Bankless - 61 - Before Bitcoin | Peter Pan

Starting point is 00:00:01 Welcome to bankless, where we explore the frontier of internet money and internet finance. This is how to get started, how to get better, and how to front run the opportunity. I'm Ryan Sean Adams. I'm joined with David Hoffman, and we're here to help you become more bankless. David, we've got an episode we've never done before. Can you describe what listeners are getting into today? Yeah, I recently put out the article all about crypto culture on the bankless newsletter. And that was the first article that I ever did a discovery process on. And so I went

Starting point is 00:00:47 out to different people who I knew could speak about crypto culture because the theory is, crypto culture is awesome and fantastic. And we don't want to export it to the rest of the world. But when I was talking to my friend Amin Soleimani, he forwarded me off to this before Bitcoin series from Peter Pan. And Peter Pan's been a key member of the Ethereum ecosystem, part of Metter Cartel Ventures. And he has, he back in 2018, wrote these four series about what he calls before Bitcoin, the history of cryptography. And this is where I think crypto culture really got instantiated in the first place, where the early formation of these early cypherpunks who came together to fight these math-based battles, math versus the world or

Starting point is 00:01:31 math versus the government, and has defined a lot of what this industry has come to be. And I immediately just realize how powerfully awesome these series are, these written series are. And so I wanted to get this information out to the world to as many people as possible because the story of Bitcoin and Ethereum and all the things that we're doing today on Ethereum, that story really started in the 70s. It didn't start in 2009 when the first Bitcoin block was mined. And it didn't start in 2015 when Ethereum when launched. It started in 1970 when some of these early cypherpunks shook hands for the first time and decided to build something together. Guys, this is really important listening for you today. If you're in the bankless program, you know that everything in crypto is an intersection between all of these various fields. We've done episodes on the history of money before, and that's important for you to understand. But equally important is the history of cryptography.

Starting point is 00:02:24 That is one of the underpinnings of this entire system. And this episode gives you the history of cryptography, tracking all the way back to the cypherpunk roots. And it gives you insight into the culture that surrounds crypto. so it's absolutely required listening. As far as format goes, guys, we're doing this a bit different. We're doing something we've never done before. Think of this as an audiobook.

Starting point is 00:02:47 If you use something like Audible, which I do all the time, you're familiar with the format of audiobooks. That essentially is what the back half of this podcast episode is. It's a full-fledged mini-audio book for you. So at first, right after this intro, David and I are going to talk with Peter Pan, who is the author of this audio book and get his insights into what we're about to get into. And then this audio book is divided into four parts. It starts with part one, the 1970s, around the public key saga, part two, the 1980s, which gets through the origins of decentralization, then the 1990s and the

Starting point is 00:03:26 crypto wars, and leads into 2000s and the birth of cryptocurrency. So David's going to be reading it as if he is reading an audiobook. The format, was fantastic for me to absorb this material, and we think you're going to enjoy it as well. So today, you get a podcast plus an audiobook. I'm really excited about this episode, David. Yeah, it's truly a hidden gem, and I'm super happy that we were able to get what Peter Pan wrote into more ears. It's well-deserved, and I think some of the information here is underappreciated and perhaps just unknown, and so we're going to make this information a little bit more known today. All right, with that, we want to tell you about the sponsors who made this

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Starting point is 00:06:40 All right, bankless nation. We are here with the author of this fantastic series, Peter Pan. He is a community first investor at 1KX. He's also an investor and part of the leadership of the Meta Cartel Ventures Group and also Venture Dow. Peter, how are you doing? I'm doing great. Thanks, Ryan. Peter, this series of articles that you wrote almost reads like an audiobook, and that's kind of how I listened to it. Actually, I listened to it before I actually read

Starting point is 00:07:07 the series. David was kind enough to record his voice reading through it, and I just downloaded it into my brain that way. But I was super impressed with the depth of research, but also kind of the narrative through line that this series of articles put together. very much read like an audio book. I was wondering if you could maybe start with, why did you write this piece? Yeah, good question. By the way, I'm super honored

Starting point is 00:07:32 that you actually picked this up because it was just kind of floating out that, right? You know, for a while. And it was actually one of the first things I really, like, worked on in the crypto space. So I joined the crypto space about nearly three and a half, nearly four years ago.

Starting point is 00:07:47 And, yeah, it was just firstly me, you know, going for the usual cycle, of like, you know, learning about tokens, you know, reading my papers, being fairly, you know, lost amongst a buzz, right? And I think it was in late 2017, where I started going to a local Ethereum meetups where I was like, where in the first meetup, right, I ever really went to, that was run by this guy called Bucky Puba, right? He was, like, the godfather of the Ethereum, Sydney Ethereum developer community. So he told me, you know, like basic things such as like, what is a network? It's like, you know, what is a blockchain network? What is the Ethereum

Starting point is 00:08:24 blockchain network? And, you know, what is EtherScan? What are private keys? And that was like, you know, I think my first one was in September 2017. And I went down the rabbit hole into learning about the technology. And I was pretty immersed by it. And I realized that, you know, Web Free and Ethereum was going to be a very, very special, like, you know, it was going to be a place of special work. Like, it was going to be the work that was being built was important. I didn't really know how or when, right? But I knew that there was a lot of catch-up work to do. So I, you know, quit my role as a designer late that year.

Starting point is 00:09:00 And it's, you know, I kind of time block myself, like one year to, like, fully dedicate myself to learning about the firm ecosystem and, you know, to get involved. And just to, like, figure stuff out and find a job in the space, right? And, you know, initially as I guess, you know, I was a designer doing use like, I guess user research, U. U-X design, non-technical, don't have a computing background. So I really started to just ask questions, like, what is the firm network? Really, what is it, right? Like, you know, this network of, you know, computers running software across the internet. Like, what is a computing network?

Starting point is 00:09:35 What are computers themselves? What is the internet? How does, how do you, I guess, even, you know, transport information across the internet securely, right? And I just like slowly started asking these questions. all the way until, like, I started breaking it down to, like, you know, I guess go through the different abstraction levels of like, you know, from computers themselves, understanding, like, how they communicate with a network layer to understanding, you know, what is actual cryptography itself, right, to realizing it's just like, you know, it's all number theory in general, right, in discrete mathematics. So I try to like really grasp and, you know, gain a brief appreciation of each layer of abstraction. And only once I did that, did I realize I could really have a solid sense of where blockchain is like really fit in this context of technology itself, right?

Starting point is 00:10:29 And one of the things I also did was not only learn about the technology, like I basically when I learn about each like piece of technology or each layer of abstraction, I also try to understand and learn about, you know, who was the people behind them, right? I generally find people much more interesting than just technology itself. And I think when I came to the part about cryptography, I did the standard reading where I went for like obviously the history of like, you know, encryption in general, right, from the ancient times to like the modern era. And I think, you know, it was actually when I started learning about, you know, asymmetric cryptography where I realized, you know, just slowly when I went for the history of the people involved, I realized it had.

Starting point is 00:11:15 really strong linkages to the cyphobunk movement and in cryptocurrency in general. And I realized that, you know, the lineage here is actually much stronger than, you know, people may have, like, made it out to be. And I just like, you know, when I did this research was really, you know, unstructured, I just realized they kept rambling to people about it because I was like, I thought this was a really cool story, right? And I realized I should just start writing about this. And when I started writing about it, it was also about.

Starting point is 00:11:45 part of my just, you know, kind of research process as well of like, you know, digging through the different people involved, right? Like, David Cholm, you know, the, like, I guess, you know, Diffy and, like, Helman, people like that. Yeah. Cudos to you, Peter, for diving deep and going through the research. You know, when we introduced you and you have this in your Twitter tagline, we introduce you as a community first investor, right? And what you did was basically not only some kind of technical study in terms of what is cryptography and defining that, but you're almost an anthropologist in this, where you sort of track the cultural lineage of this crypto movement all the way back to where it began sometime in the 1970s. And I love how this series of articles, again, it almost reads like an audiobook is laid out where you have the 1970s and you have the 1980s and 90s and all the way up through today. and how this movement has fed into the crypto-native movement, a movement that bankless is one part of as well.

Starting point is 00:12:46 So this is fantastic history. But I wondered if you could talk a little bit about the cypherpunks, because these are the heroes of the journey throughout these decades. What was the value system of the cypherpunks, if we talk about this cultural lineage? What did they care about? What did they believe in? Yeah.

Starting point is 00:13:06 I would probably call the first cypherpunks, you know, I mean, obviously you had the 90s, right, movement of the cypherpunks, but I really think that it started with, you know, Martin Hellman, which for Diffey and Ralph Merkel, like, they were the people who really came together to really publish the findings on, like, on how to solve, like, you know, the problem of asymmetric encryption and decryption, right? Right, like, I guess one distinction, you know, for those who are listening, they'll probably learn this in the articles, but there was symmetrical encryption and decryption well, like the key, you know, for securing information, encryption and decryption shared the same key. And because of that, you couldn't really share the key

Starting point is 00:13:49 publicly, right, at all. So it was very hard to, like, actually transmit, like, secret information across unsecure, like, communication channels. The key, the, the, not the key, but I don't want to say that, but the, the innovation of asymmetric key cryptography was the fact that you could actually decouple the encryption and decryption keys. So you could encrypt something and actually publish that encrypted information and you wouldn't need to, someone with the decryption key could then just decrypt that, right? And that encrypted information could be published anywhere, right? This was the problem to solve back in the day in the early 1970s. And, you know, cryptography research until then was mostly, you know, funded by the government and the military. And because of that,

Starting point is 00:14:33 cryptography was really kept in a dock. It was like no one really understood much about it. It wasn't cool. But it was actually, you know, Martin and, you know, and Whitfield that they really like, there were two individual researchers that really set out to solve these problems individually, and they found each other. And they, when they found each other, they started, you know, discussing, you know, the research problems and they realized they were working the same thing. But the key thing was, you know, they had this choice of like, you know, I guess whether they should be working on this problem or whether they should be working for like corporation to do this sort of of work. And one reason why they did do this in the public, right, and publish an open source of work

Starting point is 00:15:12 was because they believe that this technology is way too powerful for it to just be, you know, kind of to be gated by one government to be, you know, kept in the dark, right? And that was like one set of valleys that drove them to kind of deal with their research. And that really ushered in this like whole new movement around cryptography when they published the paper. But, you know, It was the first ever piece of like really strong piece of cryptography that was pushed out into the public and that created like a renaissance around cryptography itself. And this was like one of the themes, you know,

Starting point is 00:15:43 throughout the 80s as well of David Choms work. He really cared about, he really, he was an advocate for privacy. You know, he was a person who invented the idea around metadata and how like, you know, encryption only encrypted messages, but not the data around the messages, right? Like when it was sent and so on. And all of these people, history who actually pushed these innovations on. Did it for, because they believed in something bigger than themselves.

Starting point is 00:16:08 Really, it was, they did it, you know, for a set of values that we understand as the cipherbook valleys, which is really around, you know, privacy, self-sovereignty on the internet, freedom, information is freedom. I guess I took a lot of these learnings and, you know, they became kind of us inspiration to a lot of my personal mark in the space early on, which was like, you know, to do something important. Peter, there's a part of your article where it recapped an email that came out of the cypherpunk email thread. And that part really stood out to me. And so I want to read a few lines here. And this is just from the guy that sent out the email to everyone else inviting all the other

Starting point is 00:16:46 cypherpunks to come and join him in a cypherpunk meeting. And in this email, he gave out a couple things that he believed what defined cypherpunks. And he said, cypherpunks know that cryptographic protocols make social structures. Cypherpunks don't if you don't like the software they write. Cypherpunks know that software can't be destroyed. Cypherpunks know that a widely dispersed system can't be shut down. Cypherpunks will make the network safe for privacy and cypherpunks write code. How much of these statements, which were just the statements of one man back in, I believe, the 90s, one cypherpunk, self-identified cypherpunk, two other self-identified cypherpunks. How much of these values and beliefs and definitions of what makes a cypherpunk do you think

Starting point is 00:17:30 is still held true today by the cultures that surround like Bitcoin and Ethereum and open systems, right? The reason how we ended up talking about your piece is we went on this discovery process to try and figure out what crypto values actually are. And it was Amin Soleimani who focused me back to your work. And so my question here is, how has Cypherpong values become extrapolated to the communities and cultures around Bitcoin and Ethereum? It's a really good question. I think one thing about the second ones that they understood was that cryptography was this like tool that could protect the, you know, world that they created themselves on the internet, right? It gave them protection from others, you know, created this shared environment. I think for adapted to Webfree, it's all about, you know, in Webfree we have these tools known as smart contracts that which we can use to create entire new worlds, entire new economies to participate in.

