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How Technology Disrupts Politics Part 2: Cryptography

This article is the second part in a series on how technology disrupts politics. The topic of part two is cryptography.

Imagine that it takes one day to open a website in your browser and that the internet is closed on Saturdays, Sundays and holidays. That would be absurd, right? You may think so, but this is precisely how bank transactions work today. There is no physical reason for this difference because both money and websites are transferred electronically.

There are many reasons why money is so slow, but perhaps the most important one is that banking is a highly regulated guild protected from competition by the government. Banks, therefore, have no incentive to innovate. The result is a payment system stuck in the pre-internet era.

In 2009, the status quo started to change when a mysterious person who called himself Satoshi Nakamoto created Bitcoin, a digital currency built for the internet. It was designed so that no single actor controls the technology. At the heart of Bitcoin is cryptography, which is a branch of mathematics and computer science for making secret codes.

The field of cryptography goes all the way back to World War II when the Germans used their Enigma machine to scramble messages. To unscramble the coded message, one needed a secret password, and then run it in reverse through the Enigma machine. This procedure allowed the Germans to send messages that were impossible for the Allies to understand. Or so they thought. Alan Turing, a brilliant mathematician, helped the British military to crack the code, and in so doing, spawned the field of cryptography and computer science.

More than seventy years later, Bitcoin uses cryptography to revolutionize the monetary system. Bitcoin allows people to make transactions that are entirely secure and impossible to fake. Bitcoin advocates refer to it as “trustless money.” The Bitcoin technology is so trustworthy and safe in itself that there is no need for trusting a third party with your assets. It has experienced some problems and growing pains along the way, but has proven to be quite resilient. Since its inception, the price of one Bitcoin has risen from one cent to a recent all-time high of $1623.

Although widespread adoption of Bitcoin has been painfully slow, and much less stellar than the enthusiasts hoped for, it is challenging changing the global banking system. As a result, Bitcoin is banned in some countries and heavily taxed or regulated in others. These efforts to legally hamper Bitcoin is a telltale sign that it is a politically disruptive technology.

Although Bitcoin may never end up being a widely used currency, the threat it represents to the global banking cartel has already triggered significant efforts to upgrade and reinvent the monetary system. In this way, Satoshi Nakamoto has done more to modernize money than the combined effort of all lawmakers in the world. The outcome of this ongoing revolution may be to democratize money, wrestling the control out of the hands of government and banks.

However, money is not the only area in which cryptography may be politically disruptive. Edward Snowden and WikiLeaks have proven that governments engage in large-scale surveillance of all electronic communication. In essence, they spy on the whole world. Normally, people would be able to do little to protect themselves from such snooping, but if people started to encrypt their communication, prying would become much harder.

Widespread adoption of cryptographic tools would make it near impossible to for authorities to keep tabs on their citizens. Privacy and security are the purviews of encryption.

In other words, this technology allows ordinary citizens to take away power that governments normally possess, and they can do it without voting. That makes cryptography a highly politically disruptive technology.

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