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Bitrule

Giovanni Birindelli

(Last update: 21.6.2023).

 

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"You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete.

If you want to teach people a new way of thinking, don't bother trying to teach them. Instead, give them a tool, the use of which will lead to new ways of thinking"

 

R. Buckminster Fuller

 

 

 

 

Bitcoin reintroduced sound money  in a fiat money world. Can the same strategy be used to introduce sound law in a fiat law world?

 

If it could, then it would be good news for freedom.

In the digital world, where the state is weak, freedom is winning: cryptography, Bitcoin, decentralized and/or zero-knowledge applications, open source software, secure and private computing are only some examples of this victory of freedom in the digital world.

In the physical world, however, where the state is strong, freedom is loosing, badly. Lockdowns, medical apartheids and environmental repression based on scientific lies are only the most recent and visible peak of a legal, arbitrary coercion of the state on the individual that, in the long term, under the cover of political correctness, has done nothing but increasing. In fact, logically, when the law is the instrument of arbitrary coercive power instead of the non-arbitrary limit to any coercive power (in other words, when it's the instrument to realize the "public good" as interpreted by the political majority of the moment), then legal coercion cannot but increase in the long term (usually taking advantage of crises to make big leaps forward). It would be irrational to think otherwise.

 

 

1. Labels

 

Before we answer the initial question, it is necessary to briefly clarify the meaning that in this work is given to the following terms: Bitcoin strategy, sound money, fiat money, sound law, and fiat law.

 

By Bitcoin strategy I mean a strategy based on trustlessness, censorship resistance, decentralization, permissionless structure and on what I call “coexistence with the enemy”: instead of confronting the enemy directly, or trying to convince it or reform it in a centralized way, let it be and use its own strength against it. In addition, the Bitcoin strategy also makes use of nodes as rule enforcers, and of miners as core service providers.

 

By sound money I mean non-arbitrary money. More precisely, the most liquid commodity: a commodity that is spontaneously selected by the free market process as a medium of exchange. Also, sound money has ideally a fixed quantity. In fact, the first fundamental law of monetary economics (which ultimately derives from the marginal, subjective value theory) states that, as long as it is fixed and sufficiently divisible, any quantity of money is optimal for any economy. In the words of Ludwig von Mises: “The quantity of money available in the whole economy is always sufficient to secure for everybody all that money does and can do.” In the words of Murray Rothbard: “We are now on the threshold of a great economic law, a truth that can hardly be overemphasized, considering the harm its neglect has caused throughout history. … Every supply of money is always utilised to its maximum extent, and hence no social utility can be conferred by increasing the supply of money.

 

By fiat money I mean a medium of exchange backed by no commodity, whose use is imposed by force by the state, and which the latter (usually via “independent” central banks) can inflate at will. By definition, fiat money is incompatible with the free market and no proper free market can exist when the medium of exchange is fiat money: “In no period of human history has paper money spontaneously emerged on the free market. In all known historical cases, paper money has come into existence through government-sponsored breach of contract and other violations of private-property rights” (Jörg Guido Hülsmann).

 

By sound law I mean natural, non-arbitrary, law. More precisely, a coercive rule (or a set of coercive rules) whose enforcement does not imply, nor require, the violation of the logical principle of equality before the law (PEBL), without exception. Before we delve deeper, it is necessary to clarify the obvious difference between the PEBL and two logically opposite concepts with which it is unfortunately often confused, namely legal inequality and equality of material condition.

 

You have legal inequality when people/organizations are grouped into different categories according to an arbitrary criterion (say race, or wealth) and then they are subject to the same coercive rules if the belong to the same category but to different coercive rules if they belong to different categories (racial laws and progressive taxation, but also state privilege itself, being the typical examples). Since the PEBL is a logical concept and implies that the same coercive rules apply to everyone, without exception, legal inequality is opposite to the PEBL. More precisely, it is a systemic and instituionalised violation of it.

