When I first looked at Bitcoin, I thought it was a badly constructed Millennial scam. Its vaunted “blockchain” had clear design problems, as Kevin Dowd and I pointed out in a Cato Institute paper. I now realize that this was a failure of imagination. I should have seen Bitcoin for what it was: the first flawed attempt to regain our freedom, as governments worldwide use software and thuggery to eliminate cash and Swiss bank accounts. The global government Godzilla will not stop its predations; we are so interconnected that votes for Brexit or Donald Trump merely slow it somewhat. But a crypto-currency with true anonymity – that at last will liberate us from its clutches.

Thirty years ago, we had several means of making transactions anonymously, without governments knowing about therm. For small sums, cash was almost completely anonymous, although numbered bills always gave police departments the chance to trace transactions in large criminal cases. For larger amounts, there were a wide range of banking jurisdictions offering anonymity and complete respectability to those seeking a safe bolt-hole for their cash. In the 1980s, I worked for an Austrian bank whose proud boast was that they would verify only your nationality, not your name, so that if you registered yourself as Mickey Mouse, they would greet you each time you came into the branch with elegant Austrian formality: Grüss Gott, Dr. Maus!

This was no doubt convenient for Third World dictators, terrorists and the international Mafia, but it is also essential for ordinary citizens, for one very good reason: governments cannot be trusted. They always seek to expand their control and income, and they will generally give way to temptation if it is presented to them, even fleetingly. The extreme example, of course, is that of the Jewish inhabitants of inter-war Germany who had the foresight to hold a Swiss bank account; if they were able to escape when the Nazis came to power, as many were, their Swiss bank accounts were essential to being able to re-start their lives in a safe country.

Yes, those unfortunates who did not manage to escape and did not tell their non-German families about the Swiss bank account provided an unexpected bonus for the Swiss banks, but contrary to public hysteria when this was revealed; this did not make the Swiss banks collaborators with the Nazis. It made them diligent service providers whose diligence could not solve all their clients’ problems, just the financial ones. But against governments less insane than the Third Reich, financial defenses are often the ones you need most.

To those who expostulate that we should surely trust democratic governments not to behave like Nazi Germany, I would agree wholeheartedly in terms of pogroms, Kristallnachts and the like, but not on financial matters. I give you the example of Britain, an admirably democratic country that twice, in 1815 and 1945, found itself financially exhausted at the end of major wars with government debt around 250% of GDP. The first time, the government cut spending by 69% and returned within six years to the Gold Standard, with government bonds through a quirk in their design providing savers with a massive capital gains bonanza – the result being a century of peace and prosperity.

The second time, the British government controlled interest rates, set the top rate of tax above 90%, and inflated the currency until it was worth a tenth of its pre-war value – the result being relative impoverishment all round and absolute impoverishment for those savers foolish enough to pay their taxes and attempt to live on the returns from their savings. Only those with secret Swiss bank accounts, and money kept in international equities, gold and Swiss Franc deposits, were exempt from the British government’s depredations in 1945-79.

The central flaw in democracy is that there is very little to stop 51% of the population oppressing the other 49%, and when it comes to finance and taxation, the poor will almost always be tempted from time to time to oppress not just the rich but the middle class. Britain elected Clement Attlee and Harold Wilson after World War II, both admirable men, but the result was middle class impoverishment and the loss of the Empire, thrown away to fund the National Health Service. Today, Britain is more than capable of electing Jeremy Corbyn.

The United States elected Barack Obama, who no doubt is even now skulking in his magnificent Georgetown house growling “Next time, no more Mr. Nice Guy” – and could easily elect the likes of Bernie Sanders or worse. Indeed, even in the 1950s, with the universally admired Dwight Eisenhower as President, the top rate of U.S. income tax remained at 91% throughout the decade, albeit only on extremely high incomes. The John Birch Society, madmen though they were, had a point when they accused Ike of being a Communist agent; in terms of tax policy, he effectively was.

There are two reasons for an ordinary middle-class person to need both cash and the opportunity to open a Swiss bank account. First, governments can always turn nasty, either generally or against you personally, for example through the disgraceful U.S. Civil Asset Forfeiture process. Second, the existence of cash and Swiss Bank accounts is a useful albeit not completely effective deterrent against governments getting too ambitious in their “tax and tax, spend and spend, elect and elect” mania. Conversely, the lack of such mechanisms puts temptation in government’s way, just begging it to impose tyranny.

By a series of international treaties, the U.S. and EU governments have now effectively eliminated the usefulness of Swiss banks and their Austrian cousins. With the tax authorities being given details of their citizens’ Swiss bank accounts, those accounts are no longer a reliable defense against government extortion. For the Russian Mafia, there are still some numbered bank account havens available, but they are much less reliable than Switzerland, so you may need your trusty henchman Igor to blow up the bank’s head office if they try any funny business. For the rest of us, sadly lacking an Igor, the avenue has been closed.

As for cash, the authorities are now trying to abolish that, ostensibly to facilitate their crazed negative-interest-rate policies. Andy Haldane, of the Bank of England, first proposed this monstrous idea, which has now been supported by the apparently sensible Kenneth Rogoff, whose “The curse of cash” sent frissons of pleasure down the spines of Keynesian central bankers worldwide. In India, which experimented with removing cash from the system last autumn, the use of Bitcoin has skyrocketed. (Although the Bitcoin blockchain is not completely secure, presumably its Indian users think cracking it for the gigantic Indian population of Bitcoin users is at least beyond the capabilities of the permit raj.)

Bitcoin is imperfect, just as the 1885 Benz, with its top speed of 3 miles per hour, was not the perfected automobile. But improvements are coming all the time, and with massive customer usage, the need for further improvements is all the time becoming more apparent – just as the manufacturers of the 1910 Gräf und Stift learned from the assassination of the Archduke Franz Ferdinand that they needed to improve their reverse gear mechanism. Soon we will have a crypto-currency that is completely impervious to the efforts of the NSA. GCHQ, the IRS and all the other government agencies who wish to view our financial transactions.

The ideal crypto-currency would combine complete anonymity with a gold link, like the late lamented E-gold, disgracefully shut down by the U.S. government. Just as anonymity enables ordinary people to escape the fiscal follies of evil and incompetent governments, so gold, which unlike crypto-currencies provides a secure non-fiat store of value, enables ordinary people to escape governments’ monetary follies, so overwhelming in recent years. A crypto-currency that combined complete anonymity with a firm and unbreakable link to gold would provide the ultimate solution to those wishing to live in financial freedom.

A fully anonymous and secure crypto-currency will be some help to terrorists, but only to the extent they have billionaires wishing to finance them. It will be only a modest help to Russian and other mafias, who have other means of keeping their financial transactions a secret from the world’s authorities. However, it will be a massive protection for the world’s ordinary citizens, even those who are of only modest means, as they will be able to store and transfer wealth in a form that is undetectable by the world’s authorities.

Poor people living under oppressive dictatorships, such as in Venezuela, will be able to provide themselves with food and maybe a bolt-hole outside their oppressive country, just as did the luckier German Jews in the 1930s. Rich people whose wealth is attacked by Socialist governments will be able to spirit it away where it cannot be found. But above all, ordinary middle-class people of moderate means will sleep in their beds, knowing that taxes on them will not be arbitrarily increased, nor property arbitrarily seized, nor wealth eroded by inflation and government overspending, because if any such thing threatens, they have a crypto-currency bolt-hole available, even if in normal times they never bother to use it.

For the world’s governments and central bankers, mass usage of crypto-currencies would be an existential threat. The withdrawal of wealth into crypto-currencies from other stores of value, such as stocks, bonds and real estate, would cause a massive market crash (such a crash may be inevitable, given the last decade’s foolishness, but this would very much worsen it.) For the world’s central bankers, there would only be one solution: forswear, now and forever, their evil attempts to abolish cash and, to make that foreswearing credible, push interest rates far above zero, to a rate well above the rate of inflation, and pledge to keep them there.

That would enable the economy to function normally again. It would cause a mass liquidation of all the foolish investments made in the last decade, but, combined with de-regulation, it would allow productivity growth to return to its historic robust levels, and thereby begin the blessed process of making us all richer again, as we had become used to since the Industrial Revolution.

Most important, if the world invests in untraceable crypto-currencies, even a global government that attempted to seize the resources of its citizens would find itself unable to do so. And that, above all, would become our principal guarantee against an impoverished and servile future.

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(The Bear’s Lair is a weekly column that is intended to appear each Monday, an appropriately gloomy day of the week. Its rationale is that the proportion of “sell” recommendations put out by Wall Street houses remains far below that of “buy” recommendations. Accordingly, investors have an excess of positive information and very little negative information. The column thus takes the ursine view of life and the market, in the hope that it may be usefully different from what investors see elsewhere.)