Starting point is 00:18:25 and I think, yeah, I do think that, you know, it's, the Cyclonex had this, you know, they're probably like self-identified anarchists in this sense. I think the difference here within, you know, Ethereum or WebFrey in general is that we generally see, like, there's not so much as a tool to, you know, purely just protect, but also to create and build and coordinate. I think this is the key thing. I do think, like, I think James Young said something. a long time ago that resonated where it was like, you know, the whole goal of the

Starting point is 00:18:59 Ethereum was to create the Dow, right? Like the Dow was actually the idea all along. And, you know, today we have really, like, we've realized a somewhat like decent version of the original vision, right, of like this decentralized, you know, economy that really self-runs. But maybe instead of machines running it, we realize that you really do need these like human-driven, human people for us communities that actually operate these different economies that, right, that run today. So I think instead of, you know, purely as a means of like protection, defending, you know, I do see like, you know, web free as like as a means of like coordination, right? I think that's a key theme. So not anarchy, but coordination. Correct. Instead is part of

Starting point is 00:19:45 Crypto's legacy now. Yeah, I would think so. Peter, one thing as I was listening to this that kept standing out to me was throughout the decade, this dance between the cypherpunks and the government, right? This interplay that kind of is left with us now. Crypto folks often talk about the final boss being sort of the government popping up and trying to ban crypto, ban Ethereum, ban Bitcoin, right? So far that hasn't happened, but that legacy has kind of persisted. And throughout the 70s and the 80s and the 90s and into the 2000s,

Starting point is 00:20:22 there was always this dance between the power of cryptography in the hands of the people and governments who weren't sure whether they wanted this power to be propagated. It was super interesting for me to realize how much cryptography as a technology was treated as a weapon. It was on the munitions list, like banned munitions list, the same list that missiles and nuclear weapons are on. right? Can you talk about this interplay between crypto and governments and what it kind of means for us today as we explore this new horizon in the world of crypto? Yeah, no, cryptography is definitely dangerous in itself, especially when, you know, it was close-sourced. And, you know, it was on the munitions list, mostly from World War I, really. Like, you know, that's what started.

Starting point is 00:21:19 So I wouldn't say exactly that they didn't want it to be, you know, in the hands of people. I think it was just deeply, deeply misunderstood. And it was just, you know, it was by default, you know, on the munitions list because, you know, every government in the world, right, really competing on these, like, technology arms races, right? So it was a matter of, like, national security. But I think as, like, you know, computerization really hit the U.S. in the early 60s. and then everyone had computers and technology was really, you know, more abundant, you know, obviously with open source. I don't even see open sources of movement, but rather as, you know,

Starting point is 00:21:57 purely just like this natural process of like, of like information freeing itself, right, for technology. As this progress really progressed, I think like this idea that information was, this sort of technology information was harmful for national security was maybe it had, you know, some merit, but it was like futile on the end, right? And, you know, initially, I think in the 90s, it's just the government didn't really understand computers or internet or cryptography or information rights at all. They just like, you know, they went into computer laboratories, rated, you know, companies and just like went through the emails. They even sent emails themselves, right, through the same computers. Like, they didn't really understand any of this. And a lot of the,

Starting point is 00:22:42 you know, initial decisions through the government were pretty misplaced. and, you know, ignorant to a lot of extent. The comparison would be like, imagine today the U.S. government would say that, you know, putting like vaccination data on the EOS blockchain. You'd imagine the outcry, you know, like of that, you know, today. It would be the equivalent of that, you know, maybe in the mid-90s. It was just a lot of ignorance and misinformation. But it took them like, you know, maybe a decade from the early 90s to late 90s.

Starting point is 00:23:12 So that's really breakthrough. And what happened was just that more and more people were educated and then slowly, parts of that educated group, you know, increasingly, I guess, you know, were more like people who work in government, right? It's like always slow in terms of like this education of the government itself because it's just this giant system, right? And I think it's a matter of time in general. I mean, even today you have like regulators here and there, you know, really addressing defy in general. And this process generally like goes on very, very slowly until, you know, you hit, know, kind of, you hit this barrier between, you kind of, like, there's always moments in

Starting point is 00:23:52 history where, like, really strong technologies, like, you know, a cryptography or even perhaps, you know, soon, like, defy, really hit the boundaries of, and comprehension of, like, what of a government's mental model of how they regulate and enforce. And usually this often needs to be settled in the court of law, right? Where, like, all the facts are laid out, where a lot of education happens for, like, regulators in government. And it's a painful, painful process, but for cryptography itself, right, it took, like, I guess, free court cases from 95 to 97 for that to, like, really break through. And how it happened was just, like, you know, the first case, I think, was like this teacher who wanted to teach cryptography, you know, to their students. And they had one international student in the classroom, right?

Starting point is 00:24:35 And he was handing out CD ROMs, right, of cryptography, right? Like, you know, I think it was something like key exchange, you know, protocol. and technically, he got a letter from the government saying you must see some desist because you know, you're technically giving foreign nationals, you know, like heavily regulated cryptographic information and technology. And this was like, as an educator, he was like pretty pissed off because like, why can't I educate all my students? So, you know, and generally, like, from this teacher's case against a government, you know,

Starting point is 00:25:09 to a few other cases, the natural progression of an understanding cryptography, went from like the first case was made of like cryptography is free speech. You know, you know, at least like cryptography is just math, right? So math is like free speech. You can't, you know, you can't ban this. So you can't, you know, it was against the first amendment to really like ban any sort of information, right? So they've, you know, mocked the US government's, you know, like decision like by printing out like cryptographic protocols as books, right? You can't, you know, ban books. And solely this kind of grew like step by step into So cryptography, software is free speech, right?

Starting point is 00:25:46 You cannot ban software. And slowly that, you know, as it was just like a lot more education, the government really relented and finally removed it as a restricted, you know, munition, right? I do agree that there is a lot of education that had to be done. And yet also, there does seem to be some sort of conflict with those in government, at least, or those in powerful places who might be a bit more authoritarian, a bit more totalitarian. There was this move by the government to put in clipper chips, for example, which is essentially

Starting point is 00:26:23 like a backdoor that you talked about to modern encryption. Of course, this didn't work out because it was easily cracked. But all of this makes me wonder about this idea of a, you know, we talk about in the U.S. and the Constitution, there are rights protected by, you know, the Americans. and the Bill of Rights, of course. What would a digital Bill of Rights look like for society? Surely it would include something like the right to encryption for individual citizens if we were to create something like that.

Starting point is 00:26:55 So there does seem, at least in free societies, to be sort of an education process, whereby, like, once governments understand the benefits to individuals of this technology, they get on board because freedom of speech is a protected right. Although encryption itself is kind of anti-authoritarian societies or anti-governments that would seek or powerful individuals who would seek to oppress the people. So there's also this kind of conflict. Do you see a little bit of that in the legacy the cypherpunks left us?

Starting point is 00:27:30 Yeah, for sure. I mean, cryptography was math and you can't stop math, right? you know, it's no, like, human written law could ever stop that, right? So it was almost like, you know, the government's tried to ban a few stupid things in the past as well. Like, you know, banning alcohol probation, right? Like, that was never going to work. Even like, you know, the war on drugs, right, arguably there's like, you know, like kind of issues there. And I guess, you know, yeah, I don't understand the government very well in general.

Starting point is 00:28:04 I don't think too many people do. But yeah, I do think that there's definitely the sense that, you know, what sort of like, I mean, I guess the U.S. government, let's be specific here in general, they have an interest for the to protect the U.S. dollar, right, to be the economic system, the reserved currency of the world. They have a direct incentive to protect that. So, yeah, I do actually see, like, potentially this sort of like a real conflict of interest here. and sort of regulating, you know, free open, like, economic systems and, like, also wanting to

Starting point is 00:28:39 actually protect their own, right? Not saying it's a bad thing, you know, necessarily the U.S. dollar being a reserve currency, but it's been protected, you know, for many means, you know, yeah, for war, for many other things. And I don't, I definitely, you know, could see a path where it gets ugly, right? But I also could see, yeah, like some sort of nuance. But before we finally get to some sort of resolution, there's definitely going to be like a period of time where the world's do clash. And that's going to need to be resolved one way or another. Yeah. Peter, we're about to send bankless listeners into over an hour and a half of me reading your series. And so as people gear up for that and get ready for that, what would you hope would be the takeaways for people

Starting point is 00:29:29 who are going through each one of these parts. There's four parts and they're all combined together. What should listeners really be pondering or thinking about while they are hearing this? And what do you hope that they take away when they are finished? I would say think about why you're in the space and how you want to contribute to it. You know, one way, you know, this sort of like person's writing this series

Starting point is 00:29:52 really affected me was it made me really think hard about, you know, what I was going to leave behind in many senses, right? you know, and it pushed me to do work that I felt like, I guess, that everyone else did that I wrote about, right? Like, you know, I kind of like stopped thinking, I think I had this mental model before I wrote about the series. It's just like, you know, to do big things, you have to like go change the world and things like that. But I realize, you know, innovation really happens in a huge wave. And, you know, from the outside, it seems like this, you know, a hero kind of requested to change things. but in reality, it's just a lot of really smart-driven people pushing things one step at a time.

Starting point is 00:30:32 And to do something important, all you need to do is just help progressive space one step at a time yourself. So like figure out what step that is you can actually contribute to. Well, once again, Peter, thank you for writing this piece. And as soon as I stumbled upon it, I actually started just hitting record before I had even read it because I knew that it was going to be something that I wanted to get out to as a many people as possible. And so thank you for originally writing it and putting it together to make sure that this information can actually get out the door. What would you say, Peter, before listeners get into it, what would you say is the legacy of the cyper punks? And is that legacy still

Starting point is 00:31:10 alive today? Absolutely. Exists everywhere. And the hashes that, you know, we create today for our transactions, you know, it's everywhere. So for the organizations we call Dallas today, right, These were imagined long, long time before. And yeah, we're the ones who are now executing upon those ideas. All right, Bankless Nation, let's go into exactly what those ideas are and where they got formed. And so we bring you before Bitcoin by Peter Pan. But first, a moment to talk about some of these fantastic sponsors that make this show possible. Bankless is proud to be supported by Uniswap.

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Starting point is 00:33:17 This has got to be the easiest way to trade Ethereum tokens. Choose a token you own, a token to exchange it with, get your quotes. If you like what you see, you hit swap. That's it. What makes swaps so useful is what happens behind the scenes. It compares dexes, aggregators, and market makers to find you the best price with the lowest network fees and the least slippage. This means you can swap a wider range of tokens, and swaps can even automatically split up your trade to give you access to better liquidity. You don't even have to think about it.

Starting point is 00:33:50 Try it out, download Metamask for desktop or mobile now at Metamask.io and start swapping. Before Bitcoin, part one, the 70s, the public key saga. If you ask people, where does Bitcoin or cryptocurrency come from? You'll get many different answers. And if they are right, they will likely be vague jabs at the truth. What many people do not know is that Bitcoin was a creation born out of the cypherpunk movement. Originated during the 70s, but formed in the 90s, it fought the U.S. government's injuncts. it fought the U.S. government's injustices

Starting point is 00:34:21 surrounding digital freedom and pioneered modern rights to personal privacy. While you can try to understand the cypherpunks through a Google search, you may struggle to deeply understand the full picture unless you understand the context of the movement itself. You have to zoom out and think bigger. Who seeded the movement of the cypherpunks?

