"A well-defined mathematical algorithm can encrypt something quickly, but to decrypt it would take billions of years – or trillions of dollars' worth of electricity to drive the computer. So cryptography is the essential building block of independence for organisations on the internet, just like armies are the essential building blocks of states, because otherwise one state just takes over another. There is no other way for our intellectual life to gain proper independence from the security guards of the world, the people who control physical reality." - Julian Assange (from his 2012 book, Cypherpunks)
Consumers of mainstream news may recall a number of stories from two days ago, March 25th. Australian Prime Minister Tony Abbott restored knights and dames to the Australian honors system. The World Health Organisation announced that it estimates 7 million people died due to air pollution in 2012. There was a big landslide in Washington, and CNN will have kept you informed about every detail of the ongoing Malaysia Airlines saga.
A story that probably passed you by, however, is potentially historic. An unknown creator (or group of creators) going under the name Baldur Friggjar Odinsson initiated an 'airdrop' of Auroracoin, a cryptocurrency based on the Litecoin protocol (itself a descendant of the Bitcoin protocol). This airdrop distributed free of charge half of all Auroracoins that will ever be created to the 330,000 people listed in Iceland's national ID database. This came to 31.8 auroracoins per person at $11.41 per unit on the day of the airdrop (around $360 in total). According to the official Twitter account, 2,600 people claimed their coins in the first twelve hours.
What are the goals of the creator(s)?
Five years ago, the government of Iceland imposed capital controls, following the collapse of a Ponzi inspired financial system that had issued far more Icelandic kronas than the nation could ever back up through its real economy. These controls were supposed to be “temporary”, but as with so many government actions, they remain in place to this day.
This means that the people of Iceland have, for the past five years, been forced to turn over all foreign currency earned to the Central Bank of Iceland. This means that the people are not entirely free to engage in international trade. They are not free to invest in businesses abroad. The arbitrary use of power this entails and the unsustainable debt of the Icelandic government has created uncertainty and risk in all aspects of commerce. This has had a crippling effect on foreign investment, as foreigners in general avoid investing in Icelandic enterprises, because of the risk of not being able to convert their investment back into dollars or euros.
This means lack of investment and stifled economic growth in Iceland. The Central Bank finances consumption imports with the currencies it confiscates from export companies, in addition to expensive FX loans from the IMF, private bondholders and other countries.
This means that the Icelandic economy is slowly bleeding. The people of Iceland are being sacrificed at the altar of a flawed financial system, controlled by an elite that made astronomical bets supported by the government on behalf of the people and ultimately at the expense of the people.
The devaluation of the Icelandic krona, or the ISK, is not just a temporary phenomenon. The entire history of the currency is one of inflation and devaluation. Since 1960, in just over half a century, the Icelandic krona has lost over 99.5% of its value in U.S. dollars – at a time when the dollar lost 98% of its value relative to gold! At one time during this period two zeros were taken off the currency and new bills printed to replace the stock of bills. Now, the highest denomination is back up to 10,000 ISK, which would have been a million krona bill had the two zeros not been removed.
In recent years, governments have resorted to outright money printing, by allowing its central banks to purchase government bonds, thereby preventing the yield on those bonds from rising to an unsustainable level and threatening the solvency of states.
In essence, the government prints itself out of debt. In Iceland, this was not entirely possible, since the debt was nominated in foreign currency and no external bailout took place.
By printing more of the currency that people are forced to use in their daily transactions, the government is directly attacking the welfare of the very people the politicians claim to be fighting for; the poor. The poor are not in a position to protect themselves, by investing in assets that rise in value (measured in the fiat currency). Their income rises eventually, but the new money is printed into the hands of the select few who have the greatest access to the financial system, not the poor. The only thing they can do is watch their paychecks shrink and their purchasing power decrease with every trillion dollar that is being printed into the hands of the elite.
Iceland's Parliamentary Economic Affairs and Trade Committee held a closed session on March 14th to discuss Auroracoin. The chairman of the committee, Frosti Sigurjónsson of the ruling Progressive Party, is - according to Odinsson - a staunch enemy of Bitcoin and other cryptocurrencies and said of Auroracoin in a blog post:
“There is evidence however that this is a case of [a money] scam and illegal.”
[Translated from Icelandic. See here for link to original]
“They can make it illegal to own or trade Auroracoin. However, they will never be able to control such a decentralized system, or stop Icelanders from using the currency, without turning Iceland into a police state.”
Auroracoin may or may not succeed in its aims, and no doubt - like Bitcoin - it will encounter all manner of unforeseen hurdles, not to mention outright attacks from hostile entities. Whatever the future brings for the new currency, it is clear that we are now seeing the genesis of serious efforts at the state level to move control of currencies away from banks and officials into the hands of ordinary people.
The power must be taken away from the politicians and given back to the people. Cryptocurrencies are a very important milestone in this fight for liberty. They bring the hope of a new era of free currencies, immune to the meddling of politicians and their cronies.
