Midjourney, an artificial intelligence (AI) service that generates images from natural language descriptions, has recently found itself in the midst of controversy. The company has banned users from creating pictures of Chinese President Xi Jinping, citing concerns about deepfakes. Deepfakes are manipulated digital representations produced by sophisticated machine-learning techniques that can be used to spread false information and propaganda.
While Midjourney’s ban was intended to prevent the proliferation of deepfakes on its platform, users have found a way to circumvent the ban by creating deepfakes of Xi using other methods. Midjourney has responded by disabling access to its free trial version. Although the platform still allows the creation of images featuring world leaders, the Chinese President is notably excluded. Any attempt to generate an image with his likeness or even mention his name in a prompt is strictly prohibited by Midjourney.
Critics, like Sarah McLaughlin, senior scholar at the Foundation for Individual Rights and Expression (FIRE), have argued that the ban constitutes a form of censorship, undermining the fundamental principles of free speech and expression. While Midjourney’s intentions may have been to prevent the spread of deepfakes, the ban has sparked debate about whether it is ever appropriate to limit access to technology in this way.
In messages exchanged on the chat service Discord last autumn, Midjourney’s founder and CEO, David Holz, revealed that the firm had received complaints from local users about “various topics in different countries,” prompting them to block numerous related words. However, according to chat logs examined by The Washington Post, Holz refrained from listing the prohibited terms to prevent unnecessary controversy. Holz also mentioned that the prohibited words were not solely connected to China. Nonetheless, he recognized that China was a particularly sensitive matter, as political humor might put Chinese users at risk.
In response to the criticism, Midjourney has attempted to explain its decision. In a statement, the company stated that its ban on Xi Jinping images was not motivated by financial gain. Instead, the company claims that it was “for the greater good” to ensure that access to this technology was available to Chinese individuals. However, critics argue that this reasoning is flawed, as it assumes that Chinese individuals are incapable of using the technology responsibly.
Despite the ban, users of Midjourney’s platform have found a workaround by creating deepfakes of Xi using other methods. Some users have used the /imagine function and provided the full URL of an existing photo of Xi in the prompt. Others have used the /blend function to combine two existing photos. While these methods are not as seamless as generating an image directly from a description, they still allow users to create images of Xi.
In conclusion, Midjourney’s ban on Xi Jinping images has sparked debate about the limits of technology and free speech. While the company may have had good intentions, its decision has been criticized as a form of censorship. As the debate continues, it remains to be seen whether Midjourney will reconsider its decision or if users will continue to find ways to create deepfakes of Xi.
Since October 11, the proportion of Ethereum blocks that are compliant with orders made by the United States Office of Foreign Asset Control (OFAC) has decreased to its current level of 47%, which is the lowest level since that date.
The most recent achievement in the fight against censorship comes about two and a half months and one day after the proportion of OFAC-compliant blocks reached its all-time high of 79% on November 21.
OFAC-compliant blocks are ones that do not include any transactions that involve parties who have been blacklisted by the Office of Foreign Assets Control within the United States Treasury Department.
Those individuals who are opposed to censorship inside the Ethereum ecosystem may see a decrease in the number of compliant blocks as a victory.
According to a statement released by the blockchain consulting company Labrys, the originator of MEV Watch, the decline may be linked to more validators choosing to utilize MEV-boost relays that do not filter transactions in compliance with OFAC standards.
The majority of the shift in market share has been taken up by the BloXroute Max Profit relay, the Ultrasound Money relay, and the Agnostic Boost relay in particular.
MEV-boost relays play the role of trustworthy middlemen between block producers and block builders, which paves the way for Ethereum validators to delegate the construction of their blocks to third-party block builders.
The Chief Executive Officer of Labrys, Lachlan Feeney, issued a statement on February 14 in which he expressed his satisfaction with the manner in which the Ethereum community has reacted to the censorship problem ever since it first appeared during the Merge event.
He pointed out that the recent decline of censorship-compliant blocks was especially noteworthy since it was accomplished without the involvement of a user-activated soft fork (UASF). He made the observation that “many individuals” of the Ethereum community had requested the soft fork prior to the Merge in order to resist censorship.
“I am incredibly proud of the Ethereum community for the progress we have made with this issue,” said Feeney, adding: “When we released the MevWatch tool drawing attention to a flaw within Ethereum, the community did not stick its head in the sand but instead rose to the occasion and made significant progress addressing the issue.” “When we released the MevWatch tool drawing attention to a flaw within Ethereum, the community did not stick its head in the sand but instead rose to the occasion and made significant progress
However, as Feeney emphasized, “there is still a great deal more work to be done.”
On August 8, OFAC sanctioned wallet addresses that transact using the Ethereum-based privacy mixing technology Tornado Cash. These wallet addresses are associated with Ether (ETH) and USD Coin (USDC).
On September 16, during the first 24 hours of Ethereum’s new proof-of-stake consensus mechanism, just 9% of blocks were filtered by OFAC.
Nevertheless, this number shot up dramatically over the subsequent two months, reaching its highest point of 79% on November 21.
After then, the proportion of OFAC-compliant blocks stayed anywhere between 68 and 75% until the 29th of January, when it dropped to 66%. Since then, in spite of a few brief increases, it has been consistently going down.
The trading website of the OKX exchange has been blocked in Russia, according to Roskomsvoboda, a platform that keeps track of censored platforms.
The blockage remains unclear why the platform was being stopped and when it will be back online soon. However, the situation can offset the cryptocurrency ecosystem with the notion that the Russian government is all out for crypto-linked trading platforms.
Hasty conclusions may not serve users right as Russia is gradually beginning to wake up to the embrace of cryptocurrencies, with the sanctions from Western regulators still crippling the national economy.
Since the war in Ukraine started, both countries have relied heavily on digital currencies for transactions as banks in the most affected areas were halted.