Starting point is 00:34:39 Where did all the ideas come from? Before Bitcoin is a series which aims to give you a historical perspective of cryptocurrency's technology and philosophy. To do this, I'll be right. writing a four or five-part series focusing on cryptography, the underlying mechanisms of all cryptocurrencies, along with the philosophies of privacy formed over time. This will be an exploration through the 70s, 80s, 90s, and 2000s, where in each decade,

Starting point is 00:35:03 an overview of the series is focused on these points. Part 1, the 70s. How Cryptographic Knowledge was democratized through the publication of public key cryptography. Part 2. The 80s. The origins of decentralized services, anonymous communication networks, and digital cash. Part 3, the 90s, the origins of the cypherpunks.

Starting point is 00:35:23 In part 4, the 2000s, technology is born out of the cypherpunk movement during the 2000s. And part 5, Bitcoin. The original designs of Bitcoin and early coin forks. This series will be a long read. It won't be your typical 300-word pamphlet disguises a medium article written as a marketer or the usual short, punchy stuff you find. To understand anything, historical context is important, and the time to do in, Doing so is an investment. This aims to provide just that. Introduction. So we want to understand

Starting point is 00:35:55 cryptocurrency and its history. Where do we start? I want to kick things off by first talking about the 70s and the creation of public key cryptography. While you might groan at a dusty black and white image of the 70s, just like I did when I first researched cryptography. I didn't realize how important this decade was. Until the 70s, cryptography was mostly used by the military to secure communications. Research was mostly conducted by intelligence agencies, G-C-H-Q, NSA, or licensed research labs operating by enterprises such as IBM. Cryptography was used for commercial purposes and the public had little access to the knowledge. The hold on modern-day cryptography would have been broken by the publication of public cryptography released by three cryptographers known as

Starting point is 00:36:39 Hellman, Diffey, and Merkel. Their work would result in the first big public wave of interest into cryptography. So what is public key cryptography? Cryptography is the practice of securing and protecting information against enemies or people who have no right to the information. It is the underlying mechanism that secures the authenticity and integrity of information and ultimately what makes blockchains and cryptocurrency possible. Public key cryptography is a shift in the use of cryptography that now secures most cryptocurrency protocols. How does it work? Essentially, public key cryptography allows people to send encrypted information to a public address over unsecured channels. And only people with access to the public address's corresponding private key can decrypt the

Starting point is 00:37:26 information. The private key is also used to sign off and authenticate information sent a way to verify the legitimacy of its origin. In a case of cryptocurrency, while people can send Bitcoins to a public address and see how many Bitcoins it holds, only the owner with its corresponding private key can use the Bitcoins and sign off on transactions. This was extremely important concept for cryptography and would lead to the first big interest in cryptography. Three cryptographers known as Martin Hellman, Whitefield Diffy, and Ralph Merkel would be behind. And they would have a very interesting story. So how did these researchers defeat the government's control on strong cryptographic knowledge? First, let's follow the story of a cryptographer known as Martin

Starting point is 00:38:07 Hellman, a young, ambitious man. Helman grew up as a nerd where he was exposed to science at an early age by his father, a physics teacher at a local high school. He remembers that, quote, my father had books on the bookshelf that I would pull down and read about things, including when I remember Gannaut's physics, an old physics text from the 1890s that he bought. Obviously, it was an antique even for him, and my seventh grade science fair projects came out of that, so I was interested in science, but not particularly cryptography, and I loved math too, end quote. Early career. Following his interest, he studied electrical engineering from New York University and completed his master's degree in electrical engineering at Stanford University in 1967.

Starting point is 00:38:46 Fairly well-suited to academia, he did well and enjoyed his time as school. While it might be intuitive to assume that he studied cryptography at some point, he never much associated with the side of computer science until later on. Instead, early on, he was very career-driven, having already planned his life at an early age. He envisioned that he would be married at the age of 35, and until then he would be traveling the world working in management for big businesses. At the age of 22, he set out to complete a PhD in some esoteric way of thinking called decision logic. Hellman saw a doctorate as an opportunity to counter his youth in management based on the logic of, quote, if I had this PhD, it would be a way to help quell the questions like,

Starting point is 00:39:27 what can this kid do? Ironically, in his first year of his PhD, he had gotten married. That did not slow him down and within two years of starting his PhD at the age of 24, he achieved an early breakthrough. He released his dissertation, learning with finite memory. Hanging on with his grand life plan, he followed his dreams to go work for IBM. For a brief moment, he was juggling the decision to either teach or work in enterprise, but guided by the allure of traveling the world and a lot more money. He decided, quote, no thanks, I don't want to be poor. Early influences of Harry Faisal and Peter Elias. So he went off to work for IBM at the Thomas J. Watson Research Center in New York. Helman worked in the pattern recognition department,

Starting point is 00:40:07 building machines that tried to recognize numbers from photographs. While Helman's work was nothing to do with cryptography, IBM and its own division focused on cryptographic research. From that division, he met a German researcher called Horst Feistel. Through their friendship, Feistel introduced Helmand into cryptography. They often had lunch discussing cryptographic systems and seemingly unsolvable problems. Helman regards Feisel as one of the biggest early influences and would go on to later design the government's data encryption standard DES. As he mentally matured and also while when his wife was pregnant, he asked himself, do I really want to be traveling the world or do I want to have more time with my family? It was the timeless dilemma that we had to face throughout

Starting point is 00:40:48 history, wife and child versus money. Choosing family, he became an assistant professor at MIT's Department of Electronic Engineering. This was where he met Peter Elias, MIT's head of the electronic engineering, who collaborated on research with Cloud Shannon, the father of information theory. If that means nothing to you, he essentially invented the modern-day cryptography that was used in World War II. After meeting, Peter gave Helman a copy of Shannon's landmark paper, a mathematical theory of communication. This was, that paper is from 1948. This was another major influence of Helman that shaped his mathematical understanding of cryptography. He became good friends with Elias, which over time deepened his fascinations and knowledge of cryptography.

Starting point is 00:41:32 Helman regarded Elias as being another pivotal part of his education into cryptographic philosophy. Pursuing research. In 1971, Helman returned to Stanford, this time as an insistent professor. While he continued to work on decision-making research, by the end of 1971, he had started to prefer to pursue cryptographic research. His colleagues and friends at Stanford did not support his decision to do so. They told me, I was crazy, Helman. said, the funny thing is, was he didn't exactly disagree with their sentiment. A quote from Hellman. How could I hope to discover anything that the National Security Agency, which is the primary American code-making code-breaking agency, didn't already know? And they had classified everything so

Starting point is 00:42:12 highly that if we came up with anything good, they'd classify it. But driven by his intellectual fascination and previous experience with the influences at IBM and MIT, he believed that cryptography would be a commercial importance in the future. He gave his first talk and released his first technical report on cryptography in 1973. Helman's work soon spread and did not go unnoticed. In 1973, a researcher called Whitefield Diffy reach out to him. Whitefield Diffy, a very bored young man. In contrast to Helman, Diffy was first introduced to cryptography early at the age of 10 years old when his father, a history professor, brought home cryptography books from a local library. He loved mathematics but hated school. Diffy was never described to have performed

Starting point is 00:42:53 competently and how he never applied himself to the degree his father hoped. Diffie barely graduated. Despite his performance, he was smart enough to ace the entrance exams for MIT. Studing mathematics there, he remembers how he tried to teach himself how to program but thought of it as very low-class work. Overall, he was pretty bored and instead spent most of his time studying pure mathematics, skimming day jobs to work on AI and the codebreakers. Just when he graduated, the U.S. government started to draft young men to fight in Vietnam. Machine guns and screaming Viet Cong did not particularly interest Diffey, so instead he took a job developing software and doing other, quote, low-class work.

Starting point is 00:43:31 At the same time, he also started to work part-time at MIT's Project MAC's Artificial Intelligence Laboratory, run by two pretty smart people, Martin, Minisky, and John McCarthy. Diffey had a very strong relationship with McCarthy and learned a lot from him. Unknown to Diffy and many at that time, McCarthy would go on to later be regarded as the father of artificial intelligence, coining the term AI. Often quoted, McCarthy believed that every aspect of learning or any other feature of intelligence can, in principle, be so precisely described that a machine can be made to stimulate it. He was incredibly focused on the future, believing that the conception of such intelligence

Starting point is 00:44:09 will come in five to 500 years. Under his guidance, Diffie was exposed to his computing philosophy and developed a deep understanding of networking, electronic keys, and authentication. Diffey later followed McCarthy to Stanford to join his new AI lab. During his time at Stanford, Diffy read David Kahn's book, The Code Breakers, the story of secret writing. It summarized the history of cryptography from ancient Egypt to the time of its writing and was described to have profoundly influenced him in his beliefs surrounding privacy. Compelled to pursue his own personal reaches of cryptography, he left SAIL,

Starting point is 00:44:46 and SAIL was the organization, the AI Lab in Stanford, that I mentioned earlier. He left sale in 1973, spending the next year jumping around the country to meet and discuss cryptography with different experts. Quote, I was doing one of the things I am good at, which is digging up rare manuscripts and libraries, driving around visiting friends at universities. And in 1974, as part of his research, he visited IBM Thomas J. Watson Laboratory at Yorktown Heights to meet with a cryptography research team. At the time, it was led by Horace Feistel, the guy who introduced cryptography to Helman. When Diffy visited, he couldn't learn as much of the work as was classified by the NSA.

Starting point is 00:45:27 Instead, he was referred to Martin Hellman, a professor at Stanford University who was working on similar cryptography. Helman meets Diffy. In the fall of 1974, Witt shows up on my doorstep. I'll never forget that day, Helman in 2011. Through a referral, Helman agreed to Mitt Diffy at his house in 1974. Diffy came in the afternoon but stayed for dinner and left at 11 p.m. The short meeting expanded over hours of discussion. Hellman recounted how working in a vacuum had been taxing in a way,

Starting point is 00:45:56 and finding a kindred spirit was really something. Soon after, Diffy took a job at a local research group, and like his first job, he would soon spend more time working with Helman on cryptography than his actual job. Early in 1975, they had something else to worry about. The DES. Data Encryption Standard DES. Early in 1975, the government published the DES.

Starting point is 00:46:18 It was the first encryption site, that was approved for public and commercial use. The NSA published the adoption of the DES by financial services and other commercial sectors where strong encryption was needed, SIM cards, network devices, routers, and modems. Previous to the DES, the First Amendment classified cryptography along with munitions and other items that were in military and character. You had to be licensed to handle any form of cryptography and all work related to it was classified by the NSA. This was the first publicly approved use of such technology, how the DES was designed. The need for a national encryption cipher was released

Starting point is 00:46:56 after a study conducted in 1972 by the National Bureau of Standards, now known as NIST, the National Institute of Standards and Technology, basically a shell of the NSA. They requested design proposals from research centers around the U.S. in 1973 and 74. After running up dry the first time in 1974, IBM conceived of a cipher called Lucifer. Lucifer's design was led by IBM's very own Horace Feistel. This cipher was an improvement on previously developed cipher, but fit the design request from the NSA. Lucifer underwent an extra stage of collaboration with the NSA where they wanted to reduce the key size from 64 bits to 48 bits. On a basic level, it means needing less processing power to encrypt and decrypt. Their final

Starting point is 00:47:43 decision to reduce the key size to 56 bits would later come back to bite them. Helman and Diffy's criticisms. Helman and Diffey initially embraced the DES with open arms as they saw it as a huge step forward bringing cryptography into the public view. But as they look closer, they foresaw how the shortened key length was vulnerable to brute force attacks. But more importantly, along with amongst the research circles, the IBM team accused the NSA of tampering with the cipher. After the cipher was sent to Washington for approval, it was returned with an altered S-box, the part of a cipher that returned plain text into cipher text. During the 70s, there's a general sense of distrust about the government.

Starting point is 00:48:21 This wariness stemmed from a period after World War II. Learning from the control of totalitarian governments, the USSR, Nazi Germany, the public was vigilant against the intrusion by the government. The public fears were reflected in Orwell's 1984 and other popular texts that explored government surveillance, control of society, and personal freedom. This sentiment continued into the 60s, where the decades was rocked by the assassination of JFK, the Cuban Missile Crisis and the socio-political movements such as the black rights and gay rights movements.