This need for immunity from potentially prying or abusive entities is not limited to currencies.
Cryptography is the study and practice of techniques that ensure secure communication despite the existence of third parties (known as adversaries), using (chiefly) mathematics, electrical engineering and computer science. Advanced techniques have enabled cryptography to come a long way, with public-key cryptography a fundamental security ingredient in internet standards as well as various applications and protocols. So-called 'strong cryptography' is a term applied to systems that are extremely resistant to cryptanalysis (used to breach cryptographically secure systems and access encrypted messages even if the cryptographic key is unknown).
The Snowden disclosures have shone welcome light upon the undemocratic and illegal activities of the NSA, GCHQ and other allied intelligence agencies. While this has created an enormous storm in journalistic and national security circles as well as among citizens with interest in or knowledge of the issue, a significant portion of the ordinary populace in many affected nations have greeted the revelations with little more than a yawn. There are several reasons for this indifference, not least the fact that there has long been a deliberate campaign to keep citizens distracted, deceived and divided.
More than that it is a lesson in human nature; namely that people generally do nothing until they absolutely have no choice. A recent illustration of this can be found in Turkey, which saw a massive increase in the use of Tor software to get around a Twitter ban put in place by Prime Minister Recep Erdogan. Tor has been around for quite a while, and Turkey's government is infamously repressive, but few bothered to explore the option until they had no choice.
Along with the dangerously false belief - expertly debunked in a piece here with some further examples in a 2012 99.99998271% article here - that if you have nothing to hide, you have nothing to fear, the tendency to do nothing until one is forced to is extremely problematic for the prospects of human freedom. As stated by Julian Assange in the quotation at the head of this article, the only guarantee of freedom from abusive entities, be they state-related or otherwise - is a corresponding guarantee of absolute privacy with regard to communications and currencies, which can therefore not be spied upon, seized or manipulated for undemocratic or malign ends.
This is why the Auroracoin 'airdrop' and similar initiatives, such as the planned Scotcoin for the residents of Scotland, are such an important step forward, as they further the process of reminding ordinary people that privacy (enabled by cryptographic techniques) is a fundamental right that has been nigh on eradicated by the likes of the NSA and its enablers; and that this privacy, which can only be guaranteed by well-defined cryptography, is essential also for independence and protection from corrupt financial systems that permit the unlimited printing of vast amounts of money (monetization, quantitative easing etc.)
One obvious criticism of the use of cryptography is the invaluable aid it would provide organized criminals or terrorist groups in concealing their communications and funding. However, there are two main reasons why this is a red herring.
1. Well-organized and funded criminal groups already possess the resources to properly encrypt or otherwise conceal their communications using various means, not only via cryptography, and there isn't a damned thing anyone can do about it. Further, even the dumbest terrorist on the planet knows - and knew long before Edward Snowden came along - that government agencies have advanced surveillance capabilities and therefore that detailing plots online in any obvious form would be suicide.
2. Despite its vaunted surveillance capabilities, the NSA (and related agencies) nevertheless failed to prevent a major terrorist attack: the Boston Marathon bombings, failing in its fundamental role of protecting the public, essentially rendering all that technology practically worthless in its stated aim, and proving its ineffectiveness. [Aside: the false flag theory of the Boston Bombings is irrelevant to this particular argument]
Assuming the internet is not turned off completely, an act that would be suicidal for both sides of the debate, cryptography is here to stay and will only increase in complexity and accessibility, making eventual freedom for civilians from intrusive, abusive entities inevitable. In acting as all non-democratic societies shielded by secrecy have done throughout history, the 'Five Eyes' have only themselves to blame for the rising urgency of privacy and human rights activists, so-called cypherpunks (among others), to bring about a means of guaranteeing citizens immunity from abuse of power. If these societies actually permitted real transparency and accountability, there would be no pressing need for such protection. The serial abusers implicated by Edward Snowden are literally digging their own graves.
In order to keep them doing so, it is important to learn about and spread awareness of the awesome, unique potential of cryptography for freedom.
Edward Snowden himself has said: "Encryption works. Properly implemented strong crypto systems are one of the few things that you can rely on."
Indeed, you may need to 'rely on' it sooner than you think. When Europe's 'Troika' attempted to force the President of Cyprus to raid the private bank accounts of some of the island's citizens to help pay its debts, it signalled a worrying development in the thinking of lending officials: that they are not above taking the hard-earned cash of ordinary people who are in no way responsible for the debts incurred by reckless officials without their knowledge. With most of the world's nations currently deep in debt, no one can feel completely comfortable that their money is safe.
Does anyone really want their savings used to pay off debts incurred by reckless, gambling, criminal bankers, who nevertheless received enormous bonuses? And does anyone believe these people are not perfectly capable of again demanding such measures from desperate state officials in the future? If you are in the 'over my dead body' camp, learning about cryptocurrencies and the applications of cryptography could be the only way to protect not only your livelihood, but your privacy and freedom as well.
Written by Simon Wood
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