Blockchain, as a new technology that has created the third generation of the internet or WEB3.0 in combination with the internet, has caused significant impacts on various dimensions of social life, including governance, and it can boldly be said that what we have seen from its effects on Westphalian sovereignties is just the tip of the iceberg. Blockchain, with the help of its seemingly simple features of consensus, decentralization, and anonymity of users, has created a revolution in the communication among citizens worldwide, bringing what Mc Luhan called the global village closer to reality, beyond the control of governments. In this article, with a library method, we seek to find answers to questions about the opportunities and challenges that this new phenomenon has created and will create for governments.
In fact, we are witnessing the governments weakening in the face of emerging phenomenon of blockchain, as part of the exercise of government is being taken over by individuals without the need for the government and using the blockchain platform. Governments also have no longer control and supervision over individuals operating within their own jurisdiction and doing so without revealing their identities because the design of blockchain allows users to operate under aliases and not to disclose personal information such as their name or email to use blockchain-based software.
Behind this technological influence, naturally, as with any other technology that embraces social and political changes, there is a particular philosophy and worldview, and the main core of this idea in the use of blockchain to challenge governance should be considered as a philosophy called crypto anarchism, which was born over a decade ago before the birth of blockchain technology. The goal of this idea is to eliminate the need for intermediaries and regulators in the economic relations of citizens and to avoid any kind of dependency on them as much as possible. According to the power-averse cryptographers, this idea can be implemented by a decentralized and independent blockchain system.
However, the degree of decentralization and the change in the concept of governance depends on how much and in what way this technology is utilized. In this regard, cryptocurrencies as one of the blockchain-based tools have provided an opportunity to create an independent economic system free from government and political borders that is impossible for governments to supervise and reduce their power to control monetary and fiscal policies as well as taxation.
Amid all this, like any other technology, this technology has had unwanted consequences besides desirable results, including the reduction of the control of regulatory bodies on organized crimes like financing terrorism and money laundering, which have been facilitated by the use of cryptocurrencies and blockchain technology, and the support of criminals and terrorists. We have also witnessed an increase in organized financial crimes such as money laundering. For instance, in January 2014, the Federal Court of New York charged one of the most famous figures in the Bitcoin ecosystem, Charlie Shrem, with money laundering, accusing him of providing Bitcoins to users of an online underground market called "Silk Road", where various illegal items such as drugs, weapons, human trafficking, etc. were traded, and Shrem was the exchange broker for cryptocurrencies in this market.
All of the above has led most international and national financial institutions to seek management and control of the space created around cryptocurrencies and, more broadly, the control of blockchain technology.
In December 2013, the European Banking Authority issued a public warning to consumers and the general public stating that unregulated digital currencies pose various risks, including the potential loss of funds by users, as long as there are no regulations in place to protect them. Many other international and regional entities have also taken this path.
In general, it should be said that although the weakening of borders and territorial sovereignty began with the expansion of the internet, the creation of blockchain technology should be considered a revolutionary movement against Westphalian sovereignty. Today, the issue is not just about performing certain tasks without regard to borders, but also about addressing many of society's needs through this method. When we consider the fact that we are still at the beginning of a long road in blockchain technology, we can envision the future in line with the ideals of crypto anarchism ideologues. Today, we are witnessing a growing movement towards the development of blockchain-based activities in both the private and government sectors. However, there are also challenges and difficulties on the path towards progress in this field, including the ongoing North-South gap in access to information technology and necessary infrastructure among countries. Ultimately, we must recognize that although blockchain has had a tremendous impact on challenging sovereignty, and it is predicted that this impact will only increase in the future, even the success of what is considered ideal by blockchain developers does not undermine sovereignty, but only affects effective governance.