It is unclear how Russia will want to sabotage crypto trading with the censorship of some of the biggest crypto exchanges around, considering the Ministry of Finance and the Bank of Russia have recently found grounds for adopting Bitcoin as a means of transactions.
While the Ministry of Energy is advocating for the mining of Bitcoin using excess energy, the ministry in charge of trade is also considering adopting the coin for international settlements for goods and services.
The evolution of cryptocurrencies has gone through many phases this year alone, and it has gone from attempts by the Bank of Russia advocating for its ban to a stage where it is now being considered a viable avenue to survive the current economic and financial hardship rocking the local economy.
Notably, digital currencies now occupy a crucial part of most countries’ financial ecosystems. With countries like Ukraine, El Salvador, and the Central African Republic pioneering the legalization of Bitcoin and digital assets, the narrative is changing as key regions like the European Union are actively working on implementing its regulatory framework tailored for the crypto industry through the Markets in Crypto Assets (MiCA) regulation.
Progressive International, a global organization supporting progressive left-wing activists and organizers, is moving into cryptocurrencies in response to getting de-banked by major payment and banking firms.
The organization took to Twitter on Monday to announce that it now accepts donations in cryptocurrencies like Bitcoin (BTC) and Ether (ETH) to defend itself against attempts to shut them out of the global financial system.
Last week, several companies blocked donations to the @progintl campaign of solidarity with Cuba and its ambitions to help vaccinate the world.
To defend against attempts to shut us out of the global financial system, we now accept donations in crypto. Our addresses are below. pic.twitter.com/YbIwV68M5L
— Progressive International (@ProgIntl) January 31, 2022
A spokesperson for Progressive International told Cointelegraph that Dutch ING Bank and payment giant PayPal blocked donations to the organization as well as their campaign of solidarity with Cuba to help vaccinate people against COVID-19. Per the representative, ING and PayPal were “acting in support of the United States embargo.”
The vaccination campaign, which was announced last month, aimed to spotlight the Cuban government’s progress with developing vaccines for COVID-19 and host a panel of experts to showcase their efforts.
“Progressive International relies on small donations from the public to fund our work,” the representative noted, adding:
“As a defence against attempts to shut us out of the international financial system, we are now also accepting donations in cryptocurrencies as well as fiat currencies. We are grateful for the donations we have received in cryptocurrencies.”
The spokesperson went on to say that this is the first time that the organization enabled donations in crypto. “We plan to continue to accept donations in crypto to support our work, not limited to Cuba, and may expand into other currencies where appropriate,” the person said.
Related: Diem stablecoin co-founder praises Bitcoin for censorship resistance
The representative said that the organization will update its website to include information about crypto donations soon.
At the time of writing, Progressive International announced on Twitter that the BTC wallet address has collected a total of 0.008 BTC ($307), while the ETH wallet address holds 0.715 ETH ($1,979).
Shortly after Meta, formerly Facebook, officially gave up on its stablecoin Diem, some of the key people in the project have become increasingly vocal about the uncensorable nature of Bitcoin (BTC).
David Marcus, a co-founder of Diem, originally known as Libra, took to Twitter on Tuesday to predict that Bitcoin will be the number one asset in the next two decades.
It’s become clear to me that #Bitcoin will be the one asset and L1 still around in 20+ years with increased compounding relevance over time. The #2 slot (for a different use case) is still tbd. #Ethereum is in the lead for now, but #Solana and others nipping at their heels. 1/2
— David Marcus – dmarcus.eth (@davidmarcus) February 1, 2022
“It’s become clear to me that Bitcoin will be the one asset and L1 still around in 20+ years with increased compounding relevance over time,” Marcus wrote, adding that BTC is “truly leaderless” and “censorship resistant.”
“In essence, it’s unique and cannot ever be replicated,” he added.
Marcus also went on to say that the second-biggest cryptocurrency is yet “to be determined” and will be related to a different use case. He suggested that Ether (ETH) is “in the lead for now,” but other cryptocurrencies like Solana (SOL) are “nipping at their heels.”
Marcus is former head of Meta’s cryptocurrency and fintech unit Novi, stepping down from his position in late 2021. He co-founded the Diem stablecoin with Morgan Beller and Kevin Weil.
Despite his hard work on Meta’s stablecoin, Marcus has been a known fan of Bitcoin. According to some industry observers, Marcus is considered “one of the first top Silicon Valley executives to adopt and support Bitcoin.” In 2019, Marcus said that he was a “big fan of Bitcoin,” calling it “digital gold.”
Does the creator of Libra own Bitcoin? “I’m a big fan of bitcoin and what I see as digital gold,” says @DavidMarcus on #btc pic.twitter.com/Zbkfw1elHy
— Squawk Box (@SquawkCNBC) October 16, 2019
Marcus is not the only Facebook exec who is a fan of Bitcoin. Facebook co-founder and CEO Mark Zuckerberg hinted at being a Bitcoin bull in May 2021 by calling his pet goats Max and Bitcoin.
Related:Meta joins patent alliance, pledges free crypto patents for all
Marcus’ latest remarks came shortly after Meta announced the closure of its digital currency project Diem after initiating the stablecoin project in 2019.
Some prominent Bitcoin bulls like Twitter founder Jack Dorsey subsequently argued that Diem was a waste of time and effort, stressing that the tech giant should have focused on Bitcoin instead.
This article was originally published inUncharted Territories.
It’s 2050. The U.S. government just defaulted on its debt. It’s not meeting its social security payments. Hospitals are going down: they can’t operate without Medicare and Medicaid income. Old people line up outside the hospitals, hospitals don’t service them, they can’t afford it. There’s a run on the banks that held too many dollars, they are collapsing. All of the governments around the world caught with too much U.S. debt are defaulting. Those with their savings in dollars have been wiped out. They are looking at the last few decades of their lives like an empty ravine.
