Cypherpunk 2024 Part.1

Table of Contents

1. Big Brother

2. The Genesis of Bitcoin

3. The Good, the Bad, and the Ugly

3-1. Capitalism on Steroids

3-2. Crypto Changes Lives

4. Divergence

5. Conclusion

 

 

1. Big Brother

It was one of those pictures which are so contrived that the eyes follow you about when you move. 'Big Brother is watching you,' the caption beneath it ran.” - 1984, George Orwell

In today’s world, the internet has woven itself into nearly every aspect of our lives, influencing how we work, socialize, and think. The sheer amount of personal information stored on a single device could easily reconstruct someone’s entire life. But does technological advancement always equate to a better quality of life? Or are we inching closer to a dystopia where Big Brother’s watchful eye controls and monitors our every move?

It’s this underlying concern that gave birth to crypto. The cypherpunk movement emerged from a desire to protect personal privacy and freedom in a world increasingly dominated by government power, multinational corporations, and traditional financial systems. The culmination of this movement was Bitcoin, a P2P electronic cash system. Back then, crypto wasn’t just seen as a digital asset or a blockchain technology—it was an act of defiance, a part of a broader socio-political and cultural movement.

When the crypto market first took shape, it attracted a wave of bright minds who were captivated by these ideals. Their dedication and work laid the foundation for today’s crypto industry. Fast forward 15 years, and Bitcoin has not only surpassed silver in market capitalization, but it has also become a new asset class that’s recognized on the global stage. It’s even been adopted as legal tender by some countries and entered mainstream political discussions.

Crypto is no longer just the domain of cypherpunks; it’s on the path to mainstream adoption. In this transition, the focus has shifted from the original ideals to more practical concerns. While some welcome this evolution, others lament the loss of the original cypherpunk spirit. So what does crypto stand for today, and where is this market headed?

2. The Genesis of Bitcoin

It all started with cypherpunks. The term "cypherpunk" stems from the cyberpunk genre that first gained prominence in the 1980s. Cyberpunk explores dystopian futures ruled by technology, focusing on how such advancements can erode human dignity and freedom. Early works like Blade Runner (1982) and Tron (1982) visually brought these cyberspaces to life and firmly planted the genre in popular culture. However, it was William Gibson’s Neuromancer (1984) that crystallized the genre, painting a bleak vision of how technology could encroach upon individual freedom and offering a dark glimpse into a potential future.

Later, films like AKIRA (1988), Ghost in the Shell (1995), and Cowboy Bebop (1998) further solidified the foundations of cyberpunk culture. This genre evolved into more than just fictional entertainment—it became a symbol of rebellion and a cautionary tale against unchecked technological power. The iconic scenes of neon-lit cities, where characters wield technology in epic battles, are more than just visual spectacle. Beneath the surface lies a deep mistrust of power and a fierce defiance against those who might use technology to control humanity.

Around the same time, cypherpunks emerged, sharing similar ideological concerns with their cyberpunk counterparts. Cypherpunks also recognized the risks of technology being wielded as a tool of control. However, while cyberpunk explored these themes through literature and art, cypherpunks took a more proactive approach in the real world. While cyberpunk often portrayed the future with a sense of nihilism or cynicism, suggesting that technological oppression was inevitable, cypherpunks adopted a more optimistic stance. They believed that technology could be harnessed to protect individual freedom. And their solution was cryptography.

The 1970s marked a pivotal period when cryptographic technology began to emerge from the shadows of government use and into the civilian sphere. During this time, groundbreaking innovations like the Diffie-Hellman key exchange algorithm, introduced by Whitfield Diffie and Martin Hellman in 1976, and the RSA public-key cryptosystem, developed by Ron Rivest, Adi Shamir, and Leonard Adleman in 1977, laid the foundation for modern information security systems.

Whitfield Diffie (Left), Martin Hellman (Right)

Ron Rivest (Left), Adi Shamir (Center), Leonard Adleman (Right)

Prior to these advancements, cryptography was primarily a tool of governments, with its use being highly secretive. The prevalent method at the time was symmetric-key encryption, where the same key is used for both encryption and decryption. While symmetric-key systems, such as AES (Advanced Encryption Standard), are advantageous due to their speed, they suffer from significant limitations. The need for both the sender and recipient to share the same key makes secure key distribution difficult. Moreover, as the number of users increases, so does the complexity of key management, limiting the scalability of this approach.

Source: SSL2BUY

To address these challenges, public-key cryptography was developed, introducing a revolutionary system that uses two mathematically linked keys: a public key and a private key. Unlike symmetric systems, public-key encryption allows the public key to be freely distributed while the private key remains secure. This makes key distribution much easier and reduces the need for additional security measures. Additionally, the public key can be used to verify digital signatures, allowing recipients to confirm the source and integrity of data. An example of this in practice is the ECDSA (Elliptic Curve Digital Signature Algorithm), commonly employed in blockchain systems.

