HomeBlockchainRegulationCryptocurrencies: a threat from the cyberspace

Cryptocurrencies: a threat from the cyberspace

Could cryptocurrencies be considered a real threat from the cyberspace against the State?

There is a premise to be made. The background features the image of the subject in question, which also determines its existence: blockchain technology. However, due to circumstances such as the immediate and current effectiveness in relation to economic systems, laws and social relations that we have today, we have chosen to carry out the analysis only in relation to the cryptocurrency application of blockchain technology.

In order to answer this question, the first thing we need to do is to define what a threat to the State means. Given that each individual and autonomous State can define by law what or who falls into this category and, secondly, cryptocurrencies have effectiveness and scope for global use, thanks to the existence of the cyberspace, it was decided to use as a legal basis Art. 39 of the Charter of the United Nations as a blueprint for addressing a response.

According to this provision, the scope and extent of the term ‘any threat to the peace’ must be determined. Over the years, the United Nations Security Council has developed, through various resolutions, a definition of the term that includes: civil wars, violations of human rights, terrorism and others.

Without dwelling excessively and in-depth on the criteria for interpreting international treaties, it is necessary to refer to Article 31 of the Vienna Convention. 

Therefore, in order to determine the meaning and scope of “any threat to the peace” we must also consider the value, or rather the ordinary meaning of the terms used. As reported by virtually all language dictionaries, the term threat requires: 

  • at least two subjects, the threatening and the threatened; 
  • A tool;
  • The premonition of the damage.

At this point, there is only one element missing to try to give an answer to the opening question.  On 31st January 1992, the President of the United Nations Security Council declared that economic, humanitarian, social and ecological crises are threats to peace, adding that the absence of war and military conflict between states does not in itself ensure international peace and security.

Weapons, abstractly the concept of the use of force, is a fundamental exclusive attribution of the State. In fact, without this power, many believe that a territory cannot be controlled. As stated above, from 1992 the case threat to the peace does not only include the armed threat and the force of arms but, instead, also the economic and social threats.

From this perspective, the words of Satoshi Nakamoto’s whitepaper “A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution” can take on a precise meaning.

In essence, cryptocurrencies can be seen and qualified from two perspectives: the one of the State, the other of the individual. The first corresponds to the possibility of seeing them as a threat to peace, an attack on something that is proper; the individual, instead, can consider cryptocurrencies as:

  1. A form of digital realisation of positive freedom;
  2. Blockchain technology instrumental to the creation of the concept of cyberspace as real space. 

The regulation of these digital values is diverse, some States have decided that the bits of cryptocurrencies must be governed by the law of the financial markets. Others, on the other hand, have found that blockchain technology can be very useful and innovative as long as it is controlled. In other parts of the world, cryptocurrencies are illegal.

In general, however, a sketchy international attitude is emerging. States have understood that cryptocurrencies are an alternative form of human relations which, therefore, threatens to reduce their ownership if left to private control alone.

What happens when a person uses a cryptocurrency to buy bread, a car, a house or any other good or service is that the wealth controlled by the States leaves the sovereign system. 

For example, 100 euros become 1 bitcoin, with these I buy X objects and the payments in favour of the Y people who sold them to me increase the wealth, the patrimony only of the person selling them. The state doesn’t get anything out of it. The tax authorities do not levy taxes.

Taxation is fundamental for a state; in reality, discipline and the tax system are also fundamental tools for people and their rights. The State can be thought of as a subject, as a person who offers and receives benefits from and with other subjects, including natural persons. Any right when and if exercised and modified, has a cost and this is not always and only paid by the person. For example, the personal or collective security of a population can generally be identified by state expenditure for the benefit of military forces.

Furthermore, when people decide to exercise their right to demonstrate, they do so at their own expense: they organise themselves, prepare banners, signs, stages, etc. At the same time, however, there is the cost paid by the State of making it possible to exercise this right. The State must pay police personnel to make the event peaceful and safe, make changes to the road network involved, make public spaces accessible, a number of public officials must be paid to sift and approve the purpose and modalities of the event, etc. …

Another main example: the right of ownership represents the cost-benefit ratio of the State. It is a cost because it must materially set up a system: regulatory, jurisdictional and confidence-building in favour of ownership. Thus, the State creates the property that must have precise conditions and only if it has them in the system of protection. The machinery thus created generates safety in the people who rely on it and use it to establish relationships. 

In fact, following a dysfunction or injury characteristic of the case, people can count on remedies. So the better the laws are made, the more subjects will use them. So here is the gain for the State, the creator of trust. In concrete terms, the gain is given by the taxes that are requested, in a widespread manner, and therefore in a smaller proportion than the cost incurred, by the people who use the system.

The State creates the system and in return, people have to use the currency. The rights and the property can be available, modifiable but this is done using a fungible means and shared (not owned) between all.  Sovereign money fulfils this task.

Following this reconstruction and in the light of the normative interpretations of the Charter of the United Nations, it seems possible, from the State perspective, to see cryptocurrencies as a tool of danger, threat and attack against the sovereign prerogatives (rectius property).

In contrast, however, the position of individuals seems almost of power and superiority over the State. Since cryptocurrencies make extensive use of digital technologies, they are an example of this themselves, and their effectiveness in cyberspace is global. Therefore, all states and laws of the world are affected by this reconstruction, which is also the reason that led to the analysis of Art. 39 of the Charter of the United Nations.

In conclusion, it could be assumed that through the use of cryptocurrencies people all over the world, if they so wish, could constitute a “threat to the peace” to many if not all States. Furthermore, an innovative element with respect to the past that has led to the evolution of the category is the use of digital technologies. For the first time, in fact, the potential threats to peace and State security are native to cyberspace and, cryptocurrencies, have the potential to act as an aggregator of a very large and heterogeneous number of threateners. Ultimately, the threatened (States) could see the threatening (the people of the world) oppose damage in the first economic instance, but not only, and subsequently through blockchain technology, which can be an aggregative and identifying tool, defining goods and subjects in cyberspace as never before, could advance motions for claiming autonomy in the cyberspace of the so-called cloud communities.