 

Equality of material condition (which includes so-called “equality of opportunity” or of "starting point") is also often confused with equality before the law. However, the two concepts are mutually exclusive. Since individuals are necessarily all different (in their preferences, in their time preferences, in their priorities, in their tastes, in their strengths and weaknesses, in their talents, in their family backgrounds, in their education, in their experiences, in the quality and quantity of love received, in their health, in their intelligence, in their geographical position at any given time, in their luck, etc.), if they are treated equally they will necessarily end up in different economic positions. The only way they can end up in (or even start at) less unequal positions is to be treated differently: more precisely, to be subject to different coercive rules.

 

The principle of equality before the law (PEBL) is, again, a logical concept and it simply requires that the same coercive rules apply to everyone in the same way, without exception.

 

Once we have briefly clarified what is the PEBL (and what it is not), we can see that there’s only one coercive rule (with many different applications) that is logically compatible with the PEBL: namely, the non-aggression principle (NAP). Being logically derived, sound law (the NAP) is non-arbitrary, universal and eternal. In this sense, it is natural: it exists independently of any authority and/or majority as well as of its will and of its decisions. It cannot be made nor can it be unmade.

 

The rule of sound law I call freedom.

 

By fiat law (or positive law), I mean arbitrary law, i.e. made law: the arbitrary and particular decision of the legally recognized authority which is taken according to the recognized bureaucratic procedures. By definition, fiat law is valid only within the jurisdiction of the authority that made it; it is not valid before it is made and after it is cancelled or changed.

 

To sum up, the contrast between the rule of law and the rule of men logically only makes sense if the law in question is not made by men (i.e. if it is natural law). If the law is made by men, then the rule of law is the rule of men.

 

 

2. Money and law

 

Money and law have many aspects in common, therefore it would not be surprising that what is working to restore freedom money may also work to restore freedom law.

 

First of all, both money and the law have two versions: the fiat version, which is loved by the state (because it is under its total, exclusive and arbitrary control) and the sound version, which is hated by the state (because it exists independently of it and actually requires that it just gets out of the way).

 

As fiat money can be infinitely inflated by the state (via the monetary authority), so can fiat law (via the legislative authority). And vice-versa.

 

As fiat money is an instrument of arbitrary coercive power in the hands of the state, so is fiat law. Vice-versa, as sound money is a non-arbitrary limit to the state’s coercive power, so is sound law.

 

As fiat money is logically incompatible with the PEBL (and therefore with freedom non-arbitrarily defined), so is fiat law, and for the same reason: its very existence requires the violation of the PEBL. More specifically, it requires state privilege: the state must be legally allowed to do things that if anyone else did would be pursued as crimes. Vice-versa, as sound money is compatible with the PEBL, so is sound law, by definition.

 

As fiat money is logically incompatible with the a-priori laws of economics (starting with the marginal, subjective value theory, also in relation to time) so is fiat law. And vice-versa.

 

In addition, money and law are to a significant extent interdependent: as the existence of fiat money requires fiat law, the existence and preservation of sound money is much more difficult and uncertain without sound law.

 

Given these similarities and interdependencies, it should not come as too much of a surprise that what worked to restore sound money in a fiat money world (the Bitcoin strategy), may also work to restore sound law in a fiat law world.

 

However, notwithstanding these differences, money and law are still different concepts: while money is the medium of exchange (sound money is the most liquid commodity), the law sets the perimeter within which that exchange is legally allowed (of course, the shape of that perimeter changes a lot according to whether it is made of fiat law or of sound law).

 

This suggests that what worked to restore sound money in a fiat money world (the Bitcoin strategy) cannot simply be “cut and pasted” to the case of the law. Some differences and adaptations (as little as possible) might be necessary.

 

 

3. Bitrule: The general idea

 

I have come up with my own idea of how the Bitcoin strategy could be applied to the field of legislation, and therefore of what those differences might be. This idea (which I named Bitrule) needs a lot of work, a lot of criticism and a lot of improvement. However, it might already be a starting point. In the worst case scenario, it’s an incredibly naive and stupid mistake. However, even as such, it may still be useful: as Buckminster Fuller says, “Dare to be naive”, and “Human beings always do the most intelligent thing… after they’ve tried every stupid alternative and none of them have worked”.

 

The main strategic differences between Bitcoin and Bitrule (resulting from the fundamental differences between money and law) are mainly two.