Starting point is 00:48:53 In the 1970s, this was exacerbated by the Watergate incident in 1972, which was a controversy surrounding President Nixon's authorized bugging of the Democratic National Committee headquarters in Washington, D.C. To the public, their fears were slowly but surely manifesting before their eyes. People believe that the NSA had built a cipher which they could bypass themselves. Merkel, the kid who knew nothing. Soon after the release of the D.E.S. and Diffy released a technical paper called multi-user cryptographic techniques, and they soon learned of Ralph Merkel, a young 23-year-old computer science student from Berkeley. Helman was 30 years old at the time, and Diffy was only one year younger, uh, older, excuse me, Merkel's puzzles. Before meeting Helman

Starting point is 00:49:35 and Diffy, Merkel had already been working on his early concept of public key encryption, which would later be known as Merkel's puzzles. He started working on his ideas during his computer science course CS244, where he stumbled across the riddle, how do you reestablish secure communications when a hostile enemy already knows everything? He needed to complete a personal project for the course, and this seemed perfect for him to develop his ideas. When I thought about how you can possibly establish security, when everything is known to the eavesdropper and the eavesdropper can listen in on communications, how can you possibly establish security? So my first thought was, it doesn't look like you can, so I'll try and prove that it's impossible. So I tried to prove that

Starting point is 00:50:15 you couldn't establish security and I tried and tried and tried and I failed miserably. Then I thought about it some more and I said, well, if I can't prove that you can't do it, I'll turn around and try and figure out a method to do it. And when I tried to come up with a method for doing it, having just tried to prove you can't do it, I knew there were cracks in my proof were, so to speak, and I knew where I could try and slide through. So I worked on those places and lo and behold, it turned out it was possible. I could use the cracks in my proof to come up with a method for actually doing it. when I figured out how to do it, there was this well, the traditional aha moment where I said, quote, oh yeah, that works, I can do it. That happened very rapidly. And it was it was all one night

Starting point is 00:50:56 of staying up late and thinking and then realizing, oh my gosh, I can do this thing. It seems very counterintuitive by I can actually figure out a key. I can establish a cryptographic key over an open communications line, even if the enemy, the interlouper, the eavesdropper, knows everything. With no theoretical or historical knowledge about cryptography, he was unaware of how the problem was considered to be unsolvable. He put everything into a paper and shared it around. The head teacher of the security course couldn't understand his work and told Merkel to bug her off. And when he submitted his work to the CACM, a well-respected computer science journal, he was rejected. But this time, not because it was nonsense, but because the editor thought his contents of his work were,

Starting point is 00:51:38 quote, not in the mainstream of present cryptography thinking. However, he also shared it with a computer scientist called Peter Blateman, who immediately noticed the value of his work. Unbeknown to Merkel, Blateman was friends with Diffy, who invited him out to a cryptography meetup in Stanford. During a car ride, it might be Blatman. Blatman briefly outlined the problem Merkel was working on. Apparently, Diffy had been obsessing over the problem for years, and upon hearing about how some young computer science student had potentially solved the problem, he dismissed such a possibility erupting into an outburst. But once Diffy was calm again, he became excited about the possibility of such a solution.

Starting point is 00:52:16 Helman and Diffey had recently submitted a paper which explored the applications of public key encryption under the assumption that it was possible. Diffy gave Blatman a copy to give to Merkel. Quote, there are these guys at Stanford who talk just like you. After reading their work, Merkel sent over his paper.

Starting point is 00:52:32 When the other two had read it, they completely shifted their way of thinking. Despite Merkel's youth and complete lack of cryptographic knowledge, his creativity had solved the public key distribution problem. This young 23-year-old managed to achieve what academics had strived to do for years. But Helman and Diffy found his solution inefficient. With their cryptographic understanding, they had found a far more compact solution to the key distribution problem and came up with a new iteration of public key cryptography.

Starting point is 00:52:57 Soon their concepts would be formulated into a paper that would be known as New Directions in Cryptography. Following their collaboration, Merkel left for Stanford taking up Helman's invitation to work under him as a PhD student. New Directions in Cryptography. In November 1976, the paper New Directions in Cryptography was released. It discussed fundamental problems of cryptography, public key cryptography, and protocols that facilitated authenticated communication. Merkel was credited for his independent work, but in the end, the communication protocol was named the Diffy-Hellman Key Exchange.

Starting point is 00:53:28 However, despite this in 1977, when public key encryption was patented, Merkel was credited as one of the three inventors. Diffy reflected on Merkel as a possibly the most inventive character in the the public key saga. The system had since been known as the Diffy Helmand Key Exchange. While the system was first described in a paper by Diffy and Me, it is a public key distribution system, a concept developed by Merkel, and hence should be called the Diffy Helman-Mirkel key exchange, if the names are to be associated with it. I hope this small pulpit might help in that endeavor to recognize Merkel's equal contribution in the invention of public key cryptography, Martin Hellman 2002.

Starting point is 00:54:06 The concepts discussed in the paper are used to design and secure blockchains we use today. One of their purposes of the paper noted at the end was to, quote, inspire others to work in this fascinating area in which participation has been discouraged in the recent past by a nearly total government monopoly. That's a quote from the paper, New Directions in Cryptography. For the time, the public had access to powerful encryption technology. Their work broke the control on cryptographic knowledge, fueled by the growing distrust of the government's DE, cipher, the technology in the paper enabled the first big wave of public interest in cryptography and encryption. It was later revealed that Helmand, Diffy, and Merkel were not the first

Starting point is 00:54:46 conceivers of public key cryptography. A form of it was initially created and applied to an algorithm by researchers from Great Britain's Intelligence Agency GCHQ, and while the NSA had access to this, it was all classified and remained in the dark untouched. Now imagine if these three never published public key encryption. world potentially might be very different. Helman, Diffey, and Merkel's publication managed to incite a new wave of innovation that would last for decades, whereas governmental agencies kept their findings behind closed doors. This contrasts very much highlights the importance of open collaborative work within cryptography, but also other sciences. Fittingly, in the line of the first paper, it had begun with

Starting point is 00:55:28 we stand today on the brink of a revolution in cryptography. While Helman and Diffy continued to work on cryptography, Merkel was the one that continued to excel. Spending the rest of the 70s as a student of Helman and Diffy, Merkel continued to impact cryptography in the 80s, later going on to invent cryptographic hashing. Closing statement for this part of the series. These three cryptographers would break down the barrier for cryptography. A cryptographer known in the 80s, known as David Chom, would go on to directly build upon their work and conceptualize the need for autonomous communications, payments, and ultimately the need for decentralized services. Chom's work, however, would only be made possible through the dedication of Helman, Diffy, and Merkel. Continuing on from the 70s,

Starting point is 00:56:12 the story of decentralization picks up right after the publication of public key cryptography, beginning with a computer science student called David Chalm. Like Ralph Merkel, he was also from the University of California, Berkeley. As a graduate student, he recently learned about cryptography in the late 70s through the paper New Directions in Cryptography, 1976. This was Martin Helmand's Whitfield Diffies and Ralph Merkel's publication on public key cryptography. Chom was not alone in his discovery of cryptography. At that time, the San Francisco Bay Area was becoming the world's leader in technology through the local presence of Apple, Intel, and Hewlett Packard. The money and excitement attracted international tech talent. When the paper,

Starting point is 00:56:51 new directions in cryptography was released, interests in cryptography spread like wildfire amongst scientists, academics, researchers, and engineers. After about a decade, of dishing it out between Microsoft and Apple, the 70s personal computing boom was tapering off. Star Wars 4 had just come out in 1977 and the concept of the internet has started to turn heads worldwide. The world was moving towards a digital future and the tech wasn't the only thing reflecting it. It was a newly found sense of fascination and romanticism revolving around computers, robotics, and technology. Apple's record-breaking IPO of $1.3 billion would later pour fuel into the impending software boom and set Silicon Alley for success for the next 30 years. Being part of the first new wave

Starting point is 00:57:35 of interest into cryptography, Chom naturally looked into it through his natural aptitude for breaking things. While having little about his early life and personal details online, he shared hints of where his natural curiosity for technology had come from. While others were playing in the sun, Chom recounts how he spent most of his childhood breaking locks and playing with safes. He was from a wealthy family and had access to a computer early on. And like many modern day teenagers, he spent his adolescent years staring at a computer screen. But instead of YouTube and Facebook, he spent time trying to break computer systems and cracking passwords. Being part of the first generation that grew up using computers, technology was natural to him. But so was his hacker paranoia. Having broke and

Starting point is 00:58:17 exploited seemingly secure systems, Trom had likely developed a sense of cynicism about most technologies. Having that instinct as he studied cryptography, he saw an aspect that was a of cryptography that was overlooked. Metadata, the traffic analysis problem. While public key encryption conceptually solved the problem of encrypted messages, Chalm thought it was only one piece of the puzzle. He knew that encryption did not necessarily mean secure. He saw the unprotected data around protected messages of who converses with who and when they converse as a risk to personal privacy. With this information, he knew that people could theoretically be identified and tracked. Completing his graduate studies at the time, he decided to write his research paper on the traffic analysis problem. How do you keep secret

Starting point is 00:59:00 the knowledge of who converses with who and when they converse? He graduated in 1979, releasing his first major cryptography paper, untraceable electronic mail, return addresses, and digital signatures. While initially released in 1979, it was only later published in 1981. Citing the Helmand Diffian Merkel's work of new directions in cryptography in the paper, Chom outlines the risk of personal privacy and provides the blueprint of an anonymous mailing protocol using something known as a mixed network. His protocol protected the identity of the messengers as well as the time of the message being sent. How do mixed networks work? A mixed network is a network made up of nodes that use public key cryptography to authenticate messages. These nodes send information to each other to mix up the

Starting point is 00:59:45 original sender's identity and timing of messages. The message addresses was important as it could be used to identify the origins of the message. The timing of the message could also be used to identify the messages that would correspondingly move within a network. With a mixed network, when you send a message to someone, the encrypted message would first be passed to a node where it would be batched with other messages from other senders. This batch would then be sent to between different nodes. Think of a pinball full of messages bouncing around different nodes. In the end, the message would exit out of the network and end up at the intended address with the original sender hidden. For replies to the message, it would be sent back to the original address that would be unknown to the sender.

Starting point is 01:00:24 Thus, the identity of senders and order of messages would stay unknown and prevent the ability to trace and spy on messages. While designing the network, he dismissed a solution that used a single message authenticator believing that would be easily compromised. Instead, he insisted that ideally, each participant is an authority. The mixed network protocol would be used to build Tor, the anonymous browser that you can use to buy drugs or hire Hitman. Yes, incognito mode is not anonymous. Mixing is also used by Monero to anonymize transactions. Untraceable payments. Understanding the potential risk of unprotected metadata,

Starting point is 01:00:58 he also saw financial transactions in the same light. In an increasingly digital world, Chan believed that e-commerce would play a huge role in the world, but so would the traceability of consume payments. He believed that the timing of transactions and goods purchased not only enabled the tracking of people, but allowed for the profiling of individual lifestyles, consumer choices and political leanings.

Starting point is 01:01:20 Quote, the time of payment for every transaction made by an individual can reveal a great deal about the individual's whereabouts, associations, and lifestyle. For example, consider the payments or such things as transportation, hotels, restaurants, movies, theater, lectures, food, pharmaceutical, alcohol, books, periodicals, dues, religious and political contributions.

Starting point is 01:01:41 In 1980, he patented a digital cash system secured by cryptography, which would form the basis of cryptocurrency. Patent number 452-9870 outlined a protocol that was able to conduct financial transactions with an external system, exchange data with an external system, contain an ID linking to the ownership of data within the external system, store data relating to the interactions within the external system, and secure the stored data through cryptography where it could be accessed using a secret ID known to the owner. Chom later fleshes out the concepts of anonymous payments in his paper, blind signatures for untraceable payments that was later released in 1982.

