author: Vitalik Buterin
published: 2011-09-06 22:37:51 UTC
A world of electronic currency as it stands has allowed for an unpredecented amount of phyisical decentralization in modern organizations. A single web company might have some employees in one city, some in another country, possibly some cheap labor in India and customers strewn around the world; with the exception of the cheap labor in India, Bitcoin Weekly already follows this model. This change in organization, where physical location only matters in the sense of being more or less distant from the nearest wireless access point, has come to permeate many levels of society. But there are still many levels left to go. Warfare is one significant case of this: an army's output is generally physical control of a given area, and an army's input even now relies on physical cash - consider how easily Gaddafi's billions in foreign assets were frozen at the behest of the European and American powers. But all of this is changing - terrorism is becoming increasingly popular as a military tactic, the intent not being control but rather pure disruption intended to act as a deterrent against further action against the army's objectives. The idea of a community is changing from referring to people living in the same area to people spread out around the globe tied by common interests, and when such communities begin to acquire the kind of formality that local communities have with governments the idea of an army based all around the globe will begin to make sense to more and more groups. Electronic currency of increasing untraceability is allowing for the physical resources of war to be purchased much more easily despite the blockades of a territorially dominant enemy. Bitcoin is, of course, the epitome in electronic currency untraceability (despite the much hyped blockchain traceability one can still throw off any trail by employing multiple Bitcoin tumblers in series), so if Bitcoin achieves mainstream success it will arguably be the preferred currency of decentralized armies.
In order to understand what role Bitcoin would have in such a world it is necessary to first understand where warfare is going in terms of its social and economic organization. Wars of the first half of the 20th century and before were often "total wars", and discussion of these wars would follow the statist geopolitical worldview, where the war was between two state "teams" would could reasonably count on the full unselfish and undivided support of every citizen of their respective state. Killing civilians was okay because they were part of "the enemy", citizens employing any of their effort beyond the bare minimum of survival and the unfortunate requirement of maintaining public morale to their own benefit rather than the benefit of the "team" could be seen as traitors, and, especially in the earlier, more barbaric, centuries, every single citizen of the losing side could count on becoming either a corpse or a slave. Now, however, things are different. Territorial control of an area is always partial, never absolute, armies are forced to suffer the indignity of buying and selling from their own citizens rather than confiscating and conscripting their way through every problem, and there are often no front lines.
Thus, 21st century warfare will likely largely consist of two economic units functioning in a free market, buying and selling resources to be used against their enemies. Conscription will not be employed; with modern heavy weapons "human wave attacks" are completely ineffective, and it is impractical to conscript people to carry out any more advanced tasks - aside from the fact that desertion is so easy with no front lines, as Ludwig von Mises put it, "if one treats men like cattle, one cannot squeeze out of them more than cattle-like performances". Explaining further:
If one asks from an unfree laborer human performances, one must provide him with specifically human inducements. If the employer aims at obtaining products which in quality and quantity excel those whose production can be extorted by the whip, he must interest the toiler in the yield of his contribution. Instead of punishing laziness and sloth, he must reward diligence, skill, and eagerness... In the production of articles of superior quality an enterprise employing the apparently cheap labor of unfree workers can never stand the competition of enterprises employing free labor. It is this fact that has made all systems of compulsory labor disappear.
Thus, future armies will be armies motivated by loyalty and mercenary armies, although arguably the majority of soldiers will be some combination of the two. Bitcoin will allow decentralized armies great opportunities in hiring soldiers outside of the area of conflict and rewarding them for their services. One can even imagine a decentralized army offering "tasks" on an underground market, consisting of things like destroying specific buildings, assassinating enemy politicians, etc, with rewards sent to whoever completes the task - an assassination market is an example of a proof mechanism for such a market. The tasks do not need to be of the guerrilla warfare sort - one might imagine an army putting up a task "drop off .45 caliber ammunition at (-87.126,45.375)", essentially supplying itself through the free market - armies are already starting to use the internet to buy supplies. Ancient armies passing through neutral or hostile territory would often be followed by merchants eager to sell them supplies; one can imagine military supplier reappearing as a form of long-term self-employment. A decentralized army can in fact be entirely maintained in this way, acting as a black market corporation, with its objectives in Afghanistan, some of its soldiers wreaking havoc in the US and its controllers securely behind seven proxies in Finland. The army could even turn a profit by either selling information in what locations they are going to attack within the next few minutes so the buyers of this information get the opportunity to loot before everyone else or by simulaneously acting as a private defense corporation offering protection in exchange for money. Most often, however, the army would itself be a money losing operation, its main output being not profit but control, and it being supported by a wealthy employer.
