Anarcho-Capitalism, Node Hierarchies and Blockchain Security

Part 11 of 12 — Blockchain: Decentralization of Money, Power and the State Originally written as a History BA thesis, academic year 2021–2022. Published online August 2026. Series index → · References & bibliography →

Anarcho-capitalism

Associating blockchain technology exclusively with anarcho-capitalism is wrong. One can understand the blunder into which so many fall: the absence of a central authority, typical of decentralized systems, can remind one of anarchic systems and, the use of a currency, then allows one to fall into this easy trap. It has already been mentioned how the Internet of Information is translating to the Internet of Value. The change, which will be progressive but extremely fast, will ultimately be transmitted to the functioning of our society as well. True, what is called Capitalism will change. One mistake we unfortunately often fall into is that of schematizing economic-social systems: this, while simplifying the understanding of long-studied concepts, and on which there is ample literature, prevents us from grasping the emergence of new conceptual categories. Everything has a history, and even what is coming into being is inspired by old ideas, hopes and illusions that have affected humanity throughout its long life. The study of the past can help deconstruct these categories. Reconstructing human vicissitudes, ways of life and production, can show how the absence of hierarchy and the existence of currency is not enough to granitically define an economic-social system, a doctrine or a political philosophy. The questions that permeate this new world of data-and so much more-are more than possible answers. There are many people who have approached the crypto world because of the similarities to anarcho-capitalism, just as many others remain distant from it for the same reason. It is important to understand how the practical application, in its current state, of highly speculative assets is but a transition, a kind of phase in which all that is new and rare, and consequently valuable, has to face: with the full conceptual mastery of what human beings are funding at the moment, that is, building a different Internet, allowing for interaction in a different way, it will be possible to build something more consciously. At present, most decentralized system producers and investors are groping in the dark. Blockchains would not be revolutionary at all if they did not bring human beings face to face with their own differences: too often what is different is seen as a problem, rather than grasping what positive things it has to offer. In authoritarian economic-social systems-and by this is meant any system with hierarchical authority-the consent of the population is not required for the introduction of reforms. Consent is not required of every single person, as it is not functional for the very maintenance of authority, and, not least, it would also be difficult to put into practice. Digital allows one to transcend physical limits, i.e., time and space; blockchains allow one to transcend the limits of digital, i.e., the overwriting of bits, files or a digital currency.

The main difference there is between an anarcho-capitalist system and a fully decentralized blockchain system is private property. In the former case it is present and fundamental. It underlies a capitalist hierarchy, which, quite simply, dispenses with the political hierarchy. In a decentralized system, on a physical and logical level, what would take place is a situation where 'one is worth one,' avoiding even what is one of the greatest limitations of democracy, which is the dictatorship of the majority (see forks).

In a society where blockchain were to be used to structure mutual trust, there would be no absence of the state. The concept of the state would change: greater trust, greater participation, greater sense of being able to change things. What blockchain would guarantee, essentially, is the diminution of that sense of powerlessness characteristic of today's society. The electoral absenteeism of recent years has shown how a large part of the Italian population no longer feels represented and, therefore, no longer even participates in a social system with representative democracy.

The radical difference that exists between an anarchic system and a blockchain system is the geographic spread of common rules, managed and accepted by individuals. In both systems, one has the freedom to reject some of them, to question others, but, in the second case, one has the ability to do so in an analytical, precise, and nonmisunderstandable manner.

To conclude, anarcho-capitalism can occur in the case of a blockchain system, just as socialism, communism or, more simply, a form of representative or direct democracy, with varying forms of welfare, etc., can occur.

Hierarchies between node and full node

Looking at the course of history, it is easy to observe how human beings often distinguished themselves from one another, creating hierarchies within or between different social groups. The reasons for this were many and the discriminators as well: sometimes the inferior social group was the conquered and in chains; other times it was those who had no surname; still others were due to the three orders that characterized the Ancient Regime, namely oratores, bellatores and laboratores: these divisions were structural to the functioning of society. It has been pointed out that Athenian democracy owed much of its fortunes to its imperialistic attitude. The past is also thick with rebellion, with people who rejected their subservient place to and in society: Spartacus, the slave who rebelled against Rome, is perhaps the most famous example. Although slavery, in the present and in many countries, has been formally abolished, many differences between individuals still remain. Although without formal titles, linked to blood and feudal relations, wealth again constitutes a hierarchy, in which those who have much decide what those who have less will do, while the latter can do nothing but obey: sometimes one gets the impression that everything has changed for nothing has changed. Today's society only formally hopes for a meritocratic system: practical experience teaches how difficult it is to achieve. Reflecting on what the hallmarks of future social groups might be, based on today's technologies, which give power and control, might help to understand in which direction to head. It has already been seen how, with Proof of Work systems, 'notaries' are extracted on the basis of computing power, which is highly related to invested capital. In Proof of Stake systems, the difference between haves and have-nots is even more pronounced, as each 'lottery' ticket is associated with a digital currency. Let it be clear, and here it will be repeated again, that if a 'Proof of .......' system could be found in which each person could not weigh more than the others, it would open the way for unparalleled social reforms. It is likely that these new 'Proof of .......' systems should not be looked for in pure information technology, but rather in a symbiosis of computer and human systems, in networks of political and social systems, aided by the use of cryptography and the distribution of peer-to-peer systems, so as to lay an initial layer of trust between people who do not know each other. An artificial trust, this yes, but one that would help to dispense with that flaw typical of any hierarchy, and which allows it to function, namely quid pro quo. From this point of view, blockchains could be the evolutionary link between hierarchical social systems and distributed, horizontal social systems. Needless to say, once blockchains are understood at the conceptual level, they cease to be the specific domain of the engineer or computer scientist. Of course, these figures will be indispensable, but those who have the knowledge best suited to think about the issues of centralization and decentralization, power and its forms, are in quite other shores and have made studies of a different kind. The society of the future could be divided into orders, between those who can afford to validate the blocks, and thus be 'notaries,' and those who cannot, leaving an imbalance that is now millennia old and effectively constituting a new hierarchy within society. Whether there will be informatores, calcatores, and validatores in the future is unknown to us. However, the speed of information systems ensures that changes can occur rapidly, and new, stable and efficient social systems can become operational overnight.

