Cryptocurrencies Could Undermine Obsolete Laws, Says Cybersecurity Expert

Cryptocurrencies may render some outdated regulations obsolete, according to crypto-anarchist and white hat hacker Pavol Luptak.

According to Luptak, “cryptocurrencies or crypto markets may undermine government laws and regulations that are obsolete for the 21st digital century.” 

He said, “I can say the Space Age technology will help us to escape from the Bronze Age rulership. Despite the fact that rulers will not like it.”

“Although we spend a significant part of our lives in an unlimited borderless virtual online world, we are still trying to enforce the territorial laws valid for the physical world. I don't think it makes sense from a longer perspective,” he stated.

Cryptocurrencies could end taxation

Luptak also explained that nowadays anyone can create an anonymous offshore firm in any jurisdiction and use anonymous crypto assets instead of bank accounts, so traditional banking regulations are no longer enforceable.

Because of this, he believes that “cryptocurrencies will provide a new haven” and “we can expect massive tax optimizations” as a result of the new fiscal competition. In fact, he believes that taxation itself is in danger:

“When a lot of people or companies start to use truly anonymous cryptocurrencies, enforcement of taxation will also be challenging, maybe even impossible.”

Governments are unable to regulate decentralized businesses

Luptak noted that when people use decentralized versions of services like Uber or Airbnb with anonymous cryptocurrency transactions, enforcing the same regulations that are applied to their centralized counterparts may be impossible. 

Generally, he expects that a universal sharing economy mobile application bypassing government control or taxation will also take off in the future. Such solutions couldn’t be taken down by authorities:

“It can be a fully decentralized solution impossible to shut down by the government with the use of anonymous cryptocurrencies, decentralized applications, or even backed by decentralized legal subjects.”

Because of those censorship-resistant services, Luptak believes that states can lose their business license monopoly.

Luptak even claims that decentralized dispute resolution solutions are capable of replacing a significant portion of the functions traditionally performed by governments. Laws concerning data management like the right to be forgotten guaranteed by the European Union’s General Data Protection Regulation cannot be applied to blockchain technology.

With the reduced ability for governments to spy on and censor communications, Luptak also expects that services like “anti-government insurance against victimless crimes”  or “anonymous, decentralized crowdfunded whistleblowing” to be born, with far-reaching consequences:

“[Those technologies] can mean a total decomposition of all government secret agencies and government ‘classified’ agencies.”

Decentralization will probably be both good and bad

Luptak admits that he does not know whether such extreme decentralization will result in a positive or negative change, and says that it will probably be a combination of both. Still, he is convinced that — as with most technologies — the consequences of decentralization will depend of the needs of who uses the new tools:

“I believe the future will reflect our needs satisfied with future technology. They may be, of course, perverse, creating new threats. But this is happening all the time during any technological evolution.”