ramos explained her New Order in the field of art and how her platform allows people to communicate with one another beyond the written word. DADA is a social media platform in which visual creatives are paid along a much different model compared to current standards. At current, Beatriz explained, “If only one or two, or maybe three, artists make a ton of money from their work, there are so many others who can’t even make a bare living from their art.” To resolve this, DADA proposes a royalty fee paid back to the artist as his or her work passes hands even beyond the first selling point.

Hardware for Lightning and Black Market Flash Drives

Up to three events ran parallel to one another, thus the following is far from a perfect representation of all that was available at HCPP this year. Split between three principal stages, the chief organizer of the conference explained that him and his team were tempted to expand to a larger venue. “At these bigger events, though, we felt that attendees lose the intimacy and communication of a smaller venue,” he said. It seems to have also helped with the scarcity of the tickets, as all were sold out within weeks of their announcement.

Studio 1 also hosted a deep dive into the potentials of a hardware wallet to combat the fallibility of the Lightning Network. To open, Dr. Stepan Snigirev, a quantum physicist now working on Bitcoin development, asked the audience, “How many of you operate a Lightning Node on the mainnet?” Eagerly, more than half of the audience raised their hand. “That freaks me out. It’s basically like yelling to the network, ‘hey guys, here’s my IP address and this is where I keep my bitcoin,’” Snigirev responded.

(Source: Twitter)

The Lightning Network is far from the battle-tested mainchain upon which operates. Malicious agents, falsely broadcasted state channels, and simple human error still plague the operations of the speedy second layer. With the help of a hardware wallet by the likes of Trezor, Ledger, or Snigirev’s project CryptoAdvance in Munich, Germany, however, many of these issues could be resolved. The tricky part, however, is developing a device that continuously announces the latest commits as well as reducing the risk of a honeypot when routing payments between multiple parties. “Hardware like this would already have what Trezor or Ledger has, but it would also be able to constantly ask for the status of new blocks so that a bad actor wouldn’t be able to maliciously close out channels,” Snigirev explained.

Outside of the world of crypto, but not far from the political effects of technology, was a short presentation on Flash Drives for Freedom. The premise, explained Jim Warnock of The Human Rights Foundation, was to smuggle literature, movies, magazines, and pretty much any outside media that could fit into a flash drive into North Korea. “We used balloons at first and floated them across from the South Korean border, but it was pretty hit-or-miss,” he explained.

“It wasn’t until we started sneaking in flash drives along the 880 mile stretch of border with China that we saw a bigger uptick.”

Flash Drives for Freedom asks people to donate any of their unused flash drives which are then professionally wiped in South Korea before being curated with content. Typically, the organization works with North Korean defectors who have moved to South Korea; they are also the ones who decide what types of movies and television programs with which each drive will be filled.

(Source: Twitter)

The Life of the Real Smuggler

The final presentation of the day wrapped up in Studio 1 with an explanation of the real definition of cryptoanarchism. “Everyone calls themselves a cryptoanarchist these days, like it’s something cool or it’s some kind of brand,” explained Smuggler. He then went, step-by-step, into the actual definition of anarchism, the dialectic choice of coupling this word with any other sort of frankenstein, SEO-buzz word (anarchocapitalism, cryptoliberalism) a trendy blogger could think of in 2018. And with nearly 15 years of experience moderating darknet communities, anonymous servers, and truly untraceable payments (even before Monero (XMR) and Zcash (ZEC)), who’s going to argue?

Smuggler prescribed a convenient mental model for how best to understand the project of true cryptoanarchism. A clear understanding of which demands an introduction to something called an “OODA Loop” which describes a repetitive cycle of power dynamics. Otherly, it stands for Observe, Orient, Decide, and Act and was developed by United States Air Force Colonel John Boyd.

“People generally assume that an anarchist is this person who is constantly throwing molotov cocktails at everything. These are not anarchists, this is called anomie,” he explained. More explicitly, though, a true cryptoanarchist would rarely be taking these kinds of actions in the first place. The real methodology comes from omitting the observation aspect of the OODA framework. Instead of fighting hand-to-hand, anarchy via cryptography looks to blind the controller long before any violent confrontation arises. Surrounding this are huge implications for the way in which we spend our money, live our online lives, anonymous sharing economies, and all the way down to the way we dress.