The idea of decentralized command is the most troubling (and, to the organizations themselves, most compelling) result: normal armies have to deal with public disapproval, often manifesting as protests or worse, but if command is decentralized there is no central locus for the public discontent to be directed against - the UN can mount sanctions against dictators that employ mercenaries against innocent civilians, and can punish the mercenaries themselves, and can even mount secondary sanctions against others that financially assist the dictators, but if everything is decentralized such activity can be done anonymously. The laws of the free market apply: there is no harm in alienating 99.99% of the world if your loyal customers keep supporting you. As long as we live in a world with poverty, there will always be individuals with nothing to lose willing to bear the scorn of the entire world and accept a contract to do whatever some shadowy warlord needs done in exchange for not-so-cold-and-hard untraceable cash.
Such organizations do not have to be black market terrorist groups and can in fact work to the benefit of society - literature envisioning anarcho-capitalistic societies often features insurance companies with a partial market share over the areas they operate in simultaneously acting as protective armies since prevention is cheaper than repair. Even tools such as remotely hired terrorism and political assassination can be used ethically if they are targeted against politicians or leaders of groups aggressing against peaceful territories. However, "morally good" armies such as those used for local defense will likely prefer employing domestic labor because local residents have more of an emotional attachment to their home and would thus be partially motivated by loyalty and require less payment - national armies currently prefer to hire their own citizens rather than foreigners because they rely on national loyalty, and this is true especially during wartime. The loyalty effect is a significant one - military operations have a substantial risk of death and in suicide missions that risk is 100%, and it is difficult to motivate someone with money if they will be too dead to use it. It is, of course, possible, since people in poor countries would often take the chance to rescue their families from poverty and starvation, but the price premium on soldiers with no interest beyond the material will be a high one. "Loyal" soldiers could of course still be recruited from close friends and family members of local residents and individuals interested in furthering the cause of morality itself, although unfortunately this is true both for our morality which emphasizes non-aggression to alternative moralities such as a religious extremist manifest destiny worldview. On the other hand, though, the internet is increasing public perceptiveness to crimes against the innocent and feelings of sympathy and compassion are empowered and feelings of xenophobia weakened by the ongoing process of cultural globalization, so the prevailing global morality, which is anti-aggression, will gain the most ideological and financial backing in the years to come.
It is important to note one weakness of decentralized funding, however: even though money can be transferred across the internet physical resources cannot. Gaddafi's army in Libya, even if it possessed a trillion dollars, could not buy tanks over the internet and have them transferred to Zliten and Brega due to the international physical blockade. However, this weakness is not as serious as it seems for three reasons. First, most future armies will not have a reasonable expectation of 100% cooperation from citizens, so armies with more money will be able to receive more cooperation (although this effect is itself limited since electronic currency will have a lower value to citizens in blockaded zones who cannot use it to buy a full range of services on the world market). Second, external tactics such as terrorism are being employed more and more and soldiers outside the combat zone can buy whatever they want. Third, international blockades require extreme amounts of defensive military force (ie. physical soldiers, planes, tanks and/or ships, as opposed to offensive force like missiles) which is extremely expensive and is becoming more and more expensive relative to the offensive force needed to neutralize it with every passing year, and it is debatable whether governments with enough military power to afford such measures are financially sustainable. Resource siege warfare is not dead, but as warfare is getting more physically decentralized its effectiveness is weakening.
Thus, the future of warfare in a Bitcoin world is one not of countries, but of decentralized atomized economic entities acting on the free market. Loyalty and the financial motive will both continue to play a part in motivation, although conscription will not. It was once thought that warfare is so destructive that it will fall out of favor entirely, but this is only a factor in consideration for governments, not our hypothetical corporation trying to meet an objective in Afghanistan, committing terrorism in the US and being based in Finland. Of course, this does not mean that war will be profitable as an activity in itself - even though belligerents may not have to face retaliation, hiring soldiers and buying weapons is still expensive - but wealthy individuals have substantial incentive to finance military activity anonymously, such as big business owners sabotaging their competition. The hope for peace in such a future lies in the supremacy of loyalty and anti-aggression moral principles over the profit motive and extremist fundamentalism as motivators, as the only advantage "moral" armies have over "immoral" ones is morality itself.
Previously, I talked about the key factor that makes Bitcoin such a stable system - it is based on a set o...
There has been growing concern about the rising Bitcoin prices, and the sustainability of these constant increases. Many see the increases as harmful to Bitcoin's future as a currency, stating that...
For conventional internet transactions, Bitcoin does not seem to have that many benefits for the average user over credit cards. With a credit card, the user must put in some numbers and hit "submi...