What happened? The internet and blockchain technology.
Every time a new information technology is discovered, our power structures change. Speech allowed chiefdoms. Writing allowed kingdoms, empires and churches. The printing press replaced the Catholic Church and feudalism with the nation state. Broadcasting made totalitarianism viable by allowing the efficient transmission of propaganda.
This time, we have not one but two new information technologies: the internet and blockchain technology. How will they undermine the nation state?
The Nation State Becomes Inconsequential
In the 19th and 20th centuries, nation states became the ultimate powers, thanks to their control of gatekeepers. This was nowhere as true as in broadcasting.
The government established the agenda of what was going to be discussed. It controlled what broadcasters would say. Information flowed from newspapers, TV, and radio to citizens. You could hardly influence it in democracies, forget about autocracies.
Then came the internet.
The Sovereign Individual
When I wrote “Why You Must Act Now,” I couldn’t conceive that it would be read by over 40 million people. When I wrote “The Hammer And The Dance,” I couldn’t fathom that governments around the world would draw inspiration from it.
A normal guy, surrounded by children in his San Francisco apartment, reading scientific papers in sweatpants, put out a piece that took governments around the world by surprise on the most important topic of their careers.
This would have been impossible 20 years ago: Back then, information flowed from gatekeepers with a tight relationship with governments, from newspapers to TV and radio stations. That establishment decided what people would think that day, and you couldn’t influence it.
You couldn’t search for the scientific papers you needed, because they weren’t available on the internet. And even if you got your hand on the data, you couldn’t let others know because we didn’t have social media. The internet gives you the inputs and outputs to short circuit the nation state and its gatekeeping gang.
That’s how QAnon spread like wildfire, convincing 15% of Americans that its conspiracy movement is legitimate (only 40% reject it), stoked by a pseudonymous person with intimate knowledge of game design.
That’s also how another pseudonymous person, Satoshi Nakamoto, created a trillion-dollar asset class by solving a math problem, writing about it, posting his article on the internet, and coding the Bitcoin blockchain.
Now people form their opinions online and spread them online. They interact online and transact online. Most of the time, governments don’t even know that this happens. Traditional gatekeepers are bypassed. No more approval from them.
Given how many authors are killed because of their creations, it’s not a coincidence that both QAnon and Nakamoto were pseudonymous: fake names allow more subversive changes without retaliation. Who’s going to cancel QAnon? Who is going to arrest Nakamoto to bring down Bitcoin?
What is new is not the value of pseudonymity or anonymity: historically, over half of books were pseudonymous or anonymous. What’s new is how easy it is to remain hidden. While crypto-Jews feared for their lives under the Inquisition, Nakamoto could be walking past you and you would never know it.
If a nation state can’t retaliate against creators, how can it prevent them from subverting the nation state?
“The Sovereign Individual” predicted most of this rise in individual power nearly 25 years ago. However, it focused more on the decentralization of power, which would flow from nation states to individuals. But the internet also has a centralization force.
The Rise Of Multinational Organizations
Who enables the search of scientific papers? Google. Who enables the spread of information? YouTube, Twitter, Facebook, LinkedIn, TikTok….
QAnon, the Bitcoin white paper, my COVID-19 articles, or any other person’s posts would have been highly unlikely to be created or distributed without the rise of behemoth tech companies.
The change goes beyond social media.
Who replaces your cabs? Uber. Lyft, too, if you’re in the U.S. And a couple more players internationally.
Who replaces your travel agencies? Booking.com, Google Flights, Expedia… Not thousands of companies.
Many of the industries that had millions of companies around the world now concentrate that wealth and influence in just a handful.
How much power do you think they wield? And where do you see that going?
Network effects account for 70% of the value created by tech companies. The more these network effects grow, the bigger these companies become, and the bigger share of the economy they represent.
As these companies grow, they start treating nation-states not as masters, but as peers:
“The director of public affairs of one of these companies pointed out that when he was in charge of relations with public authorities within a large traditional American company, he obeyed the regulators’ instructions without negotiating: ‘then, we complied.’ Today, on the contrary, he states: ‘we don’t surrender without negotiating hard first.’”
–Gilles Babinet, Institut Montaigne
When Spain wanted to tax Google News, Google just stopped serving the country with the service. When nation states wanted to preserve their monopolies on cabs, Uber rolled over them until they accepted it. Airbnb disrupts local supply and demand of housing. Tesla challenges dealership laws. Cryptocurrency supporters push back on threatening laws. Apple did not give the FBI backdoor access to phones.
Social media is particularly powerful, by filtering what is acceptable for people to believe, by nudging them in some directions with their algorithms, and sometimes by taking the megaphone away from nation-state leaders.
And SpaceX will give everybody everywhere free access to the internet. Governments won’t be able to do much against it.
How will Venezuela censor the free flow of information that falls from the sky?
Look at the sad show of the U.S. Congress hearings of tech executives, or the deplorable show of the Federal Trade Commission case against Facebook. The nation states see the rise of alternative powers like the Church saw the rise of the Protestant Reformation. Both tried to fight, but they’re fighting against the unstoppable progress of technology, which drives the economy, so it will eventually win.
As a result, companies undermine nation states in two ways: On one side, by making information available, they extract power from nation-state gatekeepers and local companies to empower individuals to become more independent. But they also keep some of that power for themselves, becoming new gatekeepers.
This centralizing force of corporations is countered by the decentralization force of blockchains. But blockchain technology means a lot of things to a lot of people. What is it?
There is, of course, bitcoin as a store of value alternative to gold, and stablecoins and fiatcoins as alternatives to fiat currencies, making it that much harder for nation states to print money.
There is Ethereum, Cardano, DeFi, NFTs, and all the rest of the crypto economy, which is building an alternative to the existing economy that bolsters nation states.