Starting point is 01:02:21 Similar to the concept of mixed networks, his proposed payment protocol required including the masking of the sender, the amount being sent, and also the time of the transaction. Stumbling onto the concept of decentralization. Back then, as a student, his work was dismissed as political and radical by his peers. Similar to Martin Hellman in the 70s at Stansford, Chom also faced scrutiny over his work. Upon pursuing his doctorate studies, his head teacher told him,

Starting point is 01:02:46 Don't work on this because you can never tell the effects of a new idea on society. Ironically, his head teacher would turn out to be right. Despite the pressure from his peers, Chom decided to continue his doctoral studies. Revisiting the ideas in his first paper about mixed networks, he decided to research the concept of trust in computer systems. As a hacker, Chom did not trust central authorities in computer systems, as he thought that they could be easily hacked. Instead, he believed that systems where participants were authorities were harder to compromise.

Starting point is 01:03:14 Researching the concept of computer systems that estowel trust between parties that don't trust each other. Chalm argues for the need for decentralized services in his dissertation. Computer systems established maintain and trusted by mutually suspicious groups, paper in 1982. Here are some quotes. It is not enough that the organization maintaining a computer system trusts it. Many individuals and organizations need to trust a particular computer system. There are many other similar applications of computers which involve private sector records relating to consumers, such as those arising from credit, insurance, health care, and employment relationships. Public sector record keeping, such as areas as tax, social security, education, and military

Starting point is 01:03:54 service are quite similar. All of these applications involve one group who owns or control the computer systems and who is particularly concerned with reliability and maintaining the operation of the system and with ensuring the survival of the data maintained by the system. They will be called trustees. A second group or set of groups are primarily concerned about the confidentiality of the data, which relates to them that is available to the system. There may be a third group of participants which may overlap with the first and second groups who are concerned about the correctness of the operation of the system. Initially led by his concerns towards communications metadata, his idea of mixed networks

Starting point is 01:04:30 was one of the first concepts of a decentralized service. His concerns about metadata led him to focus on the need for anonymizing payments. While Chalm was focused on personal privacy after having looked over his work and how he presents the concept. of decentralization. I personally don't think he understood the magnitude and importance of decentralization at that time. Chom presents decentralized services as a means of solving certain conflicts of interest between consumers and businesses in certain application aspects. Rather than how it is portrayed in today's world as a sociopolitical movement, decentralization in his paper was first presented as an economical solution for businesses. Graduating in 1982, Chom decided

Starting point is 01:05:08 to continue his research on cryptography. As a decade continued, Chom's ideas had started to mature and a vision of the future had started to form inside of his head. Watching the growth of computing explode faster than anyone ever predicted, Chom was worried. Chom's warning to the world in 1985. Computerization is robbing individuals of the ability to monitor and control the ways of information about them is used. Already, public and private sector organizations acquire extensive personal information and exchange it amongst themselves.

Starting point is 01:05:37 Individuals have no way of knowing if this information is inaccurate, outdated, or otherwise inappropriate. New and more serious dangers derive from computerized pattern recognition techniques. Even a small group of them using them and tapping into data gathered in everyday consumer transactions could secretly conduct mass surveillance inferring individuals' lifestyles, activities, and associations. The automation of payments and other consumer transactions is expanding these dangers to an unprecedented extent. Wow. This is me, David, speaking, now. This was in 1985, and I think we can extrapolate that into the world today where we're talking about Twitter, Facebook, YouTube, and the control that these technologies implicitly have

Starting point is 01:06:19 over our lives due to the metadata that we give these things for free. Pretty crazy that Chom predicted this in 1985. All right, back to the article. Acknowledging Orwell's dystopian world with the paper's title, it talks about the dangers of using data that was building up around computing systems. Choms warned of this continuing trend of computerization which would render society open to exploitation and mass surveillance. He also argued that surveillance might significantly chill individual participation and expression in group and public life. The inadequate security and the accumulation of personally identifiable records moreover pose national vulnerabilities. Information service providers and other major

Starting point is 01:06:59 interests, for example, could retain control over various information and media distribution channels, while synergistically consolidating their position with sophisticated marketing techniques that rely on gathering far-reaching information about consumers. The main body of his paper summarizes a decentralized economy based on his previous research into the decentralization of messaging and payments. Despite his ideas being previously fragmented, he then knew the true importance of his ideas surrounding decentralized services. Seeing the future that the world was moving towards, he was acutely aware of the crossroads which lay before society. Chom understood that the decision of the internet's architecture would have enduring social and political consequences. Projecting the vision of two futures, one built with the current technology and one built with decentralized services, he saw that the two approaches appear to hold quite different answers.

Starting point is 01:07:47 A quote from Chom, large-scale automated transaction systems are imminent. As the initial choice for the architecture gathers economic and social momentum, it becomes increasingly difficult to reverse. whichever approach prevails, it will likely have a profound and enduring impact on economic freedom, democracy, and our informational rights. So what is decentralization? One of the most fundamental beliefs Chom had was the right to personal privacy. With the world becoming ever more interconnected, he saw the need to protect personal data. He saw cryptography as a means of doing so. If you think about it, cryptography is essentially the practice of protecting information against individuals that didn't have access, permission to access it. Cryptography is a digital,

Starting point is 01:08:28 law enforced by the law of mathematics, a force beyond central control. No one is above it. And when individuals are empowered to control and protect their data using cryptography, only then can true personal privacy be realized. Chomsal decentralized services as the means of protecting privacy. Enabled and secured using cryptography is something outside centralized control. Hence, this is why decentralized systems are trusted. He could believe in the math. He did not trust governments and companies. Sounds like a nutcase, right? Here is the author, Peter, putting in an image of the Edward Snowden leak from 2014, where the title is. Edward Snowden leaks that expose U.S. spy program.

Starting point is 01:09:10 We all know the implication of this. There's a lot of images here. I'm just going to scroll through them. Ah, yeah, Facebook. Cell phone metadata worries are added to the fallout from Facebook's data scandal. The news. Users have been reporting that personal data held by Facebook shows that the social network has collected metadata about phone calls and text messages on Android devices.

Starting point is 01:09:31 Facebook says that the logs are part of an opt-in feature, adding that it will never sell this data, and this feature does not collect the contents of calls and messages. Ah, yes, and then the final picture is Cambridge Analytica, a individual, I believe who's the president of it, could be wrong, giving a presentation where the title of the presentation is called, the power of big data and psychographics in the electoral process. Jesus, like, I don't even need to connect those dots for you. I'm sure the listener can do that. All right, back to the article. Wow. Was David Chom a time traveler? No, he was not a time traveler. He just had an exceptionally clear thought in his vision of the future. He was right, wasn't he?

Starting point is 01:10:12 Yes, kind of. While it does seem that way, we haven't gone down the route of decentralization. No system is ever perfect, and I wonder if we would be dealing with the problems of the same magnitude if the world did follow the heat of Chom's advice. Nevertheless, history has so far point, pointed towards the need for decentralized services. After 30 years after his paper, the world did indeed build itself around centralized services. With 2.2 plus billion users on Facebook, the world's data was protected by Goodwill.

Starting point is 01:10:40 Goodwill did not hold up. Goodwill and the promise of Facebook had little power against the CIA and government. The lack of cryptographic ownership led to the abuse of data by Cambridge Analytica. So is it too late? While the internet might have taken a wrong turn, nothing points to the fact that things are too late to change.

Starting point is 01:10:57 That's what history is full of. Evolutions and culture, technology, and society. The world will always be moving. The question is just where? After the 80s. Chalm spent the rest of the decade researching cryptography and by 1988 had moved into the Netherlands, starting his own research group.

Starting point is 01:11:12 And after a decade of research, he would finally act on his vision of a decentralized world. He found his company Digicash in 1990 and he created e-cash, the world's first digital cash system. Gaining worldwide attention, many cryptographers interned and worked for Digiich Cash, including Hal Finney, Nick Zabo, and Eric Hughes, one of the founders of the cypherpunks, a movement that would be explored in the next part of the series. Digicash would experience highs and lows,

Starting point is 01:11:37 rejecting $180 million acquisition from Microsoft, only to declare bankruptcy a while later. If you want to read more about Digi Cash, there is a link in the article. By the end of the 1980s, Chom had become one of the most well-regarded cryptographers in the world. Chom was one of the people who knew what. where the world was going. He understood things that others didn't. Deciding to focus on building a company, he would leave behind the seeds that would ultimately bloom into the 90s cypherpunk movement. This movement would go on to stand for the liberty and the fight against governmental injustices of the 90s. Do you remember what the head of the teacher said to chom back when he was still a student

Starting point is 01:12:11 at Berkeley? Don't work on this because you can never tell the effects of a new idea on society. All right. That is the end of part two. On to part three. Continuing on from the 80s. During the 80s, technology, software, and computing made massive strides. In 1982, Adobe, Autodesk, and Sun Microsystems were founded. 83, Intuit was founded and Microsoft Word was released. In 1984, Cisco was founded. Dell was founded. Hewlett Packard released their first inkjet printer. 1985, AOL was founded. 1987, McAfee Antivirus was founded. 1989, Adobe Photoshop 1.0 was released, and Apple broke into the top 100 U.S. companies ranked by revenue. While the world of tech shot ahead, other areas of life, law, and society failed to keep up.

Starting point is 01:12:58 The Wild West of the Internet was soon ruled by hackers with usernames that even 12-year-olds of today would cringe at. Criminals were becoming increasingly sophisticated through technology while the U.S. government had remained recklessly clueless, Agent Baxter and the legendary Star Wars defense contractor Autodesk. In early April 1990, a rock band lyricist named John Perry Barlow, received a call from the FBI asking for an interview. He was an early user of the internet and was part of many online communities. And while he didn't know why the FBI had contacted him, he thought it would be suspicious to turn down their request. A few days later, special agent Richard Baxter from the Federal Bureau of Investigation showed up at his doorsteps. Barlow was

Starting point is 01:13:40 accused of being a part of a hacker group called New Prometheus, where they had distributed stolen Macintosh ROM source code. Despite Agent Baxter producing little evidence of his allegations, Barlow soon realized that he could not get through to Agent Baxter. Since this was a crime involving software and technologies, you would probably assume that someone half-competently knowledgeable would be sent to investigate Barlow. Apparently no. According to Barlow, quote, complicated by Agent Baxter's fairly complete unfamiliarity with computer technology, I realized right away that before I could demonstrate my innocence, I would first have to explain to him

Starting point is 01:14:16 what guilt might be. The interrogation dragged on for three hours. He had been told, for example, that Autodesk, the publisher of AutoCAD, was a major Star Wars defense contractor and that its CEO was none other than John Draper, the infamous phone freak, also known as Captain Crunch. As soon as I quit laughing, I started to worry. Similar to how a dad might initially laugh at the clumsy moron of a son, as Barlow sat there, he soon started to worry for the future of America. At that moment, he realized how the confusion of Agent Baxter and the rest of the government might put everyone else's rights and freedoms at risk. After three hours of beating a dead horse, Special Agent Richard Baxter had let him go. Barlow posted his experience onto Well, the first

Starting point is 01:15:01 online community forum. Created in 1985, it was where the hipsters of yesterday hung out. Not long after, he was contacted by another member who had a similar experience. That member was Mitch Caper, a software kingpin of the 80s. He was the founder of Lotus, a company that made note taking software, released its first spreadsheet software. Lotus would later be acquired by IBM for $3.5 billion in 1990. Caper was also accused of the same crimes committed by the hacker group New Prometheus. He was also very alarmed by the FBI's lack of understanding with software and technology. If the authorities didn't understand it, how could they respect the rights that come with it? Within a reek, Caper had flown out to meet with Barlow.

Starting point is 01:15:44 As a snowstorm raged outside Barlow's offices, they talked about their experiences as well as the recent Secret Service raids of Operation Sun Devil. Operation Sun Devil was a part of the Clinton administration law enforcement effort targeting cybercrime. Early in January, they had released a public statement announcing it. Our experience shows that many computer hackers suspects are no longer misguided teenagers mischievously playing games with their computers in their bedrooms. Some are now high-tech computer operators using computers to engage in unlawful conduct.