 

 

3.1. Attack strategy vs. defensive strategy

 

The first one is that, while the Bitcoin strategy is purely defensive (in the sense that it does not aim at reducing legal and arbitrary coercion - LAC - but instead makes it possible for the individual to avoid it in the particular field of money), Bitrule by definition must be based on a strategy of attack: in fact, it aims at reducing LAC, not at avoiding it.

 

 

3.2. A less ambitious, dirtier tool

 

The second difference is that, while on the one hand fixing fiat money results in Bitcoin, on the other hand fixing fiat law results in the end of the state itself; and Bitrule unfortunately does not deliver that (though it helps the transition towards that objective, even if it may never be reached). What Bitrule is designed to deliver though is a continuous, progressive, long-term reduction of LAC; and therefore a progressive increase of freedom that is not based on the divulgation of its scientific principles, nor on centralized political reform, but on a decentralized, trustless, permissionless, censorship-resistant structure of free-market incentives.

 

In other words, while Bitcoin solves the problem of fiat money, Bitrule only reduces (in the long term) the problem of fiat law (and thus of the state), but does not solve it. In this sense, it’s a less ambitious, dirtier strategy, but still the best one I could come up with.

 

 

3.3. “Air-gapped transaction” approach

 

A fundamental aspect of Bitrule is what I call its “air-gapped transaction" approach.

 

By “legislative transaction” here I mean the process of fabrication of a particular fiat law: from the first idea to its final, formal approval.

 

The phrase “parliament makes the laws” suggests that a legislative transaction is one solid whole: an action that can have only a single actor (the political power) and that can happen only in a single place (e.g. parliament). However, like a Bitcoin transaction is made of two different parts (signing and broadcasting), a legislative transaction is made of two separate parts, not one; and these two parts can be performed by different actors in different places. In particular, there is a substantive part of the transaction (the decision on the contents of that particular fiat law) and a formal part (the formal approval of that specific fiat law in parliament). When these two parts are performed by the political power in parliament, I will use the term “standard” legislative transaction. However, these two parts can be performed by different actors in different places without changing the legal/institutional structure, but leaving it exactly as it is, whatever it may be (this is necessary for practical and strategic reasons: if Bitrule required some changes in the current legal/institutional structure, of course it would be an impossible scheme in practice).

 

The formal part of a Bitrule legislative transaction must stay in parliament (the corrupted environment): this is what makes it possible for Bitrule to use fiat law to reduce LAC while being immediately applicable, permissionless and censorship resistant. However, the substantive part of the legislative transaction (by far the most important one) can be brought outside of parliament in an informal way and, specifically, in the free market (the secure environment). I will call this an “air-gapped” legislative transaction because of the perfect analogy with air-gapped Bitcoin transactions vs. standard ones.

 

Most importantly, once outside of parliament and in the free market, the substantive part of a legislative transaction can be limited, in its contents, by the natural law of liberty the same way a Bitcoin transaction is limited by the rules codified in the Bitcoin protocol. More than that: once the substantive (and informal) part of the legislative transaction is out in the free market, its entire informal legislative process can work very similarly to Bitcoin (e.g. with nodes and miners). The formal part of the legislative transaction, whose only function is to approve (without changing a single comma of it) the substantive part of the legislative transaction produced in the free market, will be no different, formally, from what it has always been. However, as we shall see, this formal part will require a Trojan horse in parliament: but one we don’t have to trust.

 

By recurring to this particular kind of air-gapped legislative transactions, Bitrule uses fiat law to gradually and spontaneously reduce LAC according to the scientific principles of sound law and on the ground of a decentralized, trustless, censorship resistant, permissionless, ideologically neutral, transversal structure of free market incentives.

 

Unlike sound law, which, being a scientific principle, can be only one thing, fiat law, being purely arbitrary, can be anything: also a tool to progressively destroy itself. More precisely, to delete or modify all other fiat laws that violate natural law and, with them, the totalitarian structure of the contemporary state, brick by brick.

 

 

4. Bitrule: the “mechanics”

 

To understand Bitrule’s “mechanics”, it helps starting from the end, that is considering its “mature phase” (equivalent to what for Bitcoin is hyperbitcoinization) which may require a relatively long time to happen.