But the solution to the Byzantine Generals Problem devised in Nakamoto’s Bitcoin white paper goes further. Why? Because it made decentralized majority rule possible.
Historically, how did you trust that your cab was legit? Because it had a license from the government. How did you know to eat in that restaurant? Because it was certified to be safe by the government. How did you know your house was yours? Because it was registered by the government. How did you know somebody was American? Because they had a passport from the government
You always needed a gatekeeper.
What about money? How did you certify you had money? You either showed the cash or you needed an attestation from your bank. How did you prove you knew something? You needed to show a certificate provided by an academic institution. How did you prove anything was true? You got a seal from a notary public.
You always needed a gatekeeper.
Nation states were the ultimate gatekeepers, because not only did they control their own services, but they also controlled the rest of the gatekeepers via regulation. They drew all of their might from this control.
Since the Bitcoin white paper was published, that power is gone. We haven’t needed gatekeepers to certify most of these things. You don’t need the corruption, absurd regulations, and abuse of power that goes with it. We can build better solutions with more crowd-sourced feedback, faster feedback, crypto-oracle verification. We just haven’t built all of these solutions yet.
The future is already in the brain of the 200 million cryptocurrency holders, who can be better understood as a country, as an alternative community to nation states.
A nation-state citizen doesn’t question the sovereignty of the government, doesn’t question the validity of its currency, doesn’t fathom a world without the TVs and radio stations and notary publics and certification organisms that make the nation state what it is. They wrap their heads around 20th-century country flags. They can’t fathom the end of the nation state, just as 1500s-era Europeans couldn’t fathom the end of the omnipotent Catholic Church.
None of this is true for blockchain citizens. They get it. They hodl (It’s the term for crypto — “hodling” instead of holding) crypto because they don’t trust fiat currencies. They build DAOs because they understand the corporation is on its way to the grave. They insist on smart contracts because how else are we going to trust each other?
Who do you think they have more in common with, their patriot neighbors or their crypto siblings? Do you see alternatives to nation states emerging already?
The Supranational Entities
If you’re alone, you don’t need a political system. The point of the government is to agree on how we will coordinate. The more people there are, the more coordination problems emerge, and the more we need to regulate. The size of governments has always grown with the size of the problems to solve.
It’s not a coincidence that the League of Nations appeared just after WWI, and the UN after WWII. New governance follows the size of the problems. Since then, a globalized financial system has birthed the International Monetary Fund and the World Bank to help countries in need of money in exchange for… a bit of their sovereignty. Or a lot. Ask Argentina. The World Trade Organization coordinates countries so that they can better trade between each other, at the expense of some of their sovereignty. They can’t do whatever they want in trade.
The only reason why the World Health Organization (WHO)’s failures have been so salient during the pandemic was because it was so needed. Who cares about a useless organization failing? But we do care about the WHO because we realize that pandemics are not a national problem. They’re global. The Delta variant didn’t care about the Indian soil that saw its birth. As long as countries let people in, it was going to travel with them.
In fact, the main reason why the WHO failed is because of nation states. It was China’s secrecy and its censorship over Taiwan and the American defunding and all this governance that depends on the dysfunctional nation states.
But eventually, some governance systems will emerge to fill the need of global pandemic coordination. Because that problem isn’t going away, and now we know.
Something similar can be said of climate change. Why, despite wildly popular support, are most countries not taking enough action? Because that support has not translated into the political action that nation states monopolize today. No wonder: nation states were never built for global action. They are obsolete to the problems we need to solve.
But why can’t a community emerge where citizens around the world can pledge support to the politicians who do want climate change policies? Why can’t they make that pledge a public, automatic commitment on the blockchain? It hasn’t happened yet because we haven’t gotten around to it. But it will. When that community emerges, will it be more or less powerful than nation states? Or simply another group that nibbles sovereignty away from nation states?
Somewheres Vs. Anywheres
The Somewheres identify with their locality: their city, local sports team, church, regional state, country. The Anywheres don’t care as much. They feel comfortable anywhere with liberal values, from Buenos Aires to Tokyo; places where they can connect to the internet to work, socialize, read… They have more affinity with those who think like them globally than those who live with them locally.
As more of our daily activities move online, as we interact more with people from across the world, identity will continue moving online. The more it does, the more people will leave the ranks of the Somewheres to join the Anywheres.
We know this because it already happened in the past.
Before the printing press, people in Europe talked mostly with their neighbors in their very local vernacular, while the Catholic Church spoke a universal Latin that gave them power. As the printing press started publishing in whichever local vernacular was most widely spoken — i.e., that of the biggest cities — it accelerated Latin’s demise while the local vernaculars of the biggest printing centers slowly grew in popularity until they became national languages that shared ideas and identity across geographies. This is what eventually led to the rise of nation states.
Now that people can talk with anybody in the world, exchange their ideas, find soulmates, and people who think alike, naturally their identity will outgrow nation states.
This will be accelerated because we have one clear winner as local vernacular:
Which results in the entire world learning English.
The more life happens online, the more content gets produced in the winning vernacular — English — and the more people learn it. As it spreads over the world, so do ideas and identity.
And the only way English doesn’t become the world’s lingua franca is if we get a universal translating device that really works, which would simply achieve the same goals faster.
So, let’s summarize. Nation states will become irrelevant as:
Individuals become more powerful because they have access to more information, they can spread more information, and they can do so without national gatekeepers controlling their opinions
The emergence of pseudonyms makes retaliation against individuals hard
Corporations keep some of the sovereignty they take away from nation states, and start treating them as equals
Blockchains decentralize power, making government gatekeepers obsolete
Supranational organizations rise to solve global problems, extracting sovereignty from nation states along the way
Communities of anywheres emerge globally, accelerated by the internet and blockchain technologies, the desire to fight global problems, the emergence of global governance systems, and an ability to better understand each other through a universal English or its equivalent translation technologies, diluting the patriotic sentiment
All of this erosion of sovereignty happens just as nation states go bankrupt. Even if they haven’t realized it yet.
