Crypto-anarchism refers to the use of cryptographic software to evade prosecution and harassment while sending and receiving information over computer networks, thereby protecting privacy and political freedom. In a sense, the encrypted anonymous networks (the ‘cipherspace’) can be regarded as an independent lawless territory or as an autonomous zone. However, participants may in theory voluntarily create new laws using smart contracts (computer protocols that facilitate, verify, or enforce the negotiation or performance of a contract, or that obviate the need for a contractual clause) or, if the user is pseudonymous, depend on online reputation.

The ‘crypto’ in crypto-anarchism should not be confused with the use of the prefix ‘crypto-‘ to indicate an ideology or system with an intentionally concealed or obfuscated ‘true nature.’ For example, some would use the term ‘crypto-fascist’ to describe an individual or organization that holds fascist views and subscribes to fascist doctrine but conceals their agenda so long as these doctrines remain socially unacceptable. However, Timothy C. May’s ‘Cyphernomicon’ (one of the philosophy’s founding documents, posted in 1994) indicates that the term ‘crypto-anarchist’ was partially intended as a pun on this usage, even though he did not intend to conceal his beliefs or agenda.

One motive of crypto-anarchists is to defend against surveillance of computer networks communication. Crypto-anarchists try to protect against things like telecommunications data retention, the NSA warrantless surveillance controversy, Room 641A (the room at AT&T used by the NSA) and FRA (a Swedish law that authorizes the state to warrantlessly wiretap all telephone and Internet traffic that crosses its borders), among other things. Crypto-anarchists consider the development and use of cryptography to be the main defense against such problems, as opposed to political action. A second concern is evasion of censorship, particularly Internet censorship, on the grounds of freedom of expression. The programs used by crypto-anarchists often make it possible to both publish and read information off the internet or other computer networks anonymously. Tor, I2P, Freenet and many similar networks allow for anonymous ‘hidden’ webpages only accessible by users of these programs. This helps whistle blowers and political opposition in oppressive nations get information out. Another reason is to build and participate in counter economics (short for counter-establishment economics), which refers to the study and/or practice of all peaceful human action which is forbidden by the State. Crypto-currencies such as Bitcoin and services like Silk Road (an encrypted, illicit online marketplace) makes it possible to trade goods and services with little interference of law.

Crypto-anarchists argue that without the ability to encrypt, messages, personal information and private life would be seriously damaged. A ban on cryptography is equal to the eradication of secrecy of correspondence. They argue that only a draconian police-state would criminalize cryptography. In spite of this, it is already illegal to use it in some countries, and export laws are restrictive in others. Citizens in the United Kingdom must, upon request, give passwords for decryption of personal systems to authorities. Failing to do this can result in imprisonment for up to two years, without evidence of other criminal activity. This legislative key-surrender tactic can be circumvented using automatic rekeying of secure channels through rapid generation of new, unrelated public and private keys at short intervals. Following rekeying, the old keys can be deleted, rendering previously used keys inaccessible to the end-user, and thus removing the user’s ability to disclose the old key, even if they are willing to do so.

The only way to stop this sort of cryptography is to ban it completely — and any such ban would be unenforceable for any government that is not totalitarian, as it would result in massive invasions of privacy, such as blanket permission for physical searches of all computers at random intervals. To truly enforce a ban on the use of cryptography is probably impossible, as cryptography itself can be used to hide even the existence of encrypted messages (steganography). It is also possible to encapsulate messages encrypted with illegal strong cryptography inside messages encrypted with legal weak cryptography, thus making it difficult and uneconomical for outsiders to notice the use of illegal encryption.

Crypto-anarchism relies heavily on plausible deniability to avoid censorship. Crypto-anarchists create this deniability by sending encrypted messages to interlinked proxies in computer networks

Untraceable, privately issued electronic money and anonymous Internet banking exists in these networks. Digital Monetary Trust and Yodelbank were examples of two such anonymous banks that were later put offline by their creators. eCache is a bank currently operating in the Tor network, and Pecunix is an anonymous (submitting personal information when opening an account is optional) gold bank operating on the Internet. Anonymous trading is easier to achieve for information services that can be provided over the Internet. Providing physical products is more difficult as the anonymity is more easily broken when crossing into the physical world: the vendor needs to know where to send the physical goods. Untraceable money makes it possible to ignore some of the laws of the physical world, as the laws cannot be enforced without knowing people’s physical identities. For instance, tax on income for online services provided via the crypto-anarchists networks can be avoided if no government knows the identity of the service provider.

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