---
status: published
author: Pavel Kudrna
date: 2025-11-23
place: Prague, Czechia
---

# What Is the Problem?

Have you ever simply been angry at the state, its political class, and its bureaucratic apparatus? Angry at how it lectures you on how to build your house, run your business, raise your children, or prepare for old age? Whether it was a specific situation or a vague feeling, chances are the root cause was the same: a mismatch between how the state imagines your life — and how you imagine it yourself.

Maybe you don’t have a formal conflict with the state. You follow the rules, you don’t stand out too much, you keep a low profile. You only occasionally wonder how exactly politicians interpret your vote — and whether what they supposedly “represent” on your behalf still has anything to do with what you entrusted them with in the first place.

Maybe you bury your head in your hands over how little elected officials understand the modern world. And maybe it’s not just them who frustrate you — but also their voters, with their narrow-mindedness, low expectations, and tendency to deceive you again and again.

Perhaps you have even experienced how the state functions where it is supposed to be most visible: in justice. Were you told that seeking redress for a wrong “isn’t worth it,” because it would cost you more money, time, and nerves than simply giving up? At that moment, a good question arises: do you still feel like part of the nation and the state enough that you would be willing to fight for it — even against an external enemy? Or is it more of a one-sided relationship in which you give loyalty, and the state cannot return it?

In its own PR, the state paints itself in rosy colors. It proclaims values that it systematically violates and sabotages reforms precisely where they would endanger the comfort of its apparatus. It can mobilize — mainly to keep everything exactly as it is.

Did you recognize yourself in any of this, or do you have your own reasons why you partly hate the current state? Do you still dream of a better form of society, or have you already resigned yourself, thinking that “somehow things move forward” despite the state — not because of it?

What if there were a way out that didn’t begin with revolution or ideology but with questions? What if human nature weren’t an obstacle but a building material? What if our less flattering traits — the desire for redress, envy, distrust of strangers — could become fuel for positive change? And what if emotions need to be part of the architecture of social systems so that they are not only “fair on paper” but also stable in real time?

And what if there were a way to move from today’s world of inefficient offices, overpriced agendas, and political stages to a structure that can repair itself, respond, and adapt? Not through the force of law but purely through the economic gravity of human relationships and incentives.

Imagine a tool whose internal mechanics naturally motivate public institutions to try to be more efficient — not out of goodwill but because otherwise they lose their role. A tool capable of functioning across cultures and regimes — from liberal democracies to traditional communities — without forcing them into a single ideology.

And now imagine that to embark on this path, you do not need the state’s permission. It can stop you only at the price of heavy totalitarianism without free communication and access to modern technologies.

You might now expect me to present another ideology — just better packaged. Another grand narrative that promises paradise and ends in blood, chaos, and repression. You might suspect me of being just another false prophet.

But I have no other choice: in the following chapters, I will frankly describe concrete tools and a methodology for using them. Not so that you believe me, but so that you can dissect them, question them, and, if necessary, tear them apart.

I will consider it a success if, after reading, you experience a feeling similar to mine: a sense of relief while others fall into despair over political events and tragicomic scandals — and instead, you find calm, perspective, and focus on where we can go next.

Think I’m bluffing? Then welcome. This short proclamation is exactly for you. Think, question, rebel, and above all, do not be obedient. Otherwise, the world will remain exactly as we hate it today.

> [!danger] Problem
> Only freedom balanced by direct responsibility can truly unlock vast potential never seen before.

# Necessary Preconditions for Change

The fundamental precondition is that the subordinate becomes the superior — or at least an equal partner. This means taking over the most critical agendas that define the relationship of dominance and subordination. Agendas consist of proofs of affiliation to communities that form the citizens of the state. These are information and its verifiability by an authority with substantial reputation within those communities.

> [!important] Voluntariness
>
> Moreover — and this is more an implication than a requirement — when I take over an agenda, I also assume responsibility for managing it. I act voluntarily and of my own will; I am not forced. At the same time, I cannot demand positive-formulated rights from anyone.

> [!important] Organization
> A single person cannot break the system, which is why the state controls the association of people for organized action. It doesn’t matter whether they organize for or against. Only this way can the impact of exemplary punishments be minimized when someone dares to change the state against its will.
>
Let us not set shared goals, but we can walk together for part of the journey.

