Cypherpunk Governance: How Social Contract Theory Informed the Development of Crypto in the 1990s

Before the 2008 financial crash, early blockchain pioneers and 'cypherpunk' cryptologists envisaged digital currencies as a way to protect privacy, encode new layers of property ownership, and revisit the social contract between citizens and governments

Cypherpunk Governance: How Social Contract Theory Informed the Development of Crypto in the 1990s

Summary
Today crypto is almost universally identified as a financial instrument. Yet before the 2008 financial crash, early blockchain pioneers and 'cypherpunk' cryptologists envisaged digital currencies as a way to protect privacy, encode new layers of property ownership, and revisit the social contract between citizens and governments. This "cypher governance" predated and informed the development of crypto currencies, suggesting the emergence of a financial instrument which contains within it the seeds of a broader revolution.

Imagine being born around the 5th or 6th century BC, and being sent on a shopping trip with one of the world’s first minted coins. It seems inconvenient. There's an unusual degree of maths involved. Part of you still doesn't quite trust the coin; a decent sword or a good broth is more immediate. How much does a loaf of bread actually cost in coin, anyway? What happens if the tavern has no change? Where do you keep the coin, when you’re not using it? It will take centuries for this new technology to transform into a modern monetary system.

This anecdote isn't a segue into evangelising for crypto as a currency. It's not about suggesting digital currencies will replace fiat as coin once replaced bartering. Instead, this is a simpler point. Cyrpto might be inconvenient, but it contains a powerful logic. This logic will reshape government and alter global society. Like money once did.

Over the past few weeks I’ve been researching crypto-currencies for a Crypto Study Group (CSG) on DISCORD. Hobbes’ blockchain timeline demonstrates it has taken less than 40 years for blockchain based transactions to accrue in financial value (Bitcoin) and utility (Ethereum). In fact, it’s taken less time than that; Satoshi Nakamoto mined the first Bitcoin block on 3th January 2009.

In less than 12 years, some of the world’s largest hedge funds, corporations and financial institutions have found themselves forced to either invest, experiment or diligence the idea of a digital currency.

There’s clearly something there. Technology is accelerating history and producing a shift in economics that seems civilisational. Where did this all start? And how do I buy a loaf of bread?