I see caste-based discrimination as a side-effect, rather than a root problem.

It is for this same reason that shutting down a factory would not change anything, if the mindset that produced that factory remains.

Another factory would soon be built to replace it.

Bitcoin fixes this, I believe, but I'm not sure if we're talking about the same point since I have near zero understanding of how things work in Tamilnadu.

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Caste comprises an important component of a person's identity here. It's a hereditary, communal-level identity.

But the level of relevance of a person's caste in a particular region in India differs based on how urbanised and economically mature the place is. I'd say that it is becoming increasingly irrelevant in Tamilnadu because of the economic growth we've witnessed in the recent decades.

Perhaps you mean caste in terms of economic strata. (Class, I guess?)

Either way, I am trying to think how a libertarian society would deal with this stratification and provide a challenge to existing hierarchies of caste or class.

Reg 'Bitcoin fixes this', I agree with you that it would play an important role.

I *think* I'm talking about caste in the same way as you but correct me if I'm wrong.

Jews for example see certain people in categories such as "goyim" and "gentile".

It is a hereditary identity determined by birth