Did Laozi Dream of Blockchain?

The ancient Daoist philosopher has lessons for the crypto age, in the latest essay for Crypto Questioned.

AccessTimeIconJul 30, 2021 at 4:41 p.m. UTC
Updated Sep 14, 2021 at 1:33 p.m. UTC

Much like modern-day, hardcore bitcoiners, the Daoist classic "Daodejing," admonishes heavy taxes, strong governments and covetous leaders.

Laozi’s book, known in English as “The Classic of the Way and Virtue,” argued for a socio-political order that most closely resembles anarchism in the Western tradition: The best government is one that barely exists, a “shadowy presence.”

But Laozi wrote at a time when humanity’s organizational technology was fairly primitive. In the 6th or 4th century B.C., there were no tools to organize a society of free individuals without some type of government, ie. one group of people telling the rest what to do. 

Eliza Gkritsi is a CoinDesk reporter based in Asia. Crypto Questioned is a forum to discuss the ideas and philosophies that drive the cryptocurrency industry.

“Governing a large country is like frying a small fish,” Laozi mused, perhaps as a concession. “You spoil it with too much poking.” 

Today, we have blockchain, which might enable Laozi’s ideal system of governance to come to life. 

Effortless action or anarchism?

The ideal ruler – and person – is one that embodies the ethical and political doctrine of wuwei, which roughly translates into effortless action, inaction or inexertion. It is a doctrine of doing without thinking, ridding one’s self of desire, such that one’s true nature can show itself. 

Effortless action is the essential force of the universe, the Way or Dao. The world doesn’t strive with excessive force, it merely goes on. Similarly, each and every thing has its own way of being, its nature, its purpose, it can fulfill through wuwei.  

The ruler who stops striving and sits still can “clear up muddied water.” When society is confused, muddied, with people not following their natural way, the government can clear things up by doing nothing. If the government is chasing its own deluded goals, individual subjects can’t find their own way to flourish as human beings.

Centralized authorities like governments can cause confusion by inflicting unnatural goals or expectations on people at a massive scale. 

Not everyone is meant to run three startups while making gluten-free pasta from scratch every Thursday and hiking a mountain every other Saturday, meanwhile tweeting witty commentary and analysis every couple of hours. People often set these extreme goals because it is what our society reveres. And as we strive to achieve them we lose our ability to do what is actually in our nature.

Wuwei, an ethical and political doctrine, is about getting rid of this restless pace of living and unceasing desire to focus on what comes naturally. Perhaps that means fewer startups and more gluten-free pasta. 

The Daoist justification for minimal government is very similar to what 20th century anarchists such as Pierre-Joseph Proudhon and Mikhail Bakunin argued: it is a prerequisite for the fulfillment of individual potential. Both streams of thought stand against intellectual and spiritual coercion. 

Anarchists often predicate their arguments against government on the value of liberty. States and hierarchies are undesirable because they ultimately get in the way of individual freedom. For Bakunin, free markets constrained the peasantry, whereas socialism without freedom amounted to “slavery and brutality.”


Cryptoanarchists and cypherpunks, the intellectual inheritors of the anarchists, have long looked to cryptography and decentralized technologies to achieve their ends. In his "Cryptoanarchist Manifesto," Timothy May wrote about using technology to cut through “barbed wires.”

This attitude towards the emancipating potential of tech finds renewed vigor with blockchain. Crypto promises a future in which governments lose their coercive power because of a) cryptographically enabled privacy and b) decentralized tools that have rendered states redundant. In this future, the world is politically and ethically a-OK because individuals are free from oppressive hierarchies. 

Under Daoist thought, decentralization gains new meaning.  

Governing a large country is like frying a small fish. You spoil it with too much poking.

What better way to bring Laozi's dream to life than blockchain? This technology enables free individuals to come together and organize themselves under a set of rules, without a centralized authority setting them down the wrong, unnatural path.  

But for the Daoists, decentralization is a metaphysical imperative. Its normative value isn’t simply emancipation. It’s the best organizational tool to stay true to the Way, and put wuwei on the wheel once and for good. 

Two lessons

In my humble opinion, moving away from the ethical imperatives of liberty and equality offers invaluable grounding. It reminds us that decentralization has a fundamental purpose. It is meant to allow individuals to determine what is best for them and pursue it. It is a precious organizational tool that we must not take for granted just because it is ethically sound. 

It is important to note that wuwei and Daoism later morphed into justifications for autocracy. Under the legalist strain of Chinese thought and particularly in the writings of Hanfei, wuwei was the doctrine of an absolute ruler without emotion. The internal stillness that Laozi advocated for was interpreted as unyielding strength. 

Much like other political theories set on dismantling oppressive authority (you know who you are), Daoism eventually was used to justify exactly that. It is important that we don’t allow our thinking around blockchain and decentralization to devolve to the same point. 



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