Preston Byrne, in the third of his "Bitcoin and the English Legal System" series, explains why cryptocurrency, technological advances notwithstanding, still cannot do without the law. A few days ago, I had the pleasure of speaking on a panel at the 2014 Liberty League Freedom Forum with City AM's Marc Sidwell, Big Brother Watch's Nick Pickles, and the authors Daniel Ben-Ami and Nick Harkaway; we discussed the implications of advanced technology for liberty. Seeing as most people are not obsessed with blockchain-based technologies as I, before the talk began I asked the attendees how many of them used cryptography - such as PGP/GPG or cryptocurrency - in day-to-day life.

Of 100-odd individuals present (perhaps fifty more stumbled in later, having overindulged during the previous night's festivities), perhaps six hands went up, underscoring a significant problem with technology-as-liberator: adoption. In a room full of activists who oppose state surveillance, only a handful had taken measures to protect themselves from it - measures which, it should be said, may be taken at nil cost. Just as we criticise our philosophical opponents on the political left for denying individual agency in favour of political action, which is rightly viewed as a "convoluted and roundabout" method of accomplishing individual goals, so too should we criticise our own continuing behaviour which makes this surveillance easier to conduct. Though as the panel discussed, there is a general perception of a "technological arms race" between individuals on the one hand and states on the other, the best technology in the world is utterly useless if it is not employed.

We should nonetheless be grateful that the technology is there, developed and promoted by a handful of brilliant mathematical and political minds. One of these minds belongs to Cody Wilson, designer of the 'Liberator,' the world's first fully-3D printed firearm (as well as designer of a number of 3D-printed components for the AR-15). More recently, Wilson has been working as a spokesperson for the "Dark Wallet" project, a collaboration of some of the world's leading cryptocurrency developers aimed at augmenting the functionality and independence of the Bitcoin blockchain, as well as adding trustless privacy features. The problem they seek to solve arises from a fundamental aspect of Bitcoin's design, viewed by some as a weakness: each bitcoin (or part thereof) is a chain of digital signatures and though in aggregate the network behaves like a ledger, this particular feature renders all transactions public - and thus perfectly traceable back in time, all the way to an individual bitcoin's first creation. Because of this, a number of lawyers have crassly taken to calling bitcoins "prosecution futures," and indeed law enforcement has been able to make a number of arrests in the United States based on analyses of these records.

Wilson will be speaking to the ASI this evening. Although I do not know exactly what he will say, I think it is fair to presume he will not endorse the expansion of industry cooperation with regulatory authorities. Indeed, "if Bitcoin represents anything to us," he has said, "it’s the ability to forbid the government." TheunSystem group of which he is a member has expressed similar sentiments to that of the Freedom Forum panellists, referring also to the idea of an arms race, and arguing their work can "gain a new territory of freedom for several years." "We don't need to cooperate with control freaks," they add; "disobedience is the only way." It is a view with which I sympathise but, despite considerable admiration for their work, respectfully disagree.

When I was younger, it was all too easy to become frustrated with the intransigence of social democracy and the seemingly endless trampling of individual endeavour in the name of collective welfare this system legitimises. Given the widely-publicised abuses of state security apparatuses in democracies everywhere, it is perhaps easier still to look to technology to secure an advantage for liberty outside of legally permissible channels - even if that victory will be fleeting at best.

That notwithstanding, implementation of this technology in full compliance with the law, not civil disobedience, is the way forward. This is not to say that anonymity and privacy are unimportant. Clearly they are, and men like Cody Wilson draw much-needed attention to questions of state overreach at great personal risk to themselves. Where we diverge is that I am of the view that the proper means of accomplishing this change is through democratic consensus.

Bitcoin and its derivations are already challenge enough to state institutions, with its strong cryptography and decentralised character confounding all efforts at state control. No Act of Parliament, no court order, no standing army and arguably not even vast amounts of state-backed computing power are presently thought capable of taking the network offline on their own (at least, not for long).

While Bitcoin is the first cryptocurrency protocol, it will not be the last. Commercially, its most significant achievement is in outsourcing the element of discretion from the unilateral act of payment to an algorithm; industry cooperation with state authorities in respect of this aspect of the technology has resulted in favourable regulatory outcomes in the UK and the United States, with the consequence that hundreds of millions of dollars are flowing into the sector, and mainstream businesses large and small are beginning to enter it.

Successor platforms close to release will extend this functionality in respect of multilateral, two-way instructions, importing the cryptographic security of Bitcoin into self-regulating agreements and other communications. In theory, the range of proposed uses for these second-generation platforms is limitless: decentralised crowdfunding, frictionless microfinance, autonomous peer-to-peer banks, and even decentralised social networks have been proposed, all of which would be run by decentralised mining from which virtually anyone can profit.

Prudence demands restraint when extolling the potential of these platforms. However, the degree of investor and developer attention upon them suggests they may be deployed in practical roles rather sooner than we think; and just like Bitcoin, I suspect they will take many people by surprise.

This will have implications for conceptions of liberty. What could promote a culture of privacy more efficiently than incentivising households to put the world's most advanced cryptographic technology in their living rooms? What better way could there be to convince a man of the value of free enterprise than to allow him to hold his own commercial bank in the palm of his hand? What kind of world will we live in where a shopkeeper in Kibera can safely invest in a property development in Kensington at the push of a button, while paying no fees?

How then, with deployable personal capital at their very fingertips, will people view state interference in markets and human interactions in which, perhaps for the first time in human history, they have a stake of their own? I suspect they will view it very differently, and in a manner which has the potential to give rise to enduring societal change. But the technology must first get to this point, and prove useful, before any of this change will be realised.

I am grateful Mr. Wilson has agreed to speak to the Institute this evening; the world needs more people like him. But so too does it need transactional technology which empowers individuals, rich and poor alike, to easily deploy and accumulate capital, legally, safely, and internationally, so that they might use it in order to improve the quality of their lives.

Men have been campaigning for liberty, however they define it, within the confines of the law for hundreds of years. I for one am happy to continue doing so for at least a few more, and encourage the attendees of tonight's event to do the same.