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NEW YORK (InsideBitcoins) — When people think about some of the freest economies in the world right now, obvious options, such as Singapore and Switzerland, usually come to mind first. You can get a decent gauge of the freest countries in the world by taking a peek at the Heritage Foundation’s Index of Economic Freedom.
Although there are plenty of economies that can be considered “mostly free,” the reality is that the only place that could possibly receive a perfect score at this time is the Bitcoin economy. Let’s take a look at how the Bitcoin economy would stack up against the other 178 economies ranked by the Heritage Foundation.
Rule of Law
This is the section where many would assume the Bitcoin economy has most of its troubles. There are two aspects to the Rule of Law category: property rights and freedom from corruption.
It’s rather difficult to judge the protection of property rights in the Bitcoin economy due to the fact that there isn’t much property that needs to be protected. If someone wanted to take the idea of cryptoanarchy to its fullest extent, they would probably not have their name designated to the ownership of a car or house.
People who operate solely in the Bitcoin economy are responsible for protecting their own property, although they could hire outside help in a situation where something is stolen from them. When it comes to any kind of digital asset, it is difficult to find a better system for protecting property rights. Owners of bitcoins are their own banks, so there is no reason to worry about having their digital property stolen from them through taxation or other government action.
There has been plenty of corruption in the Bitcoin space, but this has happened whenever a bit of centralization has been added on top of the protocol. For example, various exchanges and online wallets that have been hacked or stole their own customers’ funds are a type of corruption that will only be possible until more decentralized, low-trust systems are built. The point of Bitcoin is choosing “can’t be evil” over “don’t be evil,” and removing the possibility of corruption should help the Bitcoin economy receive high marks in this area.
In the Bitcoin economy, there is no government. It’s the closest thing most people have ever seen to an anarchist society in their respective lifetimes. The two points of interest in this category are fiscal freedom and government spending.
When it comes to fiscal freedom, the Bitcoin economy has the lowest tax burden in the world. The closest thing to a tax in the Bitcoin economy is the transaction fees that must be paid to miners. Some would also say that the current rate of inflation in the Bitcoin economy could be viewed as a tax. The point here is that there is no individual or corporate tax to worry about. Everyone in the Bitcoin economy gets to keep the fruits of their labor. Government spending is also obviously not a problem, due to the fact that no taxes are collected in the first place.
The efficiency of the regulatory environment in the Bitcoin economy is another area where the usefulness of this new protocol shines. Whether you’re talking about business, labor, or monetary freedom, there is not much for a business owner to worry about.
The Bitcoin economy is the easiest place to open any kind of business. The process of starting a business will actually become even easier once a full version of OpenBazaar is released to the general public. You need nothing more than a Bitcoin address to receive payments in this economy, and you don’t have to worry about applying for some kind of business license before you can start taking orders.
If you’re looking to expand your business in the Bitcoin economy, you don’t need to worry about various labor regulations related to how much you have to pay an employee, what benefits you have to offer him or her, whether you’ll be able to lay them off without threat of retaliation in the future, severance requirements, and other various burdens on hiring someone new. All you need to do to hire someone in the Bitcoin economy is get them to agree to a certain pay rate on their own terms.
The monetary setup in the Bitcoin economy is the freest option in the world, but it also comes with a few issues. The most glaring issue is the volatility of the bitcoin price. Although it is more stable than it once was, it can still swing in either direction by double digit percentages in a single day. There are more options for hedging this risk coming onto the market as time goes by, but the volatility associated with the currency is something that will have to solve itself as the Bitcoin economy grows. Although price volatility is an issue, there currently isn’t a way to offer all of the other freedom-enhancing benefits of the Bitcoin economy without the volatility of the bitcoin price.
The last section in the Heritage Foundation’s Index of Economic Freedom involves freedom related to trade, investment, and general financial activity. This is the category where the importance of Bitcoin being an open source protocol for money is best illustrated.
International trade is likely Bitcoin’s biggest point of failure at this point in time. Although anonymous actors in the Bitcoin economy can make a deal online, whether or not the deal will work in the real world depends on the ability of Bob to send a package to Alice across international borders. Having said that, these issues related to imports and exports do not really affect people who are buying or selling online services. The 3D printing revolution can definitely help the Bitcoin economy when it comes to avoiding various fees and restrictions related to the transfer of certain goods.
There is not much to worry about when making an investment in the Bitcoin economy. Payments are censorship-resistant, so an investment of capital can be instantly sent to anyone in the world.
There is no competition for the amount of financial freedom offered in the Bitcoin economy. Not only can the government not interfere with one’s financial activities, but there is no centralized banking institution to worry about either. Gaining access to global banking is as easy as downloading an app on a smartphone, and all payments made with that new account are censorship-resistant with little to no fees. Other banking-related activities, such as offering loans, will also be available in a decentralized manner on platforms such as OpenBazaar and Open Transactions.
New explorers joining the cryptoeconomy
The private, decentralized economy enabled by Bitcoin, Tor, and PGP is by far the friendliest environment for operating any kind of business today. In past centuries, people have traveled to new lands in a search for various forms of individual freedom. With every piece of land now claimed by a government, the only new space to search for freedom is in the digital realm. The digital Galt’s Gulch that the cypherpunks talked about more than 20 years ago is now upon us.
Now that the basic tools to create a new, free economy are here, it is up to new explorers to decide whether or not they want to opt out of the current system and join the cryptoeconomy. It’s important to note that someone does not need to take a stand as a cryptoanarchist when they join this new economy. They simply need to understand the value proposition of sidestepping laws, taxes, and regulations in certain situations.
In a situation where a large number of people start to join the cryptoeconomy, it’s possible that governments would resort to different means for collecting taxes. While software backed by powerful encryption can be extremely helpful in the digital realm, it’s still possible for governments to enforce their own rules in the real world. For example, a farmer who avoids taxes on the sales of his crop still needs to physically transport those crops on government-controlled roads. Governments may be able to at least slow down the growth of the cryptoeconomy if they’re able to adapt quickly, but they’ve never proven themselves to be quick and agile in the face of new technology in the past.
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