The Real Smuggler.

To the chagrin of the audience, he also pointed out how, at current, bitcoin is doing “a pretty shit job” of concealing people’s identities. Among more than a handful of ideas native to this philosophy, Smuggler concluded with a request from the audience: “I hope next year that we this conversation, Monero and Zcash will also have gotten a lot better. Not bashing, just supporting.”

Day two of The Hackers Congress continued to shed light on the liberty fighting technologies emerging from decentralization.

Naturally, observers recognize Bitcoin as the king of both freedom and innovation, but there are many other means (and reasons) for dismantling centralized structures. From the presentations, spectators gained a better insight into how a headless organization with nodes scattered across a network is a shining example of anti-fragility.

How Do you Pronounce Anonymous?

Privacy has been a major talking point in nearly all the presentations. The rise of crypto honeypots and massive data centers have posed their fair share of problem for both the individual and communities at large. Now, as these problems enter the political realm and folks like Mark Zuckerberg bumble their way through congress, it’s clear that real solutions for flesh-and-bone individuals likely won’t be granted easily; many will simply have to take it. The question then arises as to which solution should be taken seriously.

In a panel discussion, Peter Todd, binaryFate, and Arno Pfefferling spoke on the the technical realities of privacy developments in Bitcoin, Monero, and Horizen/Zencash. As a touch point, the three were also invited to speak on the need for fungibility in the surveillance state that is becoming much of the world’s financial system. zK-Snarks, Ring Signatures, and the arrival of MimbleWimble on Bitcoin’s horizon all attempt to resolve extreme transparency in different ways.

Todd even championed the privacy features of the Lightning Network, especially in regard to it’s non-sticky way of routing transactions. Ultimately, the developer concluded that programmers build “a boring coin that works and then solve privacy on the second layer.”

Easier said than done, but not without its merit. As Japan is already pressuring companies to kick privacy coins off of exchanges and traditional services like MasterCard and Visa still viciously collecting data on our every transaction, we may need to cut the fat (and shitcoins?) and start fighting transparency with privacy, like, yesterday.

Joerg Platzer Is back from his Recon Mission

The owner of Room77 in Berlin, Germany reported on his observations from formal institutions on cryptocurrencies. “Things are good and bad,” explained Platzer. “On the one hand I know central bankers who have bitcoin because they’re not stupid, but on the other, we’re seeing the same things that we didn’t like in traditional finance appearing in Bitcoin.”

His comparisons came from a previous talk he gave at HCPP back in 2014 in which Platzer explained the general inability of financial authorities to grok the technology. As the narrative changes, however, cryptocurrencies (at least bitcoin) is under threat of being eaten up and spit out into an ETF (or worse). “Coinbase is literally a bank. And using custodial services defeats the purpose of what Bitcoin was meant to do in the first place,” he continued.

Despite the criticism, it’s likely that institutional investors are already hooked on the crypto bug and developments may be too late to hit the reverse button. The ravenous cheering of this unconditioned adoption is even more frightening. It seems like everyday in which observers witness the sell and rally following any banking authorities crypto-related announcement. To that Platzer added:

“Mass adoption my ass. I would rather see bitcoin drop in its price on exchange rates than see it being used in these kinds of conditions.”

In the end, the real observations that will need to be made will be those following groups who are pro-centralization and those who are not. For a short list of the bad guys, check out who signed the New York Agreement back in 2017.

Time-Expiring Encryption and Starfish (or Spiders)

In light of recent regulations in New Zealand, The Real Smuggler was back to present a novel solution. For the uninitiated, legislation in the country with more sheep than people states that the border patrol now has the right to search, decrypt, and go through travellers digital affairs (aka “digital strip search”). If not, those entering are obliged to pay a $5,000 fine. Fortunately, there’s a third solution: Cypherlock.

(Source: Twitter)

The software relies on an oracle, ratchet algorithms, and a bit of ingenuity. “You can’t ever tell border patrol what your passwords are if you don’t actually know what they are,” explained Smuggler. Cypherlock builds a hashed secret of a secret (think Inception for encryption) of which has an “expiry” that destroys the secret following a certain period of time. It also comes with features that allow for the encryption of multiple secrets and the ability to extend the expiry time of the secret. But that doesn’t prevent oppressive regimes from still leveraging all valuable means of coercion (i.e. removing all your fingernails). Buyer beware is perhaps the modus operandi. Better still, just forget that international vacation all together.