> [!Important] Resilience
> The chosen path toward changing the state — or transitioning to its successor — must not depend on state permission. The tools and the methodology for using them must be maximally uncensorable. The cost of censoring them must be astronomical. Without this condition, the entire effort is just burning time and life energy.

> [!important] Consensus
> The proposed solution must inherently contain a mechanism for negotiating consensus, as well as a repressive component in case that consensus is violated. It does not need to be voluntary win-win agreement. It is enough if circumstances and social pressure ensure the achievement of compromise.

# A Possible Solution
## The Tool – A Reputation-Based Social Network

Imagine an uncensorable global decentralized social network where you could safely create and manage your proxy identity and report that someone caused a harm (and later perhaps that they corrected it or were forced to). For this feedback to have value as a relevant source, inserting information into the network must cost time, energy, money, and must produce a verifiable proof for others.

Reading information would be easy, but individual entries would be costly and demanding. Moreover, a verifiable computation according to a defined algorithm would strictly tell you whom to request and how to proceed so that they verify and publish the information on your behalf and become the verifier.

> [!note] Algorithm vs Radicalism
> Algorithmic selection of verifiers would ensure that non-radical information publishers would, over time, maintain an almost neutral balance between costs for published information and earned verifier rewards.

> [!note] Algorithm
> The algorithmic selection would always nondeterministically choose a different verifier (or a set of possible verifiers) for different information. The hash of the complete DID document determines the position on a consistent hash ring, selecting verifier candidates. The DID's actual network address (onion gateway) is separate and mutable — holders can redirect it by signing a new version, like updating DNS without changing your domain name.
>
> $$
> \text{ring\_position} = \text{hash}(\text{DID\_document})
> $$

You might not succeed with the first verifier the algorithm selects, because your reputation or declared settings may not appeal to them. You would continue searching algorithmically for another verifier. With each step, the “distance” to the target verifier increases, and therefore the accompanying metadata that must be published grows as well. As the data grows, the cost naturally increases too (both due to size and due to repeated metadata). Publishing credible information would succeed far more easily than publishing nonsensical whims. It would be up to each person how high a price they are willing to bear and how important it is for them to submit an entry (radicalism becomes expensive).

To give your information more weight and a better chance of acceptance, you could use the services of a **reputable authority**, which would either reject the submitted information or accept it and stake its good name on it.

Navigating how reputational signals should be interpreted — what they imply for you in different situations and what risks they carry — might not be trivial. The market could offer products that simplify, digest, and clarify these interpretations.

> [!example] Examples
> Typical information of interest to the publisher — and valuable to others — includes events outside normal interpersonal communication in the real or virtual world.
>
> Negative examples:
> - evidence of criminal acts (e.g., audited by a reputable investigative authority)
> - indirect evidence (weak on its own but statistically accumulative) — e.g., repeatedly present near multiple thefts in a short time → still coincidence?
> - breach of contract
>
> Positive examples:
> - corrected damage (voluntarily or under circumstances)
> - accepted punishment proposed by authority X
> - authority X withdrew recognition of the offender’s property rights in scope AB
>
> It is up to each person to collect available information about the counterparty and evaluate the risks.

> [!note] Whether information about you appears in the network is determined solely by your own behavior.
> You never have to join such a network, yet information about you may appear in it. It depends solely on your actions and the impact they have on others.

I have just described — in short — how a social network inspired by decentralized identity (DID) could function. The primary purpose of DID concepts is to increase privacy and freedom, allowing users to decide what information to share and under what conditions. I propose connecting DIDs into a communication network where they exchange feedback. Instead of freedom, such a system would emphasize voluntary decision-making combined with responsibility for real-world behavior.

> [!note] Voluntariness vs Freedom
> Freedom — in the positive sense — would be a secondary effect of balancing the two factors: voluntariness and responsibility.

## Consensus and the Verification Process

To ensure consensus on which rules should be followed and enforced on average in society, the following mechanism may help. As a DID participant, I declare the rules I follow and publish that I adhere to them.

I can evaluate, relative to my DID contacts, how they would react and assess how much — and by whom — I would be sanctioned in ordinary social or commercial interactions.

A definite evaluation happens when you request information from another DID or ask them to verify a claim you want to publish into the reputation network.

The result can be acceptance and a quoted price for verification, or rejection. Sanctions or bonuses manifest in the offered price. The requester then decides whether to accept the terms or proceed to another verification round in the allocation algorithm — repeating the process until satisfied, or until they give up economically.

It is not enough to declare adherence to a rule if I do not follow it myself. In such a case, my DID risks publication of a negative entry exposing hypocrisy, making me a risk to others. The result should be fewer, more consistently followed rules and a clearing of the jungle of laws and regulations that even legal professionals barely understand.

> [!note] Consensus vs Responsibility
> For the network to serve as a valuable information source, a DID should not be too radical; otherwise, others will reject it. Social pressure will search for equilibrium, and attempts to disrupt stability will likely be punished.

	# Crime and Punishment

> [!quote] How dependent are we on one another?
> **All of us stand upon a single stage of the great world, and whatever happens here concerns us all.**
>
> Jan Amos Komenský (Labyrinth of the World and Paradise of the Heart)

Although there may be many reasons to join or reject a reputation network, I believe one aspect of human nature, often seen as dark, can serve a good purpose. I’m speaking about people’s need for a sense of satisfaction when facing a perceived wrong.

Satisfaction, justice, revenge — we associate these with negative emotions. For social cohesion, we must at least pretend that satisfaction is delivered through centralized institutions; otherwise, individuals would not feel connected to the society they live in. We need to belong to some team and trust it. When an individual suffers a wrong, society watches how satisfaction will be delivered and to what degree. A bit controversially, I propose that it has often not mattered whether the process was clean — what mattered was that society saw *someone* punished. It served the function (numerous judicial errors and the resistance to revisiting old cases say enough).

A decentralized reputation system would allow the public to see direct and indirect evidence (audited or not). Society could evaluate the information — alone or through services specializing in such evaluations — and decide what measures to apply to the subject (or even to the author or verifying authority) based on the qualitative and quantitative signals.

What is punishment? It is a form of humiliation of the alleged offender so that the victim and society feel that harmful acts do not pay. That is the important point: harmful or dangerous behavior must not pay off, and at the same time must provide a sense of satisfaction for victims and society.

Does such punishment need to be ensured by a central authority? What if everyone could declare in advance how they will respond to certain acts? I cannot, of course, carry out punishment on someone else’s property. But I can declare that I will make my property available for a selected set of executive authorities to punish an offender. I may declare this publicly so others can judge my approach. If they see me committing barbaric violence for a minor offense, they may penalize me socially or commercially. Conversely, excessive leniency may also be frowned upon.

> [!note] Quantity vs Quality
> Accusing someone of theft without evidence will likely be ignored regarding the accused but will trigger caution regarding the accuser.
>
> But if the frequency of such claims increases, they may be treated as a series of indirect indicators affecting the accused’s reputation.
>
> Conversely, frequent false accusations from various sources that never repeat may be judged as defamation.

We should not overlook repentance — a voluntary act before guilt is proven, offering a path to forgiveness. Punishment applies when offenders take no steps toward repentance and hope to escape consequences.

> [!example] Types of Wrongdoing
> The types of information need not be limited to criminal acts; they may cover:
> - descriptions of crimes  
> - breaches of contracts and fraud  
> - immoral behavior  
> - disruption of public order, both real and virtual  
> - ...

Each new entry in the DID network adjusts the evaluated reputation and risk of the DID (whether the addressed, the author, or the verifying authority).

Victims and observers seek satisfaction and can decide (individually or through automated pre-declared policies) how to treat the addressed DID, the author, or the verifying authority. In short, this is also about finding consensus between individual and social expectations. A victim may want the harshest penalty; a bystander may be more moderate. The more responsibility I have over others’ fate, the more careful I become.

> [!note] Enforcement of punishment
> I do not need to enforce punishment personally. I can pay (similar to insurance) an authority that enforces outcomes under predefined rules.

> [!note] Social contract
> People argue whether the “social contract” is an oxymoron. Nobody signs anything, yet it is invoked to justify legislative and executive actions in centralized societies.
>
A phenomenological analysis of interactions in the decentralized network could reveal certain emergent rules that apply globally or locally. What should we call these widely shared norms? A social contract?

> [!note] Value politics
> Similarly, it is misguided to view “value politics” as the basis for decisions. Values may instead be phenomenological clusters of commonly preferred rules at a given time. They evolve and are not constants.

> [!important] Democratization of Risk Management
> An uncensorable reputation network would democratize what banks already do as a core activity — risk management.
>
> For the bank clerk facing a client, risk evaluation is prepared in advance so they can focus on business interaction within predefined limits.
>
> I imagine DID usage similarly — someone (likely for a fee) provides a human-readable summary of the counterparty.

> [!Idea] Freedom vs. Totalitarianism
> A simple rule could ensure the entire system results in more freedom or more totality: the maximum acceptable number of entries a DID may publish per time period. If entries remain scarce, entries will carry weight (freedom). If entries are abundant, they will cover trivialities (totality).
>
> One can imagine delegating the right to publish entries to someone else.
>
> A society that limits entries will be more free; one with abundant entries will trend toward totality.

![[Information Verificaton and Propagation.svg]]

# Methodology of Using the Reputation Network

We have a decentralized reputation network and a motivation to use it.

Let us prepare for likely attacks and set up mechanisms for improvement: adding services, modernizing, and forgetting the unnecessary or discredited ones. Through standardization of information, we can manage the network’s evolution.

A new dimension of creativity, openness, and social cohesion emerges. In business, for example, due diligence, risk reduction, and capacity evaluation become faster and more automated.

But that is not all. We must return to the beginning and address the original problem.

> [!quote] Problem
> We want more freedom, more influence over its form, and responsibility that corresponds to it.

## Follow the Money Trail

The principle of central power is its ability to oversee and strongly influence money flows. Through money, the state pays its coercive apparatus — the final link in enforcing its rules.

Money flows naturally fluctuate (seasonally, economically). The state compensates by borrowing on financial markets. Sometimes borrowing is justified; often it is driven by oversized spending on agendas that go beyond the state’s foundational purposes (defense, internal security, criminal justice, foreign affairs).

> [!note] Note
> We are not analyzing rational borrowing for investments that increase economic performance and can justify debt.

Depending on total debt or debt growth, the state may borrow on markets. At certain thresholds, national banks (usually independent) intervene. Their primary tool is setting interest rates based on measured/estimated inflation.

> [!note] Note
> We will not examine the advantages, disadvantages, and distortions of different inflation measurements.

## A Strong and a Weak Spot

From the public’s perspective, artificially maintained inflation is a hidden tax on the currency’s purchasing power. Low inflation is tolerated, although over time it increases citizens’ dependence on the state.

In turbulent times — due to urgent societal or state needs — spending rises, compensated by “printing new money,” which increases inflation, reducing purchasing power of responsible savers and earners.

This severely undermines trust in the state — this is its weak spot. The tool described below uses this mechanism as the main lever to force the state into submissive collaboration.

> [!Important] Why money, not other weak spots?
> Another major weak spot (of civilization itself) is energy distribution. But interrupting it is not leverage — it is aggression. Voluntary non-participation is not the same as intentionally harming others.

> [!idea] Dried-Out Riverbeds
> Attempts to reform the state rely on internal mechanisms of power, hoping officials will implement changes contrary to their incentives.
>
Why feed the system instead of drying out the riverbeds? Rather than changing the old system, build a new layer above it — one that eventually makes the old system a subset of the new. At first the subset is large, but over time more actors will opt out into the new system.
Companies know this: when an old system is too entangled to replace, build a new parallel one and migrate users gradually.

## Proposed Transition to the Successor of the State

### Evolutionary Approach

What certainly triggers resistance — even if the end goal is attractive — is abrupt change disrupting social, economic, and political ties.

The proper approach must be gradual, evolutionary, ensuring the old system cannot simply shut the new one down with a button.

### The State’s Weak Spots

We mentioned one weak spot: the lack of fast, affordable satisfaction for perceived injustices.

Another is money and monetary policy. Artificial inflation is a hidden tax. In turbulent times, it sharply weakens purchasing power — someone is secretly stealing your time and flattering you that you are being well rewarded.

This severely undermines trust yet sustains state control. The upcoming tool uses this as leverage to force the state into cooperation.

> [!note] Energy and morality
> Energy is another weak spot but cannot be used ethically; disruptions would be aggression, not leverage.

### A Finger in the Open Wound

Until now, DID reputation networks may seem useful mainly for justice and consensus. I believe such a system could stabilize itself and resist attacks (especially meritocratically).

Nothing prevents us from using DID identities as controllers for additional tools that help transition from the decaying state to its dynamic successor.

Do not begin with full voluntariness; set a direction that cannot be stopped. Build:

* **A Simple Tax System**
    * e.g., a proportional tax on every transaction, clearly (auditably) linked to the DID that paid it  
    * no exemptions, easy cross-checking  
    * a single rate slightly more advantageous than the old system  
    * no tax holidays, incentives, corporate exceptions  
    * decreasing burden year-by-year, expanding attractiveness
    * the system is both record-keeper and collector

- **ESR (Electronic Spending Reporting) for the state and public sector**
    - a proxy pairing every realized expenditure with a planned-payment record
    - this produces raw data for analysis and taxpayer recommendations
    - with refundable deposits for entries, people need not join the tax system to participate (deposit ~1-3 EUR per realized payment; rest forfeited — spam filter)
    - proxy data is public; political parties become providers of analyses
    - lazy or nonsensical entries become automatic candidates for budget cuts
    - anyone may enter a record by paying the deposit; officials must pair expenditures responsibly

> [!note] ESR (Electronic Sales Records)
> Between **2016 and 2022**, the Czech government imposed the **Electronic Sales Registration (ESR, i.e EET in czech)** system on its own self-employed citizens — essentially declaring: _“We assume every one of you is cheating the state, so you will record every single sale, send it to our servers in real time, and we’ll keep an eye on you. And to make sure you comply, we will even financially reward your fellow citizens for reporting you.”_
 >
The Czech EET was modeled after earlier **fiscalization systems** introduced in the Balkans. The **first country in the world** to deploy a nationwide compulsory real-time online sales-registration system was **Croatia in 2013**, under the name **“fiskalizacija”**. The Czech Republic adopted the same model a few years later, making EET one of Europe’s strictest state-controlled transaction-monitoring schemes at the time.
>
If the dark side do not hesitate, why would we?

- **A Tool for Allocating Taxes**
    - a small % of paid tax can be allocated by the payer, but only if their DID satisfies reputation requirements (citizenship, residency, etc.)
    - allocatable % grows year by year (exponentially)
    - analysis from ESR guides taxpayers
    - poor-quality entries act as a red flag for recommended cuts
    - anyone can create entries; officials must pair them

- **A Negotiation Platform with the Existing State**
    - The main conflict will be forcing the state to adopt ESR (national level first)
    - The main leverage: just-in-time funding of the state, conditioned on pairings with ESR
    - A waiting list of participants will form; activation happens when the group becomes economically significant — enough to threaten GDP growth
    - The state will keep problematic, corruption-linked payments the longest and yield on simpler ones under pressure

**Overview of DID and Tool Relationships**
![[Transfer Mechanism.svg]]

**Qualitative Summary Timeline**
![[Unspecified Harmonogram.svg]]

I do not claim this is the only way or the best, but it seems comprehensive. We may observe that the new system initially overlaps with the old — we merely change incentives. Over time, the old system shrinks until it may or may not dissolve. The advantage is gradual transition and reversibility in case of design error.

> [!note] Peace and War
> Some parts of the state may not have fully market alternatives — perhaps the military. Temporary delegation of extra authority in crises (as ancient Greeks appointed dictators) might still exist, but accountability would lie with the decentralized society.

> [!note] War Criminals
> With just-in-time state financing and transparency, it becomes harder for a state to accumulate resources for aggressive wars.  
>
A taxpayer who continues funding such a war becomes a legitimate target and cannot claim civilian status under the Geneva Conventions.

# Conclusion

The state is the way it is because of the technologies available when it was formed combined with human nature. Building everything on voluntariness while denying average human nature is naive. A successor to the state must work even with the traits we currently consider negative.

These ideas were written between June and November 2025, when I encountered [Farewell To Westphalia](https://logos.co/assets/Farewell%20to%20Westphalia%20(Jarrad%20Hope%20and%20Peter%20Ludlow)%20-%20FOSS%20edition.pdf).  
It sparked interest, but after three hours of reading, I was disappointed by how naively the authors rely on a human nature that, in my opinion, does not exist.

Pavel Kudrna  
2025-11-23 Prague, Czechia