The Nation State Is Broke
As nation states lose power, their ability to tax and print money will plummet, just as their costs skyrocket. How are they going to keep their promises then?
It’s not a secret that big corporations use international loopholes to avoid paying taxes. What is new is the nation states finally trying to rein them in.
Recently, about 135 countries agreed to fix a minimum floor to global corporate taxes. This is quite a feat: coordinating two-thirds of countries into anything is very hard. Look at climate change. If only countries had the same incentives in that area…
But that agreement obscures the reality that an agreement between 135 countries still leaves 60 countries that don’t participate. Sixty countries for loopholes.
More importantly, some countries’ existence depends on having lower taxes.
Before it reduced corporate taxes in 1995, Ireland was a pretty poor country. Now it’s the richest one per capita in Europe. This is mostly leprechaun economics, a reporting effect due to the oversize impact of big corporations — the average Irish person is not as rich. But it reflects how much Ireland has attracted companies thanks to lower taxes, companies that can then be taxed, even if just a little, thus filling the coffers.
So, why would Ireland agree to such a deal? Maybe because it does not intend to respect the spirit of the law?
None of this is new. Pharma and finance companies, among others, have been doing this forever, because their value depends mostly on intellectual property, so they’ve been avoiding taxes for a long time.
But this problem is about to enter turbo mode because companies are more global than ever. It’s easy to pressure the local mining company to pay their taxes, or the local manufacturing plant. But how do you tax a company that can put its servers, its lawyers, and its intangibles anywhere it wants? How do you tax the Anywhere companies?
Until now, the answer was: “wherever the headquarters is”. But what if there’s no headquarters anymore?
Remote work is inexorable. Before now, the headquarters were defined as wherever the main office was and that was where a company had its leadership and the most white-collar employees.
What if companies don’t have a headquarters anymore, and go fully remote, like Automattic (the maker of WordPress.com), Invision, GitLab, Gumroad, Twitter, Square, Quora, Notion, Zapier, Coinbase, Basecamp, Fujitsu, Hims, Shopify, Dropbox, Skillshare, Spotify, Stripe, Hubspot, Coda, Figma, Trello, Upwork, VMWare, Box, Affirm, Okta, CrowdStrike, Reddit, Docker, Atlassian, Coinbase, Snowflake and REI?
Sure, as we go back to a certain post-COVID normality, many people will go back to the office. But only a few white-collar jobs will be fully office based, while the vast majority will be hybrid.
I estimate that between 10% and 25% of all U.S. jobs will be fully remote after the pandemic, and I believe that will keep going up. Evidently, fully-remote companies can decide to put their headquarters wherever they want. The more they grow, the more they will avoid taxes.
And that’s corporate taxes. What about individual income taxes?
If Musk can pack up and leave for Texas despite leading not one, but two very industrial companies, what do you think all the remote workers will do? Those who can work from a café on the Lisbon beach and pay a flat 20% income tax? Do you think they will stay around in high-tax jurisdictions in the long term?
And as corporations and founders and workers start optimizing for their taxes, how do you think countries will react?
Already, digital nomad visas have been approved in countries like Costa Rica, Georgia, Dubai, Cayman Islands, Bermuda, Antigua y Barbuda, Mexico, Australia, Thailand, Germany, Czech Republic, Portugal, Norway, Estonia and Croatia.
These same countries have started offering lower tax rates to compete for the same remote workers, with a 24% flat income tax for newcomers in Spain, 20% in Portugal, a maximum of 22.5% in Greece, between 5% and 12% in Italy, and no local taxes in Croatia. These are countries that usually have top marginal tax rates close to 50%.
And of course, as an American, the one place in the world where you can reduce your federal income taxes is Puerto Rico, where you could pay as little as 4% in income tax and 0% in capital gains incurred while living there.
To be clear, this is a good thing, for them and for remote workers. These countries are just understanding these dynamics earlier than anybody and adapting to the new world before everybody else because people are less mobile than companies, but they are mobile, too. The same way tax havens lower taxes for all corporations by competing for corporate tax income, so will countries keep lowering their taxes to compete with remote workers.
The way they do this today is by keeping a high taxation rate for locals while luring in people living abroad, so as not to drop their current tax income. But you can imagine that as more people do this, these incentives will become more long term. Spain is already proposing to extend the tax benefits of remote workers from six to 10 years.
So as companies and people become more mobile, they will keep shopping around for the best tax deal, lowering overall taxes. That is, when they even pay taxes.
The more that blockchains power the economy, the harder it will be for nation-state governments to track all of these money movements, and the harder it will be for them to tax these movements.
Today, the way governments do it is by regulating local banks, by getting direct data feeds from them, by intervening the international money flows through the SWIFT system, by freezing assets… But how do you do that in a world where all exchanges are decentralized?
This is why the U.S. government freaked out about cryptocurrencies and tried to force every crypto player to report everything. It’s why when El Salvador announced bitcoin would be legal tender, the World Bank refused to help and the International Monetary Fund warned of dire consequences — both of these organisms are controlled by nation states, particularly the U.S.
The nation state fears the loss of its grip on the financial system, without which it’s much harder to force the tax payments it needs. But that trend is imparable.
And if you think nation states will reduce international tax avoidance, ask yourself: are politicians interested in closing these loopholes?
Politicians are the first to take advantage of these rules. They will never close the loopholes.
Limited Fiat Printing
Of course, at the same time, it’s harder to finance yourself by printing money when people don’t use your money.