 

Understanding Bitrule’s “mechanics” means understanding how a Bitrule transaction happens.

 

I have mentioned earlier that a Bitrule transaction is an “air-gapped” legislative transaction: this means that its substantive part is rigidly separated from its formal part.

 

I will describe a Bitrule transaction in five steps. The first four constitute its substantive, informal part. The fifth constitutes its formal part.

 

It cannot be emphasized enough that for all five steps at least the following three conditions apply to a significant and perhaps sufficient degree (for the first four steps also decentralization applies):

 

  • trustlessness

  • permissionless structure

  • censorship resistance

 

 

4.1 First step: Alice

 

Let’s suppose that Alice believes that a particular fiat law (say the Green Pass) violates the PEBL (and therefore the NAP: but we can assume that Alice does not even know what the latter is).

 

Through specific software, Alice then sends an alert to the network of nodes (or, even better, to her own personal node) with the details necessary to identify that particular fiat law.

 

In this way, Alice started a Bitrule legislative transaction whose final aim is the production of a fiat law by parliament that abolishes the Green Pass.

 

It should be noted that Alice can be not only an individual but also a group of individuals, a community, a business, or a group of businesses. She/it can be a citizen, local resident, or a foreigner not even living in the same country: natural law (being based on logic, not on legal jurisdiction) has no political borders. In short, Alice can be anyone who has a specific interest in the abolition or in the modification of this particular fiat law (the Green Pass), and/or in sharing the (presumably very high) Bitrule transaction fees.

 

In fact, as in Bitcoin, a Bitrule transaction requires the payment of a fee. This fee is made of two commissions paid in bitcoin by Alice: one paid to the node and the other to the miner, as will be explained.

 

 

4.2. Second step: the nodes

 

As in the case of Bitcoin, the nodes are computers run by specific software, and they act as rule enforcers: they receive the alert from Alice and independently verify whether the particular fiat law submitted for revision violates the PEBL. If it does not violate it, the transaction is immediately discarded. If it does violate it, the transaction is approved and its status becomes “pending”. In both cases, the node receives from Alice a commission in bitcoin.

 

The nodes here are supposed to be able to perform this action in an automated way with the help of artificial intelligence (AI). AI is not ready yet. However, important steps are being made in this direction. Recently, OpenAI passed a practice bar exam, scoring 70% (35/50) and guessing randomly only 0.00000001% of the time. Contract review automation based on AI algorithms applied to the field of law is already available as a service for law firms.

 

The task for AI here consists in verifying whether a particular fiat law violates the logical principle of equality before the law (PEBL). This means answering the two following question:

 

  • is this particular fiat law introducing a form of legal discrimination? In particular, does this particular fiat law presupposes that the state can do things that if anyone else did would be legally persecuted as crimes?

 

If the answer to this question is “yes”, then the fiat law under exam does violate the PEBL (and therefore the NAP).

 

For a human, answering this question in most cases is banal. OpenAI, at the moment, is incapable of logically answering even a much simpler question such as: "does taxation, in and of itself, violate the principle of equality before the law?". However, the previously mentioned steps forward in this field suggest that it is not unreasonable to assume that, in the long run, an AI application specifically designed for Bitrule could be fit for the purpose. Even though difficult to implement and perhaps not ready yet, AI is necessary for Bitrule’s decentralization and trustlessness. The work done by the nodes could be easily done by humans: this would make Bitrule immediately applicable from the technological point of view, but in this case the system would lose its trustlessness and much of its decentralization.

 

 

4.3. Third step: the miners

 

In Bitrule, the role of the miners is performed by private legislators: individuals, businesses or associations (domestic or foreign) whose only task is to draft a new legislative proposal (a new fiat law) that rectifies the violation of the PEBL by the fiat law in question.

 

Such rectification can consist, for example, in an abolition of the fiat law in question or in its modification. For their work, the miners are compensated with the second commission paid by Alice (in bitcoin).