Starting point is 01:16:13 The right of the people to be secure in their persons, houses, papers, and effects against unreliable searches and seizures shall not be violated and no warrant shall be issued but upon probable cause not without support by oath or affirmation and particularly describing the place to be searched and the persons or things to be seized. This roughly translates into to fight crime we can now do anything we want but hey we will try to not violate and abuse anyone. One of the first targets of Operation Sundevil were a hacker group known as the Legion of Doom and soon after the members known as Alphid acid freak, fiber optic, and scorpion were rated. Accused of hacking phone systems, the Secret Service kicked down the doors and turned their house upside down.

Starting point is 01:16:57 The computers were confiscated along with books, notes, telephones, audio tapes, and other suspicious electronic equipment. Barely 18 years old and still living at home, their families were also subject to police treatment. Near the end of their discussion, Barlow and Caper, they both realized that the complete overstep of their civil rights and knew that something needed to be done to defend them. the beginning of the Electronic Frontier Foundation. Wealthy from his ventures, he agreed to cover all legal costs and defend the hackers' case. Within a week, Barlow and Caper were in New York setting up the legal team for the three teenagers. They decided to work with RBSKL, Rabinoids, Budin, Standard, Krinsky, and Lieberman, the law firm renowned for defending civil liberties.

Starting point is 01:17:37 The day after, acid freak, fiber optic, and scorpion would walk into RBSKL's chamber to become the first cyber conflict of the 90s. After doing so, a journalist reached out to follow up on Barlow's experience with the FBI. During his phone call with the journalist, Barlow happened to talk about his efforts with Kaper in defending the hackers. Unexpectively, several days later, the newspaper headlined, Lotus founder, defends hackers. The headline stormed the public and soon went viral. Steve Wozniak, the co-founder of Apple, reached out and jumped on board as an advisor, agreeing to give unlimited funding to the legal efforts of Kaper and Barlow. Alongside Wozniak, they were joined by John Gilmore, a tech entrepreneur.

Starting point is 01:18:20 Gilmore was known as a troublemaker with a hobby that included annoying the NSA. Just the year before, 1989, he had leaked an NSA banned cryptography paper. During his career as a self-taught programmer and Sun Microsystem's fifth employee, he was known to, quote, never take on a job unless he was convinced it was the right thing to do. Being rich from Sun Microsystem Stock Options, he spent the latter half of the 1980s hosting the alt-forums, known for being a place where anarchists, lunatics, and terrorists hung out. More recently, in 1989, he started up a company called Signus Support to pursue his passions,

Starting point is 01:18:55 freedom of speech, freedom of software, and freedom of encryption. As an anarchist and freedom fighter, the group of Barlow and Gilmore represented what he believed in. Soon after the publicity, they learned of the rating of Steve Jackson Games. Similar to the three hackers, the game company had their whole office confiscated by the Secret Service. At the time, Steve Jackson Games was making a video game titled, Cyberpunk, which the CIA believed to be a handbook for computer crime. The Secret Service looked into all their emails and had even deleted many as reported by the company. The Secret Service was recklessly out of control and had no concept of digital rights. On the 8th of June 1990, Barlow released his iconic paper, Crime, and Puzzlement.

Starting point is 01:19:36 He writes about everything that had happened leading up to the involvement of Kaper, Wozniak and Gilmore and the defense of three hackers. America is entering the information age with neither laws nor metaphors for the appropriate protection and conveyance of information itself. Feeling the need for a formal organization to fight against injustices, at the end of the article, he reveals the formation of the Electronic Frontier Foundation, EFF, an organization that would raise and disperse funds for education, lobbying, and litigation in the areas relating to digital speech and the extension of the Constitution into cyberspace. Word of the EFF traveled fast, and to Barlow's surprise, he had touched upon an issue which received overwhelming levels of public acknowledgement. The Steve Jackson Games case would go on to

Starting point is 01:20:17 set historical precedent and categorize electronic mail along with voice calls where a warrant was needed to gain access to them. A pretty good bill. Early next year in 1991, Senator Biden added an addition to Bill 266, a piece of legislation focused on anti-terrorism. The addition to the bill allowed for the government to access plain text contents of voice data and other communications when appropriately authorized by law. It basically meant that the government would be able to spy on all communications available at will. All forms of communication. At the time, a software engineer who was building an encryption program heard about this news, known as Phil Zimmerman, spent the last decade heavily involved in liberal politics as a nuclear freeze activist, and more recently started focusing on technology.

Starting point is 01:21:01 He was building a tool that could allow anyone with a computer to encrypt messages and files using the RSA encryption algorithm. Considered to be of military grade, RSA had only been used commercially, but Zimmerman believed that everyone should have access to strong cryptography and the ability to communicate privately. His program was called PGP, which stood for Pretty Good Privacy, a name inspired by the grocery known as Ralph's Pretty Good Grocery. He had been vaguely debating how he was going to make a business from PGP, but when he learned of Bill 266, he did not take the news lightly.

Starting point is 01:21:34 He saw it as impending doom. The government was about to legalize spying and the exact activity his software was looking to protect against. Taking the bill as the ultimate deadline, Zimmerman rushed to get it into the hands as many people as possible. Missing five mortgage payments in a row, Zimmerman said, this is not a commercial product. It was a human's rights project. And while version 1.0 was considered to be weak and poorly written, the recipe of sleep deprivation, having no money, and rush work is not an optimal one for writing software. Zimmerman released PGP in May of 1991, along with his famous article, which included the software docs,

Starting point is 01:22:11 why I wrote PGP. If privacy is outlawed, only outlaws will have privacy. Intelligence agencies have access to good cryptographic technology. So do the big arms and drugs traffickers. So do defense contractors, oil companies, and other corporate giants. But ordinary people in grassroots political organizations mostly do not have access to affordable military-grade public key cryptography technology until now. PGP empowers people to take their privacy into their own hands. There's a growing social need for it. That's why I wrote it.

Starting point is 01:22:41 He started uploading PGP to different forums and sites. It was open source free and didn't require a license for commercial use. He wanted to put military-grade encryption into the hands of everyday people in an anticipation of impending doomsday. Helped out by his activist friends, PGP started to spread. Did you know, before the rise of most italitarian governments, they confiscated and banned the ownership. of guns. This was the case in Nazi Germany, the Soviet Union, and Italy during World War II, etc. Within a week, people started using it around the world, and within a month, thousands had already downloaded it. It was soon used by Burmese freedom fighters, and even spread to Eastern Europe,

Starting point is 01:23:20 where one person replied to Zimmerman, if dictatorship takes over Russia, your PGP is widespread from Baltic to the Far East now, and will help democratic people if necessary. However, in spite of Zimmerman's escuried efforts, civil liberty groups, including the EFF had rallied against Senator Biden and the addition was removed from Bill 266. It turned out that it was Biden who ultimately motivated the urgent release of PGP into the public. May and Hughes, two very crazy individuals. Early next year, Gilmore hosted a party in San Francisco where he invited cryptographers together to hang out and drink. That was when Eric Hughes and Timothy C. May met.

Starting point is 01:23:56 Hughes was a young mathematician who had just come back from Amsterdam where he was where he worked with David Choms Digicash. May was originally a hardware engine. at Intel who had just spent the last three years attempting to write a non-fiction novel about David Choms' ideas. Whilst Eric was still in his mid-20s and May was in his late 30s, they immediately connected over their equally crazy libertarian views. By chance, they were both also equally obsessed with David Chalm's work. Timothy C. May was a rugged character, having been brought up by a naval officer. He was a free-spirited libertarian from the early age of 12, where he very much enjoyed his guns. Holding a pleasantly heavy, cold metallic firearm felt liberating and empowering. In a similar

Starting point is 01:24:37 fashion, while Chaum played with his locks and safes as a child, May's favorite toys were his AR-15s assault rifle and his 357 magnum. Fittingly, May pursued a career as a hardware engineer. During the 80s, his libertarian views gravitated him towards the wild west of cyberspace and fantasized how encryption makes it easy and even safe to ignore most local laws about what can be done in cyberspace. In 1986, he read David Chalm's paper, security without identification, card computers to make Big Brother Arps Elite and quit his job. He wanted to write about David Chalm's ideas. Leaving Intel as an employee rich from stock options, he started to write a novel called Degrees of Freedom. Many attempted to write about a world ruled by digital money and data heavens, blockchain, question mark,

Starting point is 01:25:26 time stamping and NSA surveillance. And similar to most teenagers who wrote about spy fiction, he never finished the novel. Being an engineer at heart, after three years of struggling as a writer, he was done with the sidelines. I don't want to work on this stupid novel. I want to actually build this elaborate world that I was imagining. Eric Hughes had studied mathematics at Berkeley as an undergraduate student. During his time there, he was first exposed to the work of David Chom at a cryptography conference, Crypto-86. Chom had been talking about a system of digital money where he stressed the importance of anonymous payments in the increasingly digital world. Unlike others, Hughes was captured by the political implications of

Starting point is 01:26:06 technology and cryptography. After a short consulting stint, he left for Amsterdam to work for David Choms Digi Cash. But despite being obsessed about his research, Hugh described how he was not too fond of Choms' personality, a comment that would not surprise any of the past and present DigiCash employees. After a short stint at DigiCash, he came back home. He had come back earlier in May 1991 to apply for a Berkeley graduate school. As Hughes had mentioned needing a place to stay while he looked for a place to rent, May offered to cover him. While it made sense then, Hughes agreed and came to live with May for a short while. Upon arriving, he ended up doing very little of what he was intending to do, look for a place to live. Instead, Hughes and May spent the three days straight just talking about crypto. Whilst others had day jobs,

Starting point is 01:26:52 May was a rare mix of being rich as well as a failed author, and Hughes was a young 20-something-year-old with no responsibilities. We spent three intense days talking about math, protocols, domain-specific languages, secure anonymous systems. Man, it was fun, said May, the first meeting. Later in September of 1991, Hughes, May, and Gilmore came up with the idea of gathering a regular meetup of tech libertarians. They liked the idea and sent out Hughes to a newly rented house. So on a September, Saturday morning, 30 or so academics, engineers, and crypto advocates sat on the unfurnished floor of Hugh's newly rented house, and so it began. May had prepared 57-page handouts detailing concept of cryptography and other background information on the discussion that they planned. They included a

Starting point is 01:27:39 discot copy of PGP 2.0, which was released the week before. After ceremoniously distributing the packets, he began the meeting by reading aloud his five-year-old creation to which he called the Crypto-Anarchist Manifesto. It was a political manifesto written back in 1988 during May's short-lived career as an author. It projected a vision of a future where the world's data, liberty, and governance were ruled by laws of cryptography and mathematics. He originally written it for the Cryptography Conference, Crypto-1988. He printed out hundreds of copies and gave them out, but no one cared too much about the political implications of cryptography. But unlike those present at the Crypto-88 conference, as May read the manifesto out, the motley crew of

Starting point is 01:28:19 crypto-fanatics who sat on the floor nodded and grumbled in approval. Exert. If the government can't monitor you, it can't control you. Politics has never given anyone lasting freedom, and it never will. May didn't trust in the protection of privacy and freedom with companies. Instead, he trusted the law of mathematics to do so. May, in an early video conference in 2017, commented how at least one or two of the people present had probably created Bitcoin. After initial discussions around the world they lived in, they started to play a series of role of playing games that simulated cryptographic concepts. By now, you would probably have realized how huge geeks these people were. For the rest of the afternoon and evening, they used paper

Starting point is 01:28:58 and envelopes to play out digital money, information markets, pseudonyms, hypothetical drug trading systems and reputation systems. They had naturally arrived at the issue that Chalm had originally encountered, metadata, and its exploitability. Frustrated at how cryptography had made little progress since the 80s, they talked about how they would go about implementing Chalm's solution of a mixed network. The group talked about cryptography all night long and ended up sleeping on the floor of Hughes bare floor. During the next morning, while Hughes and May were buying bagels, they asked themselves, why limit the club to the physical world when the real mass of potential cryptography fanatics were on the cyberspace? They realized that the internet was going to be

Starting point is 01:29:36 built in chat rooms, not in someone's living room. Within a week, Hughes developed mailing list 1.0, a re-mailer list, think like an email chat room. The mailing list would send mail to and from different users and hide the original sender's identity behind a pseudonym. How Fini would implement PGP 2.0 into the re-mailing list and another cypherpunk called Kotrell would implement message batching to hide the timing of messages. Hughes girlfriend Jude Millen, the editor of a tech magazine, commented how you guys are just a bunch of cypherpunks. A play on the world cyberpunk and cypher, the term would soon be worn as a badge of pride and political defiance. Within a month of the first meeting, the mailing list was up and members could subscribe by emailing cypherpunks dash

Starting point is 01:30:20 at Toad.com. After 13 years, David Choms' concept of a mixed network was finally realized. The Birth of the Cipherpunks. This mailing list would become the harbor of America's most back-channel discussions surrounding cryptography, drug markets, assassinations, and government politics. Julian Assange, along with the creators of Tor, BitTorrent, and most likely Bitcoin, were part of this list early on. Within a week, it had 100 subscribers, and by the end of the year, there would be over 2,000 similar re-mailers hosted around the world. world. One of the first messages serviced on the 10th of October 1992, which announced the details of the second cyberpunk offline meetup. This time, it would be held in the offices of Cigness Support,

Starting point is 01:31:01 Gilmore's company in Mountain View, where Google now currently resides in. Here's what seems to be an email from the email list. The second meeting, October 10th, 1992. The second meeting will be held in the new Cigness offices, exact address and directions to follow. We do not have yet an exact agenda, but one should be arriving in the next few days. Please mark your calendars now and start telling your friends. For this meeting and until further announced, we are using a transitive trust system for invitations. Invite anyone you want and let them invite anybody they want and so on.