After protecting the individual from being squashed by The Man, how do groups sustain themselves in the face of an oppressor? In history, according to Austin Craig, there have been two solutions: Centralized vs. Decentralized (Or Spiders vs. Starfish). Readers can likely guess which has been (at least as of late) more successful.

A primary example can be seen in the splintering of Islamic extremist groups. Craig drew from sources that outlined how the post-2001, head-on attack against terrorism in the middle east has lead to a multi-headed hydra of violence. Even after the metaphoric beheading of Osama Bin-Laden, terrorist events have seen an uptick in their efficacy. Quickly, the ideology backing many cryptocurrencies takes on a light previously unimagined.

Communitarianism Means Brotherly Love and No Safety Nets

The final speaker on the day’s events brought the high-level cryptographic pontification to the front steps of the humans it would eventually serve. Noted Libertarian thinker and author of The Freeman’s Perspective Paul Rosenberg explained how a decentralized, minimal-state economy would treat it’s sick and disabled. “People will look after eachother, like they always have, just better, ” explained Rosenberg.

“And that money that is being taken from us by the government, could be reused to call a contractor to fix up the attic. Which would mean having one more room for grandma to stay in or the neighbor whose husband just passed away.”

At current, the hierarchical conception of government alienates us from our fellow man. It prevents the nourishing relationships that stimulate a community and a rewarding life says Rosenberg. By eliminating these linear mechanisms that connect individuals (usually one-directionally), communities form in which each member manifestly picks up those in need and spreads resources more effectively. Acting locally, ideally without Big Brother’s permission, would inevitably serve groups better than the pyramid of power in place at the moment.

The libertarian response to wealth distribution, according to Rosenberg, has found an imperfect, albeit “better,” home in the tenets of decentralization. And from afar, it makes a whole lot of warm, fuzzy sense especially for grandma.

The last day in Prague served as a final reminder of the wider reach of decentralization.

If the first two days explained the more technical aspects of how best to achieve a multi-node organizational strategy, the October 7, 2018, presentations explained the philosophy on top of them. Different systems of trust have defined, razed, and rebuilt societies since time immemorial; the feelings after this year’s Hacker’s Congress filled many observers with similar revolutionary aspirations.

Transparency vs. Privacy

The applications built on top of the internet’s first iteration of a free cybernetic world also brought with it a wraith of transparency. At first, it was ushered in on red carpets and sold as a solution for corruption. Additionally, Facebook and Twitter offered a novel solution for connecting people. Threads, comments, likes, tweets, shares, and event postings reached a much wider audience than ever thought possible. The fact that each of these chunks of information could all look similar was another bonus. It became the McDonalds of communication. Blue and white messages from your long lost cousins, grandparents just hopping on their first Apple tablet, or even neighbors living next door. All of it could be corralled conveniently on two platforms.

In hindsight, this convenience is now contested if not outright detested. These platforms have become privatized data machines with huge incentives to better perfect their collection mechanisms. The transparency first offered as a solution to all the woes of our offline lives has now taken on a form never before seen. And yet, we continue to cling to transparency for revealing certain misgivings.

One of the opening panels pitted Adolfo Linares, a celebrated Libertarian lawyer from Panama, against the Czech investigative journalist Pavla Holocova. The latter worked closely (alongside a team of other journalists) to release the documents that incriminated many higher level politicians in money laundering activities. Admittedly, Holocova explained that only a few of these individuals ended up behind bars.

(Source: Twitter)

When Linares pressed for specific identities, the only real name that came to mind was the Prime Minister of Pakistan. “Ok, but this had nothing to do with the Panama Papers,” Linares retorted.

The majority of the conversation revolved less around the specifics of the case and more about the manner in which the information was collected. For background, a particular “John Doe” who’s incentives are still unclear, hacked sensitive financial information and released it to the International Consortium of Investigative Journalists (ICIJ). This information, following a tedious combing through of the documents, was then curated into what the public now understands as the Panama Papers. But was this ethical? “It’s like the new ‘Gestapo,’” said Linares.

