Cryptocurrency emerged out of a unique confluence of events. Public-key cryptography, the technology that paved the way, was born from a shared challenge encountered by two distinct groups scattered across different historical periods.
This challenge involved the need to transmit information securely, covertly, efficiently, and swiftly over a broad reach. It was driven by advancements in technology that both enhanced communication capabilities and increased the risk of information interception.
This issue was a thorn in the side of military leaders and intelligence officers during pivotal moments like World War II and the Cold War, as well as members of the rebellious hacker and Cypherpunk communities. that arose during the 1990s Interestingly, both groups converged on a similar solution, setting the stage for an inevitable clash.
The Role of the Military-Industrial Complex in Preparing the Ground for Cryptocurrency
Modern cryptographic methods found their roots during World War II as a counter to emerging communication technologies. Radio, with its ability to transmit massive data wirelessly from virtually any point, was the game-changer.
The catch with radio technology was its vulnerability: anyone with a receiver could potentially eavesdrop, enemy forces included. This issue surfaced during World War I, escalating to a security debacle in World War II, when portable radio units meant messages could be sent from virtually anywhere.
Encryption of radio communications was seen as the natural fix. As the 1930s rolled in, signal encryption became commonplace, with devices like the enigmatic German Enigma machine becoming widely recognized. As war erupted in 1939, both the US and the UK embarked on ambitious national programs to crack codes and develop encryption.
The German Enigma Machine, with its Intricate Mechanisms Wikipedia .
These initiatives sparked a formal science and technology dedicated to cryptography. Though cryptography had a long history as a pastime for spies, mathematicians, and diplomats, few made a living from it post-World War I, often struggling to find work. The creators of the Enigma machine ended up marketing it commercially, and notably, in 1929, U.S. Secretary of State Henry Stimson dismantled the government's code-breaking unit, considering it impolite to pry into others' communications.
During World War II, massive code-breaking projects were undertaken by both the UK and the US, significantly aiding their wartime efforts by deciphering nearly all German and Japanese codes. Post-war, both nations founded formalized bodies for information security and electronic surveillance, which endure today.
In the early 1970s, two cryptographers at the UK's Government Communications Headquarters (GCHQ) conceived the foundations of what cryptocurrency leverages. James Ellis They envisioned non-secret, or public-key encryption; a system where the encrypted message itself carried the key for decryption. Clifford Cocks They devised the mathematical principles enabling this concept.
James Ellis, image from The Telegraph .
GCHQ and its American counterpart, the National Security Agency (NSA), did not adopt public-key encryption at the time due to a lack of supportive technology. A public, computer-managed communication network, akin to the internet, was essential, but such systems weren't publicly available in the 1970s.
Enter the Cypherpunks
In the 1980s, a new cohort of computer scientists and tech enthusiasts turned their focus to cryptography. They grappled with a challenge akin to that of the military with radio: safeguarding information in the open space of the internet.
As the internet's popularity surged in the 1990s, a savvy few—primarily hackers—acknowledged its lack of security. They sought ways to exchange data secretly and privately across this new frontier, with public-key encryption emerging as the solution.
Small groups of hackers, mathematicians, and cryptographers banded together to actualize public-key encryption. The concept, publicized in the 1970s, caught the attention of select intellectuals, including prominent figures like David Chaum. David Chaum .
David Chaum, Image from Wired .
Chaum grew concerned about what he dubbed 'the dossier society' and 'unseen mass surveillance,' foreseeing an era where computers disclosed all personal details to authorities and major corporations. In pursuit of preserving privacy, he turned to cryptography, proposing advanced solutions. His groundbreaking ideas included anonymous digital communication, electronic signatures, and digital secret identities.
In 1983, it was Chaum who initially put forth the concept of cryptocurrency, in a paper titled Numbers Can Be a Better Form of Cash than Paper. Chaum forecasted that electronic currency might offer the anonymity of paper money with the practicality of credit cards. Although the technology to bring this to life was absent at the time, the idea persisted.
By the 1990s, a passionate group known as the 'Cypherpunks' emerged, painstakingly working to bring Chaum's visionary concepts to fruition. Among their releases were several public-key encryption solutions, like Pretty Good Privacy (PGP). The Cypherpunks rose from the cyberpunk subculture, merging an enthusiasm for the internet and computers with a fondness for the counterculture of the '80s and '90s.
Cypherpunks aimed to utilize encryption tools—borrowed from the military-industrial complex—to safeguard personal freedoms. A central Cypherpunk concern was the potential for governmental dominance or interference in their cyberspace playground.
Cryptography turned into a defensive mechanism to defend their autonomy from intrusive governance. They laid out their foundational principles in a seminal declaration that emphasized the value of privacy. A Cypherpunks Manifesto \" :
In the electronic age, privacy lays the groundwork for an open society. Privacy differs from secrecy: the former is about concealing aspects one's willing to share selectively, whereas the latter ensures nobody knows. It empowers individuals to reveal themselves selectively to the world.
Many Cypherpunks stood firmly against governmental authority. American Cypherpunks often aligned with Libertarian ideals, equating any form of governance with tyranny. In contrast, European Cypherpunks, typically Anarchists, saw both government and big business as oppressive forces. Among the most idealistic Cypherpunks, there was a belief that cryptography might lead to a digital utopia free from external control.
This belief fueled ongoing skirmishes between Cypherpunks and intelligence agencies from the early '90s. Although they wielded the same technologies, contrasting views on patriotism and societal good often left them at odds. Tensions flared whenever new surveillance technologies came on the scene or Cypherpunks introduced novel encryption methods.
The Possible Role of Cypherpunks in the Birth of Bitcoin
As Cypherpunks harnessed cryptography for personal computers and the internet, they ignited widespread open-source cryptography research. This research spanned nearly two decades, finally giving birth to the first public cryptocurrency—Bitcoin—in 2009, bringing the revolutionary blockchain concept to broader attention.
The true identity of the creator of Bitcoin Satoshi Nakamoto The identity of Bitcoin's creator, Nakamoto, remains cloaked in mystery. However, it's evident they emerged from the Cypherpunk tradition, leading to rampant speculations—including suggestions that Nakamoto might have ties to organizations like GCHQ or the NSA. Regardless, Nakamoto's innovation intertwined Cypherpunk visions with mainstream society.
Today, we're witnessing the dawn of a crypto-revolution poised to realize the Cypherpunks' boldest ambitions; the simple quest for privacy has the potential to catalyze profound societal transformation.
Reading list:
A comprehensive overview of public-key cryptography and the Cypherpunk phenomenon can be found in The cypherpunk revolution a Christian Science Monitor initiative from July 2016.
A definitive account of digital cash's evolution is Cryptocurrency: How Bitcoin and the Blockchain Are Challenging the Global Economic Order by Michael J. Casey and Paul Vigna. While the book, released in 2015, is already somewhat dated, it remains an enlightening read.
Numerous captivating books delve into cryptography and codebreaking during World War II. Among the best is Code Girls by Liza Mundy, charting the inception of the NSA and U.S. cryptography. Ronald Lewin’s Ultra Goes to War: The Secret Story, originally published in 1977, remains invaluable for its revelations about encryption's wartime role.