Starting point is 01:31:33 The crypto-anarchy game we tried out at the first meeting was a good success as we could have hoped for from an untested idea. The game seems useful and fun enough to warrant continue play and play testing, so we'll be playing it again on future meetings. We've observed several interesting emergent behaviors in the first session, including resellers and reputation behaviors. We'll play a two-hour session this time and discuss it afterwards. The Cyberpunks list is a forum for discussion about technological defenses for privacy in the digital domain. Cypherpunks assume privacy is a good thing in which there were more of it.

Starting point is 01:32:06 Cypherpunks acknowledged that those that want privacy must create it for themselves, not expect government's corporations or other large faceless organizations to grant them privacy out of beneficiary. cypherpunks know that the people have been creating their own privacy for centuries with whispers, envelopes, closed doors, and couriers. Cypherpunks do not seek to prevent other people from speaking about their experiences or their opinions. The most important means to the defense of privacy is encryption. To encrypt is to indicate the desire for privacy, but to encrypt with weak cryptography is to indicate not too much desire for privacy. Cypherpunks hope that all people desiring privacy will learn how best to defend it. cypherpunks are therefore devoted to cryptography

Starting point is 01:32:49 cypherpunks wish to learn about it to teach it to implement it to make more of it cypherpunks know that cryptographic protocols make social structures cypherpunks know how to attack a system and how to defend it cypherpunks know just how hard it is to make good cryptosystems cypherpunks love to practice they love to play with public key cryptography they love to play with anonymous and pseudo anonymous mail and forwarding and delivery they love to play with the DC nets

Starting point is 01:33:16 They love to play with secure communications of all times. Cypherpunks write code. They know that someone has to write the code to defend privacy, and since it's their privacy, they're going to write it. Cypherpunks publish their code so that their fellow cypherpunks may practice and play with it. Cypherpunks realize that security is not built in a day and are patient with incremental progress. Cyphopunks don't care if you don't like their software they write. Cyphre punks know that their software can't be destroyed.

Starting point is 01:33:43 Cyphorunks know that a widely dispersed system can't be shut. down. CyphraPunks will make the networks safe for privacy. Continued. The second meeting of the cypherpunks will be Saturday at noon. John Gilmore has graciously provided us with a meeting space at the new Cygnus support offices. These offices are so new, in fact, that Cygnus will not have been moved in yet. This meeting will be a bring-your-own pillow or chair, since it will likely be held in a largely empty space. Directions are at the end of this message. Attendance is transitive trust arbitrarily deep. Invite whoever you want, let them also do so and so on. Invite them also to join the mailing list.

Starting point is 01:34:19 Do not, however, just post the announcement. Time will come for that. I'd like everyone who plans on attending this meeting to send me Hughes at soda. berkeley.edu a message telling me so. I'd like to get a rough headcount before a Saturday for game planning. We are starting at noon because of popular demand. Eat beforehand or bring a burrito or something. It will be fine to eat during the first segment. It won't be any more disruptive than the game is. Bring your own PGP public key for in-person key distribution, preferably on diskette. We need a portable PC or three to do key distribution. If you have one, you can bring, post it to the list and tell people. We realized after the first meeting that a strict schedule was nonsense, this meeting will have a very informal schedule.

Starting point is 01:34:59 Starting at noon, we're going to play session two of the crypto-anarchy game, in which players try to conduct business under the watchful eyes of others. We want to play for two hours and then have a discussion about experiences, afterwards for about an hour. Some of the improvements over last time will flatter denominations of money, wider distribution of commodities, more watchers, governmental and otherwise,

Starting point is 01:35:20 and perhaps some pre-printed forms. We'll take a break to regroup for about 10 or 20 minutes. For the second half, we'll talk about the security of re-mailers. I'll lead the discussion. We'll be designing protocols and analyzing attacks and defenses. I've done this with Digi Cash for electronic money protocols, and remailers are much easier, but still probably more than an afternoon's discussion.

Starting point is 01:35:41 We'll do this in until six or so when people will have to start leaving. Everyone who wants to will go out to dinner. I don't know any of the restaurants down there. Perhaps someone can suggest one. And then the rest of the email is this, the directions. Okay, so back to Peter Pan's article. That was just an email thread that was part of the Cypherpunks email thread.

Starting point is 01:35:58 Now we're back to the article from Peter Pan. Cypherpunks assume privacy is a good thing in which there were more of it. Cyphur puns are devoted to cryptography. Cyphurpunks love to practice cypherpunx write code. unlike other political movements throughout history, the cypherpunks were able to equally match and defeat the government through direct action. An archive of the messengers are available online. Here's an archive of the first year of messengers. There's a link in the article.

Starting point is 01:36:24 John Gilmore's genanigans. So while Gilmore was running his company organizing crypto rebel meetups, he was caught up with another hobby of his, annoying the NSA. He had been battling a court case with the NSA and scored another win for the cypherpunks. Earlier that year in the June of 1991, he had learned of some books written by a cryptographer known as William Friedman. He was the founder of the U.S. Signal Intelligence Service, the precursor to the NSA. After reading two volumes of Friedman's work, he realized that the other four volumes were classified. He asked for them to be to classified.

Starting point is 01:36:55 They said no. This was not because Gilmore was a pain in the ass, but instead he had stumbled across one of NSA's founding documents. So being a curious George, he started hunting for them and ended up in Virginia after being tipped off by a friend. When he found the exact books that were classified by the NSA, he mailed them to himself. However, life was not as simple as that. Under surveillance, the NSA demanded him to hand them over. Denying the request, he argued how these textbooks are relatively simple cryptographic techniques and that he obtained them legally. To get them off his back, he gave his story to the

Starting point is 01:37:28 press, and after a front page headline focusing on the NSA, they dropped the pursuit of Gilmore and the books. Soon after the books were declassified, the NSA hated the publicity and were forced to give it up. So after all that effort, what value were their books to Gilmore and the Cypherpunks? Apparently nothing. Gilmore just wanted to stand up to the NSA and prove that government could be defeated. Gilmore 1, NSA's 2.0 gets into trouble. Early next year in 1993, PGP fell into the sites of the U.S. government. After having attention drawn to Zimmerman through RSA's intellectual property dispute, regulators initiated a criminal investigation on the violation of arms export control act. Cryptography since World War II had been

Starting point is 01:38:10 considered as a military product and controlled within the same class as munitions. While back then, the world was made up of stone and chalk. In the 90s, it was a digital one where software and computing led to the U.S.'s GDP. With Zimmerman given a court date, the EFF and a public rallied behind him. In response to the government, he printed copies of PGP's source code on hardback to cover as a political stunt. Books were protected by the First Amendment under free speech, but cryptography was outlawed. What about a book that had cryptographic source code? What was that then? But despite all the ridicule, the public threw at the government, it was clear as day. Zimmerman could not deny it. He had violated the Munitions Act. Things looked grim for the software engineer turned hippie. Quote,

Starting point is 01:38:53 to have 10 lawyers unanimously tell me that it was hopeless, it was a ton of bricks. It was the worst day, says Zimmerman. His all-star legal team was sure of defeat until one of them had an idea. Known as Phil Du Bois, he built his reputation through creativity and defending criminals, celebrities, and generally crazy people who did stupid things. Instead of denying and pleading, Du Bois' idea was to go on the offensive and portray the government as a danger to freedom. This would become key to the Zimmerman defense, and luckily for Zimmerman, the government would soon step into its own news. Shortly after the Zimmerman case in April 1993, the Bill 266 had come back in another form.

Starting point is 01:39:33 The Clipper Chip. Sinking the Clipper Chip. There was no better time to release an NSA spy device that allowed federal, state, and local law enforcement officials the ability to decode and intercept voice and data transmissions. Its timing was perfect to further piss off an already irritated nation that stood behind Zimmerman. The Clipper chip set was a manufacturing standard that encrypted data. Similar to the DES of the 70s,

Starting point is 01:39:57 it had been part of the Clinton administration's attempt, to manage the country's security. The government just wanted to protect everyone by having access to everything, everywhere, whenever they wanted. And while the DES of the 70s had had suspicions of being backdoored, the clipper chip was straightforward about it.

Starting point is 01:40:13 It was part of the chip's inherent design and was openly announced through its proposal. It had a slight improvement upon the DES 56-bit key and used an 80-bit key. And like most government projects today, back then you could also trust the quality of the work. That sarcasm, by the way.

Starting point is 01:40:29 With a healthy, distrust of the government and fresh memories of the last three years when the clipper chip was announced, the public erupted against it. They had just woke the sleeping bear, a very excited crew of cypherpunks. Official civil rights groups, such as the EFF, responded to the proposal in well-tempered criticisms of how it endangered freedom. But in the general public population, frenzy and paranoia ensued. Orwell's dystopian world of 1984 was about to come true. In contrast to the mainstream urgency, the cypherpunks were rather excited. Imagine this. You forecasted a doomsday and had started preparing for it, and 10 years later, it happens. And sure, while the world looks like

Starting point is 01:41:09 it was going to end, it would be hard to not get excited to watch the world scramble and arrive at the same conclusions which you had already arrived at. The cypherpunks predicted and expected this day. The war is upon us, announced Timothy C. May. Clinton and Gore folks have shown themselves to be enthusiastic supporters of Big Brother. Timothy C. May, Eric Hughes, John Gilmore, and other cypherpunks rallied against this news with a level of giddy enthusiasm. And while the cypherpunks openly opposed the chip and debate raucously about their withdrawal, many others, including May, did not actually take it too seriously.

Starting point is 01:41:45 They knew the vulnerabilities of the chip design and how public key cryptography fundamentally becomes useless the moment anyone else has the private key. The backdoor of the chip was almost like a sick joke to them. On the day of the release, May wrote, First, the bad news. The government wants to control encryption. Though they are playing coy about it, it's clear that eventually they will try and ban, quote, the good stuff.

Starting point is 01:42:08 It's clear Zimmerman and others have gotten their attention. Now, the good news. It does not matter. The game is over. We won. The government may engage in holding actions, but it still doesn't matter. What we have here is the state's pitiful attempt to make the best of a bad situation. This amazing policy announcement is a tacit admission of defeat.

Starting point is 01:42:28 How can I be so sure? The cat is out of the bag. Free millspec data encryption is readily available for all. Within a year, equivalent voice encryption freeware will join it. There is no way the government can stuff the encryption cat back into the bag. They can pass their laws. We will do as we please. And they will help us.

