Well, technology has a way to empower individuals and local organizations. In the past, we had to use the federal post office (and Lysander Spooner was not too happy about it) but later we got email, which has revolutionized how we send mail. In the past, we had to print using centralized print services (which often required an imprimatur from an authority), and do our computing on mainframes, but now we have personal computers and printers. All kinds of pornographic and seditious material can be printed and disbursed, now that people have their own technology – and governments around the world have come to accept it in small amounts. There was a time when you needed access to institutional infrastructure in order to get the word out, but the Web has made it so anyone can deploy code to publish anything, and anyone else in the world can consume it. The revolution of smart contracts is similar – anyone can deploy their own smart contracts (including DeFi “protocols” like UniSwap or Aave) and others can start to transact with what is essentially an autonomous organization.
When it comes to local currencies, we do plan to require KYC for the communities themselves, who issue them. For example, the Sinaloa Cartel can start their own “drugcoin”, but it would have to pass KYC with several providers. The Mexican government and other governments can then choose what to do with them. Intercoin Inc. doesn’t plan to take upon itself to do any of the enforcement, nor does plan to do the KYC, but rather to set up an SRO of KYC providers, similar to certificate authorities on the Web. The SRO member would police each other and vote to kick out ones that are giving out the KYC too liberally. These entities, incidentally, would also be responsible for determining the per-capita wealth of a community, in order to help subsidize its members if it’s very poor.
Anyway, so the federal governments may require federal taxes to be built into the local currency’s rules, on various purchases. Intercoin isn’t dictating what each community would do, but its federal government may compel it to add these rules. The rules would be automatically applied during transactions (e.g. sales tax or VAT tax) but everything would be automated and transparent.
Intercoin’s goal isn’t to help with tax evasion or money laundering, but rather to make a financial operating system that lets people issue and manage their own currency, and make their own decisions. By cutting out the middleman, crypto can be permissionless, it can be private, it can let people do what they want without paying a ton to intermediaries. So it has value even in places where transactions are being taxed.
Smart contracts cannot be taken down, once they are operating. People are going to be able to use UniSwap, for example, to swap USDT for ETH no matter what. They won’t be blocked arbitrarily from withdrawing money from Binance, nor will they wait days or have to get permission from a middleman. So this has a ton of value, not least of which is that it enables permissionless innovation in fintech. The VC firm Andreessen Horowitz just published this article two days ago: Open Source is coming to Fintech.
As for me personally: after working on decentralized systems for nearly a decade, I have come to believe that if large swaths of people are resorting to sneaking around in order to evade the government, then that is a band-aid: they have to fix their government. For example, if freethinkers have to use encrypted channels to communicate, then the problem is upstream of that.