Michael Gibson has written an interesting post on “How to end bad governance.” The argument is that “The diffusion of the smartphone, strong crytpography, and peer-to-peer decentralized public ledgers will weld individuals, networks and voluntary hierarchies into single units of sovereign power capable of opt-out and opt-in governance without precedent.”
Unfortunately, I do not think the argument is correct. To understand we can differentiate between types of governance, contract governance and violence governance. Contract governance is the governance system we use to resolve contractual disputes. Violence governance is the governance system we use to resolve cases of direct violence of one person against another.
Violence is inherently territorial. A given condition of humans living together is a shared set of rules over when the use of violence is acceptable. Without these shared rules there would literally be chaos. Allowing someone to opt out of those rules means they would necessarily be dangerous. Any governance system must first solve the problem of violence. It remains unclear how the block chain can.
The problem of violence is currently solved by the state. This brings us to the analog option. No matter how much of our lives we move to the digital world, the state can always knock on our door and ask for money. There is always the analog option. Opting out of the state requires more than just electronic components, it requires an ability to solve the problem of violence and a way to prevent the current state from using its regulations. Both of these occur in the world of atoms, not the world of bytes. So yes, the block chain will likely revolutionize contractual arrangements. However, it is highly unlikely it will lead to the downfall of the state as we know it.