Source: iStock/sinology

Through the blockchain’s ability to create an immutable decentralized record of data and transactions, it has the potential to change society for the better. More transparency, more trust, and less reliance on centralized services can lead to more freedom, fairness, and equality for the society of tomorrow.

Increased decentralization using blockchain-based applications also opens up the door for alternative political philosophies, such as anarcho-capitalism, to potentially function in the real world.

In this article, you will learn about anarcho-capitalism and how the blockchain could potentially enable a thriving anarcho-capitalist society.

What is Anarcho-Capitalism?

Murray Rothbard. Source: Wikipedia

Anarcho-capitalism is a fringe political philosophy that promotes the removal of a centralized state in favor of individual ownership, private property, and free markets. Anarcho-capitalists believe that in the absence of statute, society has the tendency to self-regulate through the discipline of the free market.

Anarcho-capitalists also believe that instead of having centrally governed courts and law enforcement agencies paid for through taxation, private companies - chosen by the consumer - could fulfill these roles by competing on the open market. Anarcho-capitalists envision a society where the voluntary trade of private property and services minimizes conflict while maximizing personal liberty and prosperity.

The term anarcho-capitalism was coined by American historian and economist Murray Rothbard in the mid-20th century when he merged concepts from the Austrian school of economic thought, classical liberalism, and American anarchism.

Murray believed that “capitalism is the fullest expression of anarchism, and anarchism is the fullest expression of capitalism. Not only are they compatible, but you can't really have one without the other. True anarchism will be capitalism, and true capitalism will be anarchism.”

Could the Blockchain Create a Anarcho-Capitalist Society?

Anarcho-capitalism is a political philosophy and like all many other political philosophies, it has its challenges. Creating a functioning anarcho-capitalist society takes more than a handful of idealists who believe that this school of anarchist thought can create a utopic society.

For anarcho-capitalism to function in the real world, there needs to be trust. This trust could be provided - to a certain degree - by blockchain-based decentralized services, which could replace many of the centrally-governed public services of today.

First and foremost, all contractual agreements could be digitized and turned into smart contracts. This would decrease friction among different parties in both commercial and civil matters as the smart contracts would be immutable and self-executing.

Digital identities can be created and stored on the blockchain that include all relevant personal information so that there is no reliance on centralized bureaucratic services issuing documents.

Financial services, such as lending and insurance, could be conducted using decentralized blockchain-based banking applications while cryptocurrencies could be used for day-to-day financial transactions.

Moreover, property and asset ownership, as well as the transfer of ownership, could be recorded on a publicly viewable ledger. This would ensure that no one’s property could be unrightfully taken away from them.

Furthermore, a real sharing economy could be created in a decentralized form where popular peer-to-peer services, such as ride-sharing and home-sharing, could be operated without a centralized third-party that takes a cut out of the financial exchange. This, in turn, would be the economy more efficient and create more wealth for its citizens.

As the examples above show, the blockchain has the potential to bring the anarcho-capitalist dream a step closer to reality for the proponents of this political philosophy. Through the decentralization that blockchain technology can bring, the need for centrally state-governed public services becomes less and less.

Having said that, the likelihood of an existing sovereign nation switching to an anarcho-capitalist model - despite it technically being a possibility thanks to the blockchain - is close to zero. Anarcho-capitalism - like most radical political ideas - has a long list of opponents and, at the end of the day, those in power will not relinquish it in favor of an untested political theory that would disintermediate them and empower the individual.