“Someone stole private information, from private citizens and companies and then released it. This is a breach of privacy and a breach in a fundamental human right.”

While Linares and Holocova are far from mortal enemies, they do represent a more accurate narrative for how transparency should be conceived. The pick and choose of a citizen’s privacy versus a government’s clarity of their behavior creates double standards globally. On top of that, governments are technically responsible for protecting the privacy of its citizens, but headlines point to a much different reality. Picking sides is tricky, and few regimes seem capable of finding the perfect balance that protects citizens and local businesses better than the government heads themselves.

If you Can’t Beat Them, Start a new Country

At an event focusing on defining the difference between “anarchism” and “cryptoanarchism,” it isn’t a farfetched to propose a mass bonfire of Big Brother and his centralized organizations. A literal fire and just be done with the whole mess. And while that’s still on the table (and would likely be interesting in and of itself), the arrival of Liberlandproposes a non-violent alternative.

The president of the free world island explained how a patch of land, roughly the size of Gibraltar, is going to reinvent how a city-state could be formed. Czech right-libertarian activist Vít Jedlička proposes an opt-in voluntary tax in which a citizen’s voting power and political sway are defined by the amount they decide to pay in taxes. Instead of the taking of taxes, citizens are incentivized to pay their dues, but these aren’t mandatory (unless they also want to wash away their political power). More relevant to BTCManager, this staking power is achieved via a cryptocurrency called “Merit.”

The president explained that while the coin isn’t listed on any exchanges yet, “Many Liberlanders operate different exchanges and things, so that won’t be a problem when the time comes.”

The government will reportedly be an “open source” operation with many features running along Ethereum’s blockchain. Already, they’re working with DAOstack and Kleros to reinvent the social contract and bring outdated political models to a “new generation.”

Since their inception in 2015, they have received nearly 500,000 citizenship applications. Likely not everyone is going to be able to live on the island (it can only host a fraction of the application hopefuls), but the interest is more than just a fad. As the land is a product of the disintegration of Yugoslavia, both Croatia and Serbia have both shared their opinions on the project. “Next steps means that Croatia just leaves us alone,” explained Jedlička. And so it goes when running a state like a startup: Fail fast and try again.

(Source: Liberland)

Mechanics Care More about Cars when They’re Driving Them

The final discussion came from the author of The Black Swan Nassim Nicholas Taleb. He spoke to the audience about the tenets of his newest novel Skin in the Game and reminded listeners of how to signal information correctly. “An accurate metaphor for what I’m talking about is in the restaurant business,” said Taleb.

“In New York, you could have all these awards. ‘The best burger in Queens,’ or five stars on Trip Advisor, or something like that. But when you came back a year later, most of these restaurants had gone bust.”

This point provides an excellent mental model for how best to think about one’s relationship with reality. A business’s accountant is far more important than an internet troll’s review of your famed bacon burger. It’s about the end product, the reality of the viability of your business, not about what peers think of your business. Keeping this in mind is also helpful for identifying who should earn your attention.

It’s about experience, according to Taleb: “One failed business owner is worth more than a hundred academics because the business owner is aligned with both profits and losses.” Intellectuals, experts, and bureaucrats, however, are all safe from the losses and thus don’t have skin in the game when it comes down to brass tacks decision making. They can make choices without ever having to worry about the downsides of their decisions. It was this distinction that prevented many of the people who caused the financial crisis in 2008 to earn any sort of prison time.

So, the next time readers are interested in figuring out who to follow for trading advice, they should likely pick themselves up by their bootstraps and do it themselves. Or learn from the losers turned winners.

Wrapping up

Cryptocurrencies make up a rich constellation of a technology-fueled political stance. It’s one that revolves around trust, participation, and empowering the individual to innovate for her community. Bitcoin was the first mover of this agenda, and from the commentary coming from many of the speakers at the Hacker’s Congress, there are few (if any) real competitors to the honey badger digital asset.

Unfortunately, the philosophical implications of sovereign money are lost on the speculative aspects popping up around it. To lose sight of these aspects isn’t without precedent either. The rise and fall of nations can be understood via their monetary policies.

And if observers are to take Taleb’s advice to heart, they would do well to recognize recent history before committing the same mistake that brought the global economy to its knees. At least, that’s the hope.

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