Source: SSL2BUY

As cryptographic technologies evolved and became more accessible to the private sector, cypherpunks saw an opportunity. They aimed to leverage these tools to build decentralized systems that could redistribute power away from governments and large corporations while safeguarding individual freedom and privacy. As early cypherpunks articulated:

“Privacy is necessary for an open society in the electronic age. An anonymous system empowers individuals to reveal their identity when desired and only when desired; this is the essence of privacy. We must defend our own privacy if we expect to have any. We must come together and create systems which allow anonymous transactions to take place. The technologies of the past did not allow for strong privacy, but electronic technologies do. Cypherpunks write code.” - Eric Hughes, A Cypherpunk’s Manifesto (1993)

“We find ourselves on the verge of a dangerous time, a point where our basic freedoms are at stake. The internet, once hailed as the greatest tool for liberation, has now become the most dangerous facilitator of totalitarianism we’ve ever seen. The great battle of our time is whether the internet will empower us or enslave us. Our task is to ensure self-determination and to fight back against the surveillance state. Encryption can enforce privacy on a large scale. Encryption is the technology that can give power back to the people.” - Julian Assange, Cypherpunks: Freedom and the Future of the Internet (2012)

“Computer technology is on the verge of providing the ability for individuals and groups to communicate and interact with each other in a totally anonymous manner. These developments will alter completely the nature of government regulation, the ability to tax and control economic interactions, the ability to keep information secret, and will even alter the nature of trust and reputation. The state will of course try to slow or halt the spread of this technology, citing national security concerns, use of the technology by drug dealers and tax evaders, and fears of societal disintegration.” - Timothy C. May, The Crypto Anarchist Manifesto (1988)

Eric Hughes, Timothy C May, Julian Assange

Under this philosophy, cypherpunks wrote code and built practical systems that pushed the boundaries of cryptographic technology. Their relentless determination led to significant breakthroughs that have been integrated into modern cryptographic programs. Some of their notable achievements include:

• PGP (Pretty Good Privacy): A data encryption and authentication program that allows individuals to communicate and share files securely over the internet. It quickly became the de facto standard for email encryption.
• Remailers and Mix Networks: Technologies that enable anonymous communication by concealing a user’s actual IP address. Remailers allow for the anonymous transmission of emails, while mix networks shuffle message paths to make tracking difficult.
• Anonymous Digital Signature Technology: Digital signatures verify the authenticity and integrity of documents. Anonymous digital signatures allow users to sign documents without revealing their identity, playing a crucial role in preserving privacy.
• SSL (Secure Socket Layer): A protocol designed to securely transmit data over the internet. SSL protects communication between web browsers and servers, ensuring that sensitive information like online transactions remains secure.

Around the same time, cryptographic currencies and their technological foundations—prototypes of Bitcoin—were also beginning to emerge. David Chaum, a renowned cryptographer and a pioneer of the cypherpunk movement, invented DigiCash in 1989, a digital currency system that used blind signatures to keep transaction details anonymous. DigiCash was the first attempt to merge cryptography and finance, paving the way for digital currencies.

Eight years later, in 1997, Adam Back introduced Hashcash, the first system based on proof-of-work. Originally designed to combat email spam, Hashcash required users to perform a computational task before sending messages. This proof-of-work concept became the foundation for Hal Finney’s Reusable Proof-of-Work (RPOW) system, developed shortly thereafter.

In 1998, Wei Dai published the B-money whitepaper, which first introduced the core concepts of decentralized ledgers and smart contracts to electronic currency systems. Around the same time, Nick Szabo proposed Bit Gold, a precursor to Bitcoin that combined proof-of-work, decentralized ledgers, timestamping of blocks, consensus mechanisms, and double-spending prevention. Though Bit Gold remained a theoretical proposal, it laid the groundwork for Bitcoin’s design.

In 2004, Hal Finney developed Reusable Proof-of-Work, a significant milestone in the journey toward Bitcoin. Unlike Hashcash, where proof-of-work tokens were used once and discarded, RPOW allowed tokens to be reused for different transactions or tasks. Although RPOW still relied on a central server, it demonstrated the utility and efficiency of proof-of-work tokens, paving the way for Bitcoin’s fully decentralized system that would later eliminate the need for central servers using blockchain technology.

Hal Finney, Nick Szabo, Adam Back, David Chaum

Finally, on January 3, 2009, Bitcoin was born. While many attribute Bitcoin’s creation to the genius of a single figure, Satoshi Nakamoto, the reality is far more complex. Bitcoin is the culmination of years of dedication and innovation by countless cypherpunks, building upon the concepts and technologies they developed over decades.

Excerpt of the Bitcoin Whitepaper, Source: Bitcoin Whitepaper