"Money" only exists because of the organization of government. If we didn't have any, I could just come on to your land, shoot you, and take all your land and possessions.
Hypothetical anarchyland isn't a very nice place to live, though. Most libertarians are not anarcho-capitalists (let us ignore the subset who are because they're crazy), and are quite happy to pay the portion of taxes which go towards sensible things like the police force and the enforcement of contracts. The problem is that governments get to set whatever tax rates they like, inevitably wind up with a desire to go beyond this and to begin using tax dollars to feather the nests of whoever gets to make the government's decisions, whether it's a solid gold tomb for the King or free welfare checks for the bottom 51% of the population. And, y'know, we can deal with some of that happening, because it's inevitable, but we do need people to be standing up all the time and saying "Hey look Mr President, how about we get to keep a bit more of our money and you get to fly around in a private 777 instead of a private 747?"
I'm not sure how you make the leap from "the government is necessary to protect your private property" to "it's not really your property, it's the government's". The bank is also necessary for me to get paid, and so is the electric company and the telephone company and the nice lady down in HR, but it's still my money. I don't mind paying for the services they provide either, but I'll still complain if they take more than they're entitled to.
For once, a subset of ancap are able to engage in dealing with a Neal Stephenson plot device.
I often feel like I am in a cyberpunk novel. ;)
When everyone gets to decide how much they want to pay for private goods, ceteris paribus we get better, cheaper private goods. When everyone gets to decide how much they want to pay for public goods, ceteris paribus we get worse and fewer public goods.
1. Cheaters are most problematics to deal with, especially with drive-by fraudsters. They make everything worse for everybody else, not just the direct recipient of the fraud. 80% of drive-by cheaters can be prevented with simple measures. However, the rest are long term scammers who build up reputation and than cheat over us. This is extremely difficult to prevent. Thus everyone factor in the risk of being cheated out of their money.
2. Reputation is VERY IMPORTANT in an economy with no court and police.
3. Paypal dollars and anything that is chargebackable is BAD MONEY. It is the DOMAIN of scammers and fraudsters. They also cause bank runs as people transfer their worthless money into something more valuable.
Is the economy a utopia? No. There are some scumbags who cheat and sometime got away with it. In one situation, their fraudulently brought merchandise got confiscated by an exchange mediator but not before it cause damage to the system. However, others were not so lucky. A guy got 2000 dollars in chargeback and had to shut down. What people will do, is learn how to handle cheaters, and find better methods to avoid cheaters. Since it is the internet, you can't just do "violence" or coerce individuals. It's impossible. Contracts are entirely based on reputation and trust. Nobody want to go to a state court and waste lot of money on lawyer.
"However, the rest are long term scammers who build up reputation and than cheat over us."
Well you have that in the rest of the world too -- only they go by nobler-sounding titles of government agents, bureaucrats, commissioners...
"Reputation is VERY IMPORTANT in an economy with no court and police."
What's the problem here -- reputation can be earned, through quality, and should. The stronger it is, the less it can be shattered by drive-by morons who haven't built it for themselves yet (and if they had, they wouldn't need to).
"They also cause bank runs as people transfer their worthless money into something more valuable."
The corrective invisible hand at work, it sounds to me. Again, what's the issue?
"Contracts are entirely based on reputation and trust. Nobody want to go to a state court and waste lot of money on lawyer."
I think the western world will be moving to that direction as public services keep increasing prices and decreasing quality, as every coercive monopoly must, especially a high-deficit one.
Contracts in the end are always primarily based on reputation and trust, aren't they? And shouldn't they?
There is no country in the world that is at the very least quasi-anarcho-capitalist. This economy deal entirely on the internet and with bitcoins as its currency.
I think the western world will be moving to that direction as public services keep increasing prices and decreasing quality, as every coercive monopoly must, especially a high-deficit one. Contracts in the end are always primarily based on reputation and trust, aren't they? And shouldn't they?
Keep in mind, these are lessons, not a critique. I am not criticizing the reputation based nature of a cryptoeconomy. Rather it is lessons in how the cryptoeconomy really works.
I did not mean to imply you were criticizing. Your lessons are valid examples of a quasi-anarchic situation. People policing themselves, organizing networks of trust and reputation and self-protection.
Sounds like there is a market in there for mutually-trusted middlemen acting as, well, "trustees" or escrow services? Or is that built into BitCoin already. Of course if the scam only materializes after the transaction was already completed to mutual consent, that's a different matter. But what kinds of fraud are happening there?
The notion of bitcoin being backed by CPU mining or even GPU mining is a fallacious notion. CPU and GPU are used to mine bitcoins and create bitcoin blocks, nothing more.
Every currency will probably have an exchange market. Bitcoin is no different. People have brought pecious metals with bitcoins, as well USD. However, USD are usually prefixed with a service such as Paypal USD and MtGox USD, and so on because of additional monetary property that the service provider imbues to it. Thus, Paypal accounts are considered risky because of chargeback.
Sounds like there is a market in there for mutually-trusted middlemen acting as, well, "trustees" or escrow services? Or is that built into BitCoin already. Of course if the scam only materializes after the transaction was already completed to mutual consent, that's a different matter. But what kinds of fraud are happening there?
The trust network is mostly around the bitcoin forum. There has been talk of creating reputation systems of some kind but nothing of substance come out yet. Most frauds are usually the drive-by scams type of frauds. However, the other concerns is when escrow failed to do their job or simply disappear. There may be no intent of fraud involved, but people lose their money all the same.
The flaws should have been apparent to anyone who understood human nature and was willing to sit down and ask the obvious questions like "What happens when X" and "But won't people Y?" They were less apparent to people who didn't want to sit down and ask these sorts of questions.
This is pretty much exactly the same level of crazy you get from anarcho-capitalists.
This brings to mind my favorite communism story. 15 or so years ago my local newspaper ran a story about a young lady who was moving away to go work for the American Communist Party, because she had taken a trip to Cuba and seen Communism in action; it was clear to her that this was the ideal form of government for the people. That same day, the news was full of stories of people risking their lives to leave Cuba in homemade boats. It always amazed me how this girl could completely miss this.
By necessity, local landlords and smaller communities were in a much stronger "competition of sorts" with their neighboring "jurisdictions", more effective than our grand nation states with their inter-national tax agreements. Some of them were nasty bastards, but the next one presumably less so. They seriously couldn't indebt themselves and keep raising taxes quite as abusively as today's nation governments do, the world over, and didn't. You do realize than sub-10% taxes were the default scenario in these times long past, and in many European provinces they were in fact paid voluntarily, for real armed protection services that could be denied if you chose not to pay them, but weren't forced to.
References / citations? Read Hans Hermann Hoppe's Democracy book, it's full of them.