Countries like Weimar Germany, Venezuela, Argentina and Zimbabwe know well what happens when you print too much money: dramatic inflation and dollarification — people escape from the local currency and start using dollars instead.
Since 2009, however, governments like in the U.S. and the EU discovered that they could print money without dramatic penalties. So they started pumping the printing press.
It took 96 years for the Federal Reserve to print $1 trillion, but six years to reach $4 trillion (after 2009). Since the beginning of the pandemic, the money supply has doubled. But this time, it wasn’t without consequences.
And you have to realize this is the government printing the money and the government telling you the inflation rate. If the normal escape from local inflation is the dollar, where do you escape from the dollar?
This is one of the key reasons why the stock market has been doing so well in the middle of a pandemic. But stocks aren’t a perfect alternative. Cryptocurrencies are, because they’re not denominated in dollars.
The more of the economy that happens through cryptocurrencies, the less the government will be able to rely on the printing press to fund itself.
All of this, of course, is happening at the time when the governments will break under the weight of pensions they can’t pay from taxing workers that don’t exist.
The Demographic Ticking Bomb
All of this is happening while at the same time we’re having fewer kids.
But — thankfully — we’re living much longer.
Unfortunately, most nation-state governments are incapable of raising the retirement age accordingly. As a result, workers must support ever more retirees.
This graph means that a retiree in the 1980s in developed countries like Japan, China and the European Union had more than five workers to pay for her old-age benefits like healthcare and pensions. In Japan, every retiree only has two workers to support her. Europe will get there in 10 to 20 years. The U.S. will follow soon after.
Already today, over 20% of European governments’ spending is dedicated to old-age benefits. If that doubles, how much money will be left? Especially since a big chunk of government income must be spent to service the debt — to pay back all of these bonds we happily buy at “risk zero.”
Meanwhile, the debt keeps piling up in the developed world.
Governments in developed countries are more in debt today than after WWII.
This is the Congressional Budget Office’s (CBO) projection of U.S. federal government debt:
According to the CBO, in 10 years the U.S. federal government will spend half of its discretionary budget on those aged 65 and older.
So, just to summarize here:
Nation states with developed economies won’t be able to fund themselves as they’ll have a hard time taxing corporations and individuals because of the internet, remote work and blockchains.
At the same time, they will have a harder time printing money because of cryptocurrencies
They won’t be able to emit debt forever either, because their debt is already through the roof. Servicing it will cost more and more.
This happens just as their costs increase because their population is aging
Instead of doing what they should — realizing they overpromised and correcting accordingly by raising the retirement age — they try to control their technological foes: social media, multinational corporations, mobile individuals, blockchain technologies…
We know how this ends. It happened five centuries ago, when the Catholic Church tried to suppress the printing press instead of reforming itself. It failed because it couldn’t stop the avalanche of technological progress. Within decades of the invention of the printing press, it had splintered, never to return to its glory days again.
For nation states moving forward, there are only two paths. The first one is totalitarianism. They can do like China, split from the rest of the world, and control everything that happens internally, at the cost of destroying development and erasing individual freedom.
The other alternative is choosing freedom, which means competition between many of the 195 countries that exist today, the extreme difficulty of collusion between them, and the unavoidable result of the demise of the nation state.
The only question left is: What will replace nation states? I will cover this in upcoming articles. Subscribe now to receive them.
This is a guest post by Tomas Pueyo. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
Traders and the market are showing extreme optimism on Oct. 15 after rumors and an assortment of documents suggest that the path toward a Bitcoin ETF approval has fewer obstacles lying ahead.
Following the positive news, the price of Bitcoin (BTC) rallied to nearly $63,000 for the first time since April and multiple altcoins saw their prices book triple-digit gains.
Data from Cointelegraph Markets Pro and TradingView shows that the biggest gainers over the past 24-hours were NuCypher (NU), Keep Network (KEEP) and Orchid (OXT).
NuCypher partners with Keep Network
NuCyper is a protocol focused on creating decentralized encryption, access control and key management system services for public blockchains by offering end-to-end encrypted data sharing and decentralized storage solutions.
Data from Cointelegraph Markets Pro and TradingView shows that after hitting a low of $0.283 in the early trading hours on Oct. 15, the price of new catapulted 535% to an intraday high at $1.80 as its 24-hour trading volume skyrocketed by 19,440% to $2.152 billion.
The surge in price and trading volume for NU come as the project helped facilitate the launch of tBTC v2 on the Keep Network with is designed to “extend the censorship-resistant properties of Bitcoin onto every network that can interoperate with Ethereum (ETH).
Censorship-resistance comes to the Ethereum network
Keep Network is a protocol designed to offer privacy-focused infrastructure on public blockchains through the creation of an incentivized network for storing and encrypting private data.
VORTECS™ data from Cointelegraph Markets Pro began to detect a bullish outlook for KEEP on Oct. 12, prior to the recent price rise.
The VORTECS™ Score, exclusive to Cointelegraph, is an algorithmic comparison of historical and current market conditions derived from a combination of data points including market sentiment, trading volume, recent price movements and Twitter activity.
As seen in the chart above, the VORTECS™ Score for KEEP began to pick up on Oct. 12 and climbed to a high of 75 and the price increased 585% over the next day.
The spike in momentum for KEEP came along with the spike in the price of NU as the two projects collaborated to release tBTC v2 on the Keep Network.
Related:BREAKING: Nasdaq listing hints that the SEC may soon approve ETF application from Valkyrie
Blockchain-based VPN service boosts Orchid price
Orchid is a cryptocurrency-powered virtual private network (VPN) that describes itself as “the world’s first incentivized, peer-to-peer privacy network.
VORTECS™ data from Cointelegraph Markets Pro began to detect a bullish outlook for OXT on Oct. 12, prior to the recent price rise.
As seen in the chart above, the VORTECS™ Score for OXT climbed into the green zone on Oct. 12 and reached a high of 75 on Oct. 14, around 15 hours before its price spiked 82% over the next day.
A scroll through the project’s Twitter feed points to an increased focus on privacy concerns as the impetus behind Friday’s price surge, which lines up with the main goals of both Nu and KEEP suggesting that the sector of privacy-related projects could be starting to attract more attention.
The overall cryptocurrency market cap now stands at $2.482 trillion and Bitcoin’s dominance rate is 46.6%.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.
Dfinity founder Dominic Williams believes content creation platforms like OnlyFans are ripe for disruption now that decentralized technologies have become mainstream. He’s inviting developers to build a blockchain-driven content platform on Internet Computer (ICP) — a powerful general-purpose blockchain launched by Dfiniity Foundation earlier this year.
In an interview with Cointelegraph, Williams discussed recent attempts by financial institutions to censor adult content creation on OnlyFans, as well as the general outlook on smart contract platforms.
Creator-driven platforms are ideal for decentralization
In August of this year, major financial institutions such as Bank of New York Mellon, Metro Bank and JPMorgan Chase effectively forced OnlyFans to ban sexually explicit content on its platform. CEO Tim Stokely told the Financial Times that his company, which has become synonymous with adult content creation, “had not choice” but to heed to the banks’ demands. (The banks reportedly threatened to cut ties with OnlyFans because of the reputational damage of servicing an adult content platform.)
While Stokely would eventually reverse the decision to ban explicit content after receiving assurances from banking partners, the whole ordeal sparked a public debate about censorship. Dominic Williams said OnlyFans represents a case study on why content creation platforms need decentralization.
Related:OnlyFans reverses decision to ban porn after assurances from ‘banking partners’
The threat of censorship, Williams said, isn’t just from credit card companies but traditional IT services as well:
“[OnlyFans] could also be censored by any of the traditional IT services it uses to run its online services, such as cloud services and data centers, in the same way Amazon Web Services switched off the Parler social media service.”
Decentralization via blockchain technology can fix this problem:
“One of the key ways blockchains can add value is by running smart contract code that cannot be stopped, providing a way to create systems that are more resistant to censorship by third parties.”
However, not every blockchain can provide true censorship resistance because decentralized applications still rely on traditional IT to function. “This is because they cannot scale to store large amounts of user content themselves, and cannot serve interactive web content directly to users, and therefore builders must incorporate cloud or private servers into their dapps,” he said.
Dfinity’s grants program is keen to hear fresh ideas
Williams is actively encouraging developers to create a more decentralized version of OnlyFans on Internet Computer. In fact, he touted the Dfinity Foundation’s $250 million grants program as a good starting point to bootstrap such ideas. The grants program, which is entirely meritocratic and designed to help teams build on Internet Computer, has funded over 80 projects already.
Initial funding is small but can be scaled up once the projects demonstrate progress, Williams said. Early results have been promising.
“Today, people have built things like chat, professional networks and games that are running entirely from the Internet Computer blockchain,” he said. “It’s only been four months since Genesis and there are already more than 500 developers building. Services like Open Chat are rapidly growing, and already have many tens of thousands of users. In fact, over 1.2 million Internet Identity handles have already been created.”
Related:Smart contracts are coming to Bitcoin through Dfinity’s Internet Computer
Internet Computer won’t make Ethereum obsolete
The quest to uncover the next “Ethereum killer” has led some investors to speculate whether Internet Computer will take the mantle from the preeminent smart contract platform. However, just as Ethereum didn’t render Bitcoin (BTC) obsolete, ICP is unlikely to squash Ethereum in the long run, Williams admitted. But other competing smart contract platforms are unlikely to stick around in the long run.
“What’s important to note is that Ethereum didn’t make Bitcoin obsolete,” he explained. “For similar reasons, the Internet Computer is unlikely to make Ethereum obsolete. However, arguably the same cannot be said for the so-called “Eth-Killer” blockchains, as their contribution of innovation and authenticity lacks substance.”
Williams expects Ethereum to integrate with Internet Computer and become a source of innovation for Ether-based developers.
The Internet Computer blockchain currently ranks 23rd in terms of market capitalization, with the total value of ICP crypto hovering just above $8.4 billion. By comparison, Ether’s (ETH) market cap is currently $424.8 billion.
It’s all happening. After dropping to $3,800 in March of 2020, bitcoin is now sitting around $35,000. It seems like more legacy institutions or large investors are announcing their entrance into the space every day. Thousands of coins are moving off exchanges. Governments around the world continue to print money, and the message “deficits don’t matter” circulates alongside that newly printed cash.
The bull run is underway. More people are starting to question the assumptions they’ve made about the world and are starting to see bitcoin as a valuable asset to hold. The narrative is changing. As bitcoin continues to attract attention, more people are exposed to its gravity. Inevitably, a percentage of those people get sucked down the rabbit hole. “Number go up” (NGU) technology is working as intended. The feedback loop continues.
Hyperbitcoinization is inevitable. The growing user base continues to add liquidity. The protocol and surrounding infrastructure continue to improve, making bitcoin easier to use. Altcoins continue to die as bitcoin’s monetary and network effects continue to grow stronger. A widespread user base and increasing corporate interest make it impossible for governments to ban bitcoin. The citadels are nigh.
Before we get too carried away, let us throw an ice-cold bucket of reality on our heads. Instead of getting wrapped up in the hype that bull markets tend to produce, let’s take a step back and acknowledge reality. Bitcoin will not, and more importantly cannot, become what we envision with the assistance of the State.
As bitcoin continues to grow in popularity, the question of whether or not governments can ban bitcoin is more frequently being discussed. Many of the responses to this question land in one of two camps. The first camp has concluded that yes, governments can and will ban bitcoin, and there is nothing we can do about it. The second camp believes that a government ban on bitcoin is impossible. Constitutional rights, supreme court cases, popularity, competition and even corporate involvement have been cited as reasons why governments can’t or won’t take action. Most who fall into the first camp are nocoiners while the second camp is mainly made up of HODLers.