 

It should be noted that, on a formal level, the legislative proposal produced by the miners is nothing more than an independent legal opinion published somewhere. This guarantees censorship resistance. As we shall see later (fifth step), however, on a substantive (though informal) level, the opinion effectively becomes a command that the agents in parliament cannot avoid executing without personally bearing a heavy, censorship-resistant financial cost.

 

Miners arbitrarily choose which pending Bitrule transactions they will insert in their “block”. Since the only scope of the miners is profit, in most cases this choice will likely be made on the grounds of two factors:

 

1. The amount of the commission paid by Alice in bitcoin: other things being equal, the higher this amount, the higher the likelyhood that that transaction will be selected by a miner.

 

2. The level of difficulty. Different forms of LAC have different “structural depth”: for example, some forms of LAC (say taxation itself) require a modification of the constitution and others (say taxation of bitcoin wealth in particular) don’t. Other conditions being equal, Bitrule transactions that aim at eliminating less structurally deep forms of LAC will likely be preferred by the miners (because they are more likely to be approved soon and because they demand less work). This is a good thing because it allows for an easier and softer start and for spontaneous graduality in progressively eliminating, in the long term, any form of LAC.

 

Unlike the case of Bitcoin, in the case of Bitrule there’s probably no need for a blockchain but rather of a blockseries where the blocks are not cryptographically linked to one another. The miner who has the right to attach his own block to the blockseries is the one who first solves a Proof of Work (PoW), which here I will not delve into. The first miner who solves the PoW sends his own block to the nodes for verification.

 

 

4.4. Fourth step: back to the nodes

 

The nodes receive from the miner the block with the new legislative proposals and verify them. To the extent that the single transactions included in the block are successfully verified by the nodes, they start receiving confirmations and the miner starts receiving a first part of the second commission paid by Alice: he will receive the rest if (when) these legislative proposals are formally approved by parliament.

 

* * *

 

This concludes the substantive part of the Bitrule transaction, the one that takes place in the free market (the secure environment). The fifth and last step (a bit “dirtier” but still trustless) is about the formal part of the Bitrule transaction and takes place in parliament.

 

 

4.5. Fifth step: the Trojan horse in parliament (the agent)

 

Yes, to formally fight LAC Bitrule does require an agent in parliament: a Trojan horse. The agent represents an ideologically neutral political organization informally but explicitly committed to Bitrule, and therefore to the defence of the PEBL. Importantly, representative of Bitrule in parliament (the “agents”) are not required to be trusted. This trustless property emerges from the eligibility requirements to be an agent:

 

1. Convert in bitcoin a significant portion X of one’s wealth;

 

2. Sign a smart contract (i.e. a transaction that is automatically performed under certain conditions). According to this smart contract, if the agent does not vote in parliament even only one legislative proposal sent and verified by the nodes, the entire portion of his wealth that he/she converted in bitcoin is transferred, in the form of voluntary donation, to a censorship resistant entity. How the input of the smart contract is given, and by whom, requires a solution (probably again based on AI for trustlessness).

 

If the legislative proposals included in a block are formally approved as fiat laws of the land, the miner that proposed that block receives the second part of the commission (paid by Alice in bitcoin).

 

At the end of their parliamentary term, the agents get their bitcoins back. In the meantime they will have enjoyed all the privileges and the financial benefits of being a member of parliament. These privileges and financial benefits are a violation of the PEBL. However, they are the only such violation that the agents can refuse to delete/modify without this triggering the smart contract: this is to preserve this part of Bitrule's structure of incentives.

 

 

5. Bitrule: the structure of free market incentives

 

I will briefly discuss the structure of free market incentives in relation to the four main actors: Alice, the nodes, the miners, the agents.

 

 

5.1. Alice

 

To analyse Alice’s incentive structure, it is useful to distinguish her incentive to use Bitrule from her incentive to vote for Bitrule (or, more precisely, for the agents).

 

 

5.1.1. Alice’s incentives to use Bitrule

 

Alice has an incentive to use Bitrule (whether she voted for it or not) and start a transaction if the value for her of what she can have/do without that coercive fiat law is greater than the value, for her, of the bitcoins she would have to spend on her share of the transaction fee.