Information security

A well-known phrase in computer science says, "A secure computer is a computer that is turned off," leaving it well understood how a computer turned on and connected to the Internet can always be susceptible to attacks or issues of various kinds.

Computer science is the child of electronics and is built on it, bit by bit. Electronics, made of on and off, closed circuit or open circuit, is then in computer science expressed in 1 or 0, that is, a binary language (or system) with only two symbols. Other kinds of languages, simpler for human beings to understand, are built on top of this elementary system. From the beginning of computer science to the present day, programming languages have become increasingly powerful as they are more easily understood by humans, allowing them to devote more resources to program conception and conceptualization rather than technical development. Computer science is, to simplify, a system layered on top of electronics: from this paradigm it inherits the positives and negatives. In order to write efficient programs, that is, ones that occupy the minimum amount of material resources (hardware) required, it is desirable that the layer adopted be as low as possible. This is because, using a high-level, human-friendly language, it is necessary for the program to then be translated into machine language. Everything that is possible to see in a computer, and that looks so much like the analog world, so much as to speak of windows, folders, trash, and e-mail, is then translated into a language that is gradually less comprehensible to the human and more comprehensible to the machine.

It is a well-known fact that a direct translation from one language to another is more efficient, and that translating from a text that has already been translated can lead to a strange cordless telephone as a result, going so far as to alter what were the original intentions of the author. The emotional and logical meanings could be compromised and thus lead to a great misunderstanding of the original work. In information technology, should misunderstandings of this kind arise, it would mean that we are in the presence of structural flaws, the use of which by malicious parties would be possible. Flaws of this kind are not uncommon, and as the stakes increase in terms of economic-decisional power allocated and guarded by technology, the effort on the part of humans to discover new ones also grows. In addition to natural and unforeseen flaws, there are also those intentionally built into programs, called backdoors¹ , or service entries. These are flaws typically built by large companies, whose theoretically secure software is provided to users with a specially designed 'flaw'

that only the manufacturer knows about. These types of flaws are often inserted under political pressure.² These backdoors can be used to steal information from users, or to gain operational control of the machine. There are many known cases of backdoors, but, as always, the rule applies that for one stunt, there are a hundred that no one talks about. Dealing with all the possible problems related to security is not feasible; however, an example will be cited that should make it clear what the challenges will be in this field. In addition to classic viruses, i.e., computer programs that have malicious purposes, parts for smartphones (in this case screens) were found, inside of which was embedded an electrical circuit that could steal very valuable information and send it to the Internet.³

51% attack

The so-called '51% attack' involves that percentage (or higher) of nodes being in the hands of rogue users, who can therefore be selected as 'notaries' and tamper with the last blocks, while maintaining a democratic appearance. A 51% attack is considered very difficult to implement, precisely because of the very high costs present in a Proof of Work system (due to the computing power and electricity consumed) or the Proof of Stake system (in which one would need to have 51% of the tokens/actions). Proof of Work, but also other types of 'proof of', could suffer from blockages to computer networks, as the total amount (100% of nodes) is relative to the total and not absolute. Those who wanted to launch such an attack would have an advantage in fragmenting the nodes so that they could deal with them a few at a time. Already it has happened that the authorities shut down the Internet, as happened for five days in Cairo in 2011. This was meant to shut down communication among the population, after less radical measures had proved futile.⁴

In Proof of Work systems, the total number of nodes is not a closed and well-defined number as in Proof of Stake systems (if there are 100 tokens in total, the majority will always be 50+1). If there are 100,000 Bitcoin nodes worldwide, distributed half in Europe and half in America, to have a majority, and thus launch an attack, one would have to have control of 50,001 nodes (we do not care at all about the geographic location of the nodes). If, however, communication between the two continents could be disrupted, here is where half of the nodes would be sufficient to launch a 51% attack in America.

The proposed example is deliberately extreme, but it serves to understand how it is possible to divide a very tightly packed majority and deal with it one piece at a time. To take a more humane example, it would be as if two very capable missionaries had infinite time and resources to reach every corner of the globe to convert everyone they encountered on their way and, to top it off, encountered only one person at a time so that they would always be ahead in numbers. What has been described here, while it sounds very cumbersome and perhaps even impossible, would, thanks to information technology and automation, be implementable quickly and almost instantaneously.

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