To add some nuance to this topic I am going to side with the first camp. Yes, governments will eventually ban bitcoin. It may not be tomorrow. It may not be any time soon. It may never even be banned at all, if I’m honest, but the opposite should be our base case assumption. For bitcoin to be censorship resistant, there must be a censor.
To date, bitcoin’s success, as well as the proliferation of altcoins, is largely a result of what Eric Voskuil calls the honeymoon phase. Bitcoin is currently just unthreatening enough for governments not to make a serious attempt at either destroying it or altering the way it is used. If this space continues to grow, however, and the ability for governments to fund themselves is threatened, the honeymoon will come to an end. If the State ever has to decide between protecting its own sovereignty or protecting individual property rights, it will choose the former.
The word decentralization has been bastardized in a world full of altcoins. It is easy to claim and hard to prove. Many industry participants use the term loosely, but what do we really mean when we claim decentralization? Why does decentralization matter? The main objective of a decentralized monetary network is to be censorship resistant. Everything else is just noise.
In the long run, censorship resistance is achieved in Bitcoin by the following:
1. Users are willing to illegally transact in bitcoin, and pay a premium to do so.
2. Miners are willing to mine bitcoin illegally and can do so profitably.
If either of these necessities breaks down, so does bitcoin. Yes, you read that correctly. Bitcoin’s long-term survival depends on people being willing to break the law.
My intention in pointing out Bitcoin’s security assumptions is not to turn us into hardened criminals, but rather to remind HODLers of what they actually own. In the last few months, there have been a number of narratives that have been working against bitcoin and Bitcoiners have desperately tried to counter those narratives by taking to social media. If we would just be honest about what bitcoin is, rather than trying to pander to regulators and institutions, we might be more effective in our rebuttals or make them completely unnecessary.
The most recent noise about bitcoin energy use does not need to be defended against. Every joule consumed by the Bitcoin network is a function of the free market. Positioning bitcoin as a “green technology” in order to ease the worries of people in charge is simply a waste of energy. Another waste of energy is arguing with altcoin promoters about how superior bitcoin is. It has become pretty clear that the market does not care about “network fundamentals”. The truth is that what separates bitcoin from all other coins is that it actually has a chance of surviving as a black-market money when this honeymoon phase comes to an end.
If bitcoin were to be banned globally, all bitcoin transactions would then be considered black-market. The more interesting scenario to consider is what happens to bitcoin if it becomes a bifurcated market. Approved bitcoin activity would occur inside of the walled gardens of regulators, and any transaction that is peer-to-peer would be illegal. If miners and users decide to play by the rules, the properties of the network will be lost. Over the long run changes will be made to suit the objectives of regulators. However, if we choose to dissent we stand a fighting chance to protect the properties that make bitcoin so valuable. We would also be paid a premium to do so, as black market goods tend to fetch a premium.
If you are feeling bearish while reading this post, you need to re-examine your assumptions. Bitcoin will succeed or fail based on its own merit, and the economics behind the security model. I have confidence that Bitcoin will survive. There is nothing to gain from friendly regulation. Bitcoin skeptics like to repeat that “bitcoin is backed by nothing.” Nonsense. Bitcoin is backed by us, and we need to be prepared to defend it. Shouting on Twitter about how bitcoin mining uses 76% renewable energy does nothing to help.
Ignore the prospect of mass adoption and the allure of “number go up.” Ask yourself instead the following tough questions:
What will you do if bitcoin is outlawed? Will you still hold it? Transact with it? Mine it?
What will you do when regulators try to control bitcoin?
I am ready to take a stand. Are you?
References: Many of the ideas written here have been influenced by the works of Eric Voskuil. I know he would find errors in my distillation of his concepts, so please check out his original work on libbitcoin or buy his book here.
Disclaimer: Bitcoin Magazine does not condone or encourage any illegal activity.
This is a guest post by Justin Siegal. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
Hong Kong cyber-activists are not giving up on the freedom of speech and are backing up articles from the pro-democracy tabloid newspaper Apple Daily using blockchain technology.
Following a national security probe, Apple Daily printed its last edition on Thursday. But Hong Kong activists took it from there and uploaded the publication’s articles on a distributed network, Reuters reported.
21-year-old Ho, an anonymous activist working in tech, started uploading Apple Daily articles on decentralized file storage platform ARWeave this week. Backed by investors like Andreessen Horowitz, the platform deploys a blockchain-like structure called blockweave to enable the permanent storage of files across a distributed network of computers. According to sources, more than 4,000 Apple Daily articles have been uploaded on ARWeave as of Thursday.
Apple Daily is one of Hong Kong’s most vocal pro-democracy newspapers, known as the biggest critic of Hong Kong and Chinese leadership. Last week, police froze the assets of several companies linked to Apple Daily. In addition, they arrested five executives, which led to the tabloid printing its final edition, shutting down its website and erasing all its social media accounts on Thursday.
“I’m not doing this because I love Apple Daily. It’s what needs to be done,” Ho said. “I never thought that Apple Daily would disappear so quickly.”
Related:Global banks reportedly limit service in Hong Kong for political reasons
The people of Hong Kong have previously fought against government censorship using blockchain technology, archiving content by public broadcaster Radio Television Hong Kong through LikeCoin, a blockchain-based decentralized publishing infrastructure.
Since 2009, the crypto and blockchain industry has become a symbol of greater freedom, enabling people worldwide to resist centralized powers by building decentralized networks that are essentially impossible to shut down. Apart from helping to resist state censorship, distributed ledger tech and crypto also empower people with financial freedom.