 

Since the legislative transaction fee can be shared among any number of users (not only domestic but also foreign), Alice’s share of the cost will decrease (and therefore her incentive will increase) with the increase of the number of participants. By definition, a fiat law tends to affect a large number of individuals / businesses: free riders aside, this makes the opportunities to share the relative costs very significant.

 

 

5.1.2. Alice’s incentives to vote for Bitrule

 

An incentive to use Bitrule can also be an incentive to vote for it. Putting cultural political affiliations aside (not because they are unimportant), one person will have an economic reason to vote for Bitrule if the value of what she can have/do thanks to the removal/modification of all the arbitrary coercive fiat laws that are relevant for her and that Bitrule allows (under the condition that they violate the PEBL) is greater than the value of what she can have/do thanks to a competing party’s electoral program. (Let’s remember that, to the extent that the Bitrule agents are the majority in parliament, to change/eliminate via Bitrule a fiat law that violates the PEBL no majority is needed and the single individual is enough).

 

Now, here it’s important to understand that by far the greatest part of LAC limiting Alice’s actions is not (nor could it ever be) the object of any party’s electoral program. This greatest part of LAC (which I call the “base of the iceberg”) is made of small, often invisible fiat laws that from the point of view of a political party searching election are too irrelevant to be mentioned (and generally are not even known) or they are too "structural" to be questioned. However,. from Alice’s particular point of view they can make the difference between life and death, between prosperity and poverty, between individual flourishing and decay, between freedom and slavery. Perhaps no one described this “base of the iceberg” made of little, invisible, arbitrary coercive fiat laws better than Alexis de Tocqueville: “After having thus successfully taken each member of the community in its powerful grasp, and fashioned him at will, the supreme power then extends its arm over the whole community. It covers the surface of society with a network of small complicated rules, minute and uniform, through which the most original minds and the most energetic characters cannot penetrate, to rise above the crowd. The will of man is not shattered, but softened, bent, and guided; men are seldom forced by it to act, but they are constantly restrained from acting: such a power does not destroy, but it prevents existence; it does not tyrannize, but it compresses, enervates, extinguishes, and stupefies a people, till each nation is reduced to be nothing better than a flock of timid and industrious animals, of which the government is the shepherd. I have always thought that servitude of the regular, quiet, and gentle kind which I have just described might be combined more easily than is commonly believed with some of the outward forms of freedom, and that it might even establish itself under the wing of the sovereignty of the people”.

 

Alice can vote, but her vote has no effect on this “network of small complicated rules, minute and uniform, with which the supreme power covers the surface of society”. Bitrule would be the only way available to her (not to a majority of people) to remove/modify those that for her constitute the greatest obstacles (provided of course they violate the NAP, which almost by definition all “small complicated rules, minute and uniform” tend to do).

 

Now, since the “base of the iceberg” made of these small, invisible, arbitrarily coercive fiat laws is much, much bigger than its tip, and since Bitrule is the only way Alice could remove/change those that for her constitute the greatest obstacles, then it seems to me that, in the long run, the incentive for Alice to vote for Bitrule is most likely greater than her incentive to vote for any party’s electoral program. In fact, by definition, a party’s electoral program can make promises only on a part of the tip of the iceberg. Bitrule, on the other hand, gives Alice the possibility to intervene (according to her individual priorities and within the boundaries of the PEBL) on the entire base of the iceberg, as well as on the tip, and without having to trust anyone. (Socialists hate other people's freedom but love their own).

 

The fact that the PEBL is transversal and that people of different political creed advocate its defence in different particular cases contributes to increase the incentive to vote for Bitrule: people of different and even opposite political creeds will use or vote for Bitrule to defend the PEBL (and therefore the NAP) in the particular cases that are of interest to them.

Last but not least, it should be reminded that, in a fiat law environment, the limitation of political power is the scarcest good in the political market. As history shows (e.g. in Italy, where fiat law is most extended), the new political organizations that voluntarily offer some form of self-limitation of political power tend to win Alice's vote, even when such self-limitation of political power is fraudulent and based on trust (regularly betrayed by the Lord Acton principle: "Power corrupts. Absolute power corrupts absolutely"). Bitrule offers Alice the scarcest good in the political market (limitation of arbitrary political power) without the need to trust someone.