Starting point is 01:42:48 Nonetheless, there had been an emergency meeting at the offices of Cygnus support. With 50 cypherpunks tightly packed into a room, they would brainstorm ideas to destroy and rebel against the government. Similar to how in Fight Club, Tyler Durdin would hand out assignments that cypherpunks printed off parody stickers that said Intel inside and stuck them inside of computer stores, where May had originally drawn it on a whiteboard as a joke, referring to Big Brother Inside. Other designed T-shirts that shouted Fight the Clipper had lines from May's Cryptoanarchist Manifesto. Whitefield diff was a major influencer during this clipper chip saga and would later write a famous public letter to the Clinton administration. Here's an excerpt. No right of private conversation was enumerated in the Constitution. I don't suppose it occurred to anyone at the time that it could be prevented.

Starting point is 01:43:36 Now, however, we are on the verge of a world in which electronic communication is both so good and so inexpensive that intimate business and personal relationships will flourish between parties who can at most occasionally afford the luxury of traveling to visit each other. If we do not accept the right of these people to protect the privacy of communication, we take a long step in the direction of a world in which privacy will only belong to the rich. The import of this is clear. The decisions we make about communication security today will determine the kind of society we live in tomorrow. Early next year in 1994, a National Council of 40 experts, industry leaders, and academics

Starting point is 01:44:13 wrote a public open letter to the Clinton administration, asking for the Clipper proposal to be withdrawn. This group of 40 included all three original creators of public key cryptography, Martin Hellman, Whitfield Diffy, and Ralph Merkel. Ronald Rivest, one of the creators of the RSA encryption, David Chom, founder of Digi Cash, Philip Zimmerman, creator of PGP. Here's an excerpt. The Clipper proposal should not be adopted. We believe that if this proposal and the associated standards go forward, even on a voluntary

Starting point is 01:44:42 basis, privacy protection will be diminished, innovation will be slowed, government accountability will be lessened and the openness necessary to ensure the successful development of the nation's communications and infrastructure will be threatened. Next section. Government, don't worry, we have it covered. Next year, during May of 1995, the NSA finally responded. Failing to give an inch of ground, they responded through a fairly pointless press release that attempted to assure the public of the chip security. The cryptographic strength of the Clipper algorithm is very substantial and should be highlighted. With regard to the ATNT TSD 3,600 device and other similar devices, these vendors almost exclusively employ DES encryption. DES encryption is based on the use of 56B key

Starting point is 01:45:26 information. Clipper employs an algorithm, which is based upon an 80-bit key. Although it's 20 bits longer, although it's only 24 bits longer, Clipper encryption provides 16 million times as many permutations, which makes it geometrically more difficult to decrypt. This fact is a critical counterpart to the encryption methodology and makes Clipper encryption attractive. By 1994, the communications manufacturer AT&T had started creating hardware with the chip. Communication companies were starting to use the chip. But despite this, the ideology of the cypherpunks had reached far and wide. As the chip was released into commercial products, the cypherpunx soon had eyes on the restricted

Starting point is 01:46:04 design of the chip. An AT&T embedded systems engineer called Matt Blaze had the job in testing the chip for production and was able to examine it closely. He discovered that while the cipher itself was relatively secure, the NSA's key for access to the encrypted backdoor was only a 16-bit hash that could be brute-forced. It turned out that Blaze was also a cypherpunk and part of the mailing list.

Starting point is 01:46:26 After consolidating his findings, he published them in 1994, effectively breaking the chip's design. Soon after his findings, the clipper chip was discarded and found impractical by the government and also commercial producers. The tides were finally starting to turn. Next year, the Cypherpunks' efforts will continue and transition into a series of legal battles. Karn versus the United States.

Starting point is 01:46:48 Soon after the vulnerability of the clipper chip was released, a programmer known as Philip R. Karn stepped up to the challenge the government's classification of cryptography as a munition. He ordered an assessment of a book that contained cryptographic source codes for encryption algorithms. Unable to dispute the claim, it was found that the book was not subject to the Munitions Act. Karn continued to request a second assessment of the book's CD disc, which contained the source. source code detailed inside the book, but unable to prove otherwise it fell under the munitions act. The nuances here were decided on the potential ability to cause malice through the medium in which the source coast was held on, but his efforts would not be wasted. Bernstein versus the

Starting point is 01:47:27 United States. Next year in 1995, Carnes case held the legal grounds for another challenge. A student of Berkeley called Daniel J. Bernstein attempted to publish a paper along with source code about his encryption protocol and through his publication challenged the Munitions Act in federal trial court of Northern California. Based off the precedent of Carn versus the United States, the court ruled that the source code inside the paper was speech protected under the First Amendment. While Carn's case had ruled text forms of source code to fall outside of the Munitions Act, Bernstein's case proved it to be protected by the First Amendment under free speech. The pieces of the puzzle were slowly coming together. Junger versus United States. Peter Junger would be the next

Starting point is 01:48:08 challenge the Munitions Act. He was a law professor who enjoyed teaching from first principles and wanted his students to not only study but also play with concepts explored. For one of his courses, he was restricted to only take in international non-U.S. citizens, as he had included an encryption program in the course materials where it officially recognized as the export of cryptography. Held back from teaching, he announced his case against the Munitions Act, believing that it violated the First Amendment. Leveraging the recent cases of Karn and leveraging the recent cases of Karn and Bernstein, Junger's case would emerge victorious later in 1999

Starting point is 01:48:44 to conclude how software would be protected by the First Amendment. But immediately after Junger's initial challenge, the Clinton administration gave in, Junger's case would only be closed later on. Later that year, on the 12th of October, 1996, President Bill Clinton signed Executive Order 13026. Cryptography was officially removed from the munitions list and placed on a lightly controlled schedule.

Starting point is 01:49:07 the export of cryptography was no longer prohibited. Through this order, Zimiman's case would also be dismissed as the consequences of exporting no longer carried any weight. The battle was won. But was it over? No. Coming full circle from Helman, Diffy and Merkel. Later in 1998, as the remaining legal cases surrounded cryptography were finally being closed,

Starting point is 01:49:27 Gilmore looked to press on and completely destroy the government's claim and involvement on future cryptographic technology. The cypherpunks community has set their size... The Cypherpunks community has set their sights on the DES. Originally released in 1976, it was an encryption standard that was provided for commercial use. The DES was what Martin Hellman and Whitfield Diffy had opposed and what inspired the open publication of public key cryptography. One of their criticisms of the DES was that it was 56-bit key was theoretically vulnerable to a brute force attack,

Starting point is 01:49:58 but back in the 1970s, doing so was considered unfeasible with the degree of computing power available. But now in the year 1998, it was a different story. Later that year, RSA data security released a bounty to see who could crack a DES-secured message. After five months, it would be solved. They set a bigger bounty of $10,000 to see if anyone could do it faster and better. After missing the boat on the first challenge, Gilmore, who by then had a successful business, took on the challenge with a cryptographer called Paul Kocher. He worked under and was trained by Martin Hellman, one of the three original public key inventors.

Starting point is 01:50:33 Fitting for the mission that would bring history full circle, Gilmore and Kosher spent $22,000 to build a computer called Deep Crack. Within 56 hours, the DES was cracked. After about two decades of controversy, the DES was finally broken and soon officially declared defunct. By the year 2000, all restrictions and regulations surrounding cryptography had been removed by the government. Open source cryptography was legal and allowed. At the beginning of the 90s, the world wasn't sure where it stood with cryptography. until the government gave people a reason to care. The cypherpunks fought and won.

Starting point is 01:51:09 They did so to protect the right of personal privacy and liberty through cryptography. They would continue to rampage through the 2000s, leaving behind in their trail Tor, and the rise of the deep web, torrenting and piracy, wiki leaks and transparency, but more relevantly, Bitcoin and cryptocurrency. In the next part, part four, we will explore the creation of Tor, BitTorrent, WikiLeaks, and the birth of Bitcoin. Part 4. The last part, by the way, on the home stretch. Before Bitcoin, part 4, the 2000s, new millennium.

Starting point is 01:51:41 Continuing on from the 90s. This movement fought the injustices of the U.S. government and their treatment of digital rights. It all began over a series of hacker raids that would spark a decade-long skirmish between the cypherpunks and the government. With civil rights emerging victorious, the world was no longer in 1992. Cryptography was removed from the Munitions Act, and code was free. officially deemed under the protection of the First Amendment Act of free speech. By the end of the 90s, it was a different world. MSN was founded in 95, Google was founded at 98.

Starting point is 01:52:13 In 2001, Apple would soon release its first iPod to change mobile technology forever. Myspace would emerge in 2003, Facebook in 2004, YouTube in 2005. The world was changing and a new era was on the cusp. But what about the cypherpunks? After the late 90s victory over the government, there was a short time period in which things seemed quiet, and naturally there was no need for an underground dwelling of rebels anymore. Cryptography was legally open source,

Starting point is 01:52:39 and its export from the U.S. spread strong cryptography all over the world. By the 2000s, Cypherpunk mailing list activity was dying out. After the attack on 9-11, the government questionably increased their brute force authorization on hosting services for investigations, and soon cypherpunk mailing lists were shut down. As a joke, one of the last cypherpunk mailing lists renamed them, themselves to cypherpunk at al-Qaida.net. In a recent video conference call in 2016, Timothy C. May

Starting point is 01:53:07 remembers that, quote, I didn't think it would be too smart to be part of a group labeled al-Qaeda.net. Many others thought the same, and the members of the list fled elsewhere. With over thousands of messages spanning over nearly a whole decade, it served as the cypherpunk war room and the home of the 90s techno-libertarian spirit. With the infamous mailing list coming to an end, things were just getting started for the cypherpunks. A Cambrian explosion of the cyberpunks, a Cambrian explosion of internet information services would erupt in the following decade and change society forever. And with developing applications of the internet from file sharing, video streaming, gaming, e-commerce, the cypherpunk missions of privacy and uncensored technological freedom stayed ever-relevant.

Starting point is 01:53:45 The cypherpunk spirit continuously lives on through BitTorrents, the Torrent network, pirate bay, wiki leaks, the Silk Road, Darkneck markets, and all its contributors, where many were part of the original Cypherpunks mailing list. Julian Assange was a very active member back in 1995, and so were core members of the Tor project, BitTorrent, and other open source advocates, but also through Bitcoin and the Web 3.0. We often lose track of perspective of where we are in history. It is far too easy to look no further beyond the local maximum of technological innovation. That was the reason I wrote the series before Bitcoin. Bitcoin wasn't a eureka moment.

Starting point is 01:54:25 It was a technology constructed with ideas and blueprints spanning over nearly half a century. It is part of a movement that has been brewing for the last 40 to 50 years, starting with Martin Hellman, Whitfield Diffy, and Ralph Merkel's open source publication of public key cryptography. They started the movement of the cypherpunks that would cede the ideology behind Bitcoin. It enabled true immutability and censorship-resistant data. But more importantly, it was a significant zero-to-one moment for decentralized technologies. The rag-tag bits and pieces making up Bitcoin can be found in the waking trail of the cypherpunks. Satoshi built Bitcoin along with Hal Finney, Nick Zobo, and Wei Dai. It was handcrafted by the veterans of the 90s Crypto Wars.

Starting point is 01:55:07 It was part of the inventing spirit of the cypherpunk movement that will continue to live on. While this might be a historical series, it is yet to conclude, as we are all part of it and continuing it. It seems motionless and still, but one thing is certain in history, and that is change. And change has been part of the cyphorfer. Psyphers movement for the last 40 to 50 years. We have to take a step back and appreciate that Bitcoin and now Ethereum is simply another piece of the puzzle that will fit into our story and the movement of the cypherpunks. It is simply just another important stepping stone for the movement, just like public key cryptography, the Cypherpunks mailing list, BitTorrent, Tor, and

Starting point is 01:55:43 WikiLeaks. We have to look beyond what is in the present and into the future in order to shape the world that we want. While David Chom knew about the consequences of a centralized internet, no one else believed him to work towards a better future. We may not realize it, but we are moving towards something that is way bigger than anyone can imaginably conceive. A future built on cryptography and liberty. Even back in the 70s, Martin Hellman and Whitfield Diffy knew it themselves. We stand on the brink of a revolution in cryptography.

Starting point is 01:56:12 Here's some more pictures. Here's Andreas and Tonopolis talking about Bitcoin to a crowd of four people in an empty room in 2013. Wow. Here's Gavin Wood presenting Ethereum at DefConnell. Thank you, and it has been a pleