Planting multiple electronic flags

August 5, 2010
Vilnius, Lithuania

Our website was down yesterday. You probably noticed… I think it was down for over 12-hours. Now, I’m normally a pretty laid-back guy, and there’s not a whole lot that bothers me. But when technology that’s supposed to make our lives easier suddenly doesn’t work, I become unglued.

After 12-hours, the tech support folks at our hosting company finally determined the root cause of the issue: a faulty network cable. That’s it… nothing sinister, nothing complicated, just a 19th century solution to a 21st century problem.

It’s amazing how reliant on technology we have all become; this is not necessarily a bad thing. Every successive generation in the history of the world has had its own emerging technology that became integrated into their society.

Furthermore, each caused the older generations and social critics of the day to bemoan how that new fangled technology was ruining their civilization, making people ‘soft’, etc. Electricity, indoor plumbing, the telephone, etc. were all met with resistance by some measure of the population.

The chief difference between then and now is that our technology, at least in the consumer’s perspective, is in digital or electronic form… and that the rate of technological progression is exponential (according to Moore’s Law). Naturally, the government has been keen to adapt (somewhat reactively) to these changes.

Curiously, a lot of people think that the government actually spearheads and innovates technological advances. This may have been true 50-years ago when many of the world’s brightest tech minds aspired to government service. Today they aspire to Apple, Google, and their own startups.

Governments now rely on the private sector for their technology needs, and the latest issue with Blackberry is an excellent case in point. For its enterprise service, the popular data handset uses a series of complex encryption algorithms that are frankly too difficult for most government security agencies to break.

So, instead of spending all of that time, money, and effort trying to break Blackberry’s encryption, a handful of governments have issued its maker, Canada-based Research in Motion (RIM), an ultimatum: hand over your encryption key, or we’ll ban your product.

The United Arab Emirates and Saudi Arabia, among others, are the first to do this. Ironically, while authoritarian governments may or may not be successful in a deal with RIM, they are still going to be behind the learning curve when it comes to new technology.

Simply put, the market will continue to adapt, and new technologies will emerge that thwart the best efforts of government to intercept every bit of data flying through the air.

In my opinion, though, this Blackberry case underscores a critical point that we have discussed before— technology is an important flag that you should consider planting in order to diversify your sovereign risk.

For example, if your email provider is based in the same jurisdiction where you live, work, and hold citizenship, the chances of being locked out of your account, or having your private messages used as evidence against you, increase dramatically.

Switching over to an offshore email provider can be done at no cost, an often you don’t even need to change your email address.

For technology entrepreneurs, I would strongly advise planting multiple flags and spreading your sovereign risk across multiple jurisdictions; for example, you can base your company in one country, your web server in another, your email server in another, your bank account in another, and your merchant processor in another.

This safeguards your business, as well as your information, from the ridiculous and often unpredictable acts of impetuous bureaucrats who know no other means but to confiscate and regulate their way to achieving their own agenda.

About the Author

Simon Black is an international investor, entrepreneur, and founder of Sovereign Man. His free daily e-letter Notes from the Field is about using the experiences from his life and travels to help you achieve more freedom, make more money, keep more of it, and protect it all from bankrupt governments.