Trust, Anarcho-Capitalism, Blockchain and Initial Coin Offerings

27 Pages Posted: 22 Nov 2017 Last revised: 10 May 2018

See all articles by John Flood

John Flood

Griffith University; Queensland University of Technology; Centre for Blockchain Technologies

Lachlan Robb

Griffith University - Griffith Law School

Date Written: November 20, 2017


Blockchain - distributed ledger technology - is seen as heralding what some call the internet of trust because it provides an immutable chain of authority that is difficult to hack. Satoshi Nakamoto created an algorithm that required immense amounts of computing power to solve cryptographic problems that when resolved would create consensus throughout the blockchain community by rewarding miners with Bitcoin and prevent the "double-spend" problem. Trust, in either one's opposite party or intermediaries would be unnecessary. The cryptographic work made trust redundant.

Unfortunately, Satoshi could not predict how the blockchain community would behave once the software was launched into the community. Trust became the core issue as different factions among developers and miners squabbled over changes to the software. Trust is also deeply implicated in the ways the community uses blockchain to raise money to fund developments through initial coin offerings (ICO).

In this paper we trace how this these issues emerged in blockchain's short history. We use arguments over block sizes, transaction fees, and hard forks, and the process by which ICOs are run to exemplify our account. We contextualise our story by examining the history of blockchain. Blockchain seems so recent that it doesn't really have a history, but in fact it has a long history stretching back to the Austrian School of Economics. We argue that blockchain can trace its philosophical roots to the anarchy-capitalist strain of the Austrian school. Anarcho-capitalists believe in peer to peer contractual transactions as the foundation for society, They abhor collective action even that which includes the defence of the realm. Dyadic collaborations are sufficient for a society to survive by. Theorists such as Murray Rothbard and Leland Yeager promoted these views in the second half of the 20th century. Satoshi's paper was published in the Great Recession (2008) and incorporated this philosophy. As the blockchain community has developed distributed ledger technology these basic philosophical tensions have surfaced causing dissension and strife. It has all come down to a fundamental issue: who do you trust?

Keywords: blockchain, distributed ledger technology, ICO, initial coin offerings, bitcoin, ether, trust, anarcho-capitalism, Satoshi, Nakamoto,

JEL Classification: Z13, Z38, Z23, K20, K22, G02, G18, G24, G38, B13, B15, B25, B31, B53

Suggested Citation

Flood, John A. and Robb, Lachlan, Trust, Anarcho-Capitalism, Blockchain and Initial Coin Offerings (November 20, 2017). Griffith University Law School Research Paper No. 17-23, U. of Westminster School of Law Research Paper, Available at SSRN: or

John A. Flood (Contact Author)

Griffith University ( email )

Nathan campus
Nathan, Queensland 4111

HOME PAGE: http://

Queensland University of Technology ( email )

Level 4, C Block Gardens Point
2 George St
Brisbane, QLD 4000

Centre for Blockchain Technologies ( email )

UCL CBT UCL Computer Science
Malet Place London WC
London, London WC1E 6BT
United Kingdom


Lachlan Robb

Griffith University - Griffith Law School ( email )

Nathan Campus, GU
Nathan 4111

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