 

 

5.2. The incentive of the nodes

 

The economic incentive of the nodes is constituted by the commission that Alice has to pay to them.

 

 

5.3. The incentive of the miners

 

The incentive of the miners is constituted by the commission that Alice has to pay to the miner who wins the PoW.

 

 

5.4. The incentive of the agent

 

The incentive of the agent is constituted by the financial compensation, the privilege and the status that come with being an MP, whose only job, in this case, is simply to transform the informal legislative proposals published by the nodes in formal ones (without changing a single comma), and to vote for them.

 

It should be noted that the agent does not receive any Bitrule fees. It is imperative that this is so. In fact, if he received them, he (and therefore Bitrule) would immediately loose censorship resistance.

 

 

6. Conclusion

 

Because of legal positivism (i.e. of fiat law), the coercive power of the modern state on the individual is limitless and it necessarily increases over time. This fact is not altered by the constitutions of positive legal systems: in fact, they themselves are fiat laws.

 

A problem cannot improve if its ultimate cause is not addressed. The decline of freedom (i.e. the continuous increase of LAC) cannot be arrested (let alone inverted) if its ultimate cause (fiat law) is not addressed. The fact that, independently of scientific truth, it seems to be utterly impossible to replace legal positivism, understandably discourages most people, in their concrete efforts to improve things, from challenging it. The solution for the problem of the gradual decay of freedom is therefore generally looked for within the framework that causes it, not outside of it. No wonder, then, that a long term, structural improvement never happens and that the accelerated decay of freedom continues undisturbed.

 

Bitcoin has fundamentally changed things. Given the similarities between money and law discussed above, a centralized political reform that replaced fiat money with sound money is no less impossible than one that replaced fiat law with sound law. However, Satoshi Nakamoto has shown that there is another way: one that is not based on centralized political reform. In the long term, the combination of decentralization, trustlessness, permissionless structure, censorship resistance and (last but not least) codification of scientific truth in open-source software, can do the trick. Bitcoin is factual evidence of this.

 

Given the many similarities and interdependencies between money and law, it is not unreasonable to imagine that what worked to reintroduce (a much better form of) sound money in a fiat money world, can work to introduce sound law in a fiat law world. This could not only stop the continuous increase of LAC but also reverse it.

 

In this paper, I sketched an idea of how this could be achieved. The strategy here proposed allows for the reintroduction of natural law in a fiat law environment without replacing legal positivism. On the contrary, by using the latter against itself within a decentralized, trustless, permissionless, censorship resistant structure of free market incentives. 

 

This result is achieved via a rigid separation between the substantive (but informal) part of the legislative process and its formal (but substantially "emptied") part. In Bitrule, the substantive (but informal) part of the legislative process takes place in the free market (the secure environment). This part is limited exclusively by natural law (which is codified in open-sorce software and applied by AI on decentralized nodes) and to a significant extent replicates the Bitcoin system. The formal part of the legislative process, however, takes place in parliament (the corrupted environment) and requires a Trojan horse: an ideologically neutral political organization committed to Bitrule. The only two tasks of the representatives of this organization (the "agents") are: 1) to transform the informal legislative proposals produced in the free market into formal ones and 2) to vote for them without changing them (that's why this formal part of the legislative process is substantially "emptied").

The entire system is trustless, permissionless, censorship-resistant and powered exclusively by a structure of free market incentives.

Technical issues aside (which are of fundamental importance), Bitrule can therefore be applied immediately: in fact, to work, it does not require to change any aspect of the legal and institutional framework, whatever that may be. Legal positivism, and with it the totalitarian structure of the state, remains in place: however, now it's used to restore freedom, not to violate it. And this process of restoration, whose essential (and informal) part takes place in the free market and is very similar to the Bitcoin system, is trustless, permissionless, censorship-resistant, and (apart from the Trojan horse in parliament) decentralized.

 

Again, Bitrule is just a starting point. Perhaps it’s the wrong one, or perhaps the time is not ready yet. But I don’t have many doubts about the fact that a structural return of freedom depends on finding the right way to apply Bitcoin’s lesson to the field of law. What restored freedom in the field of money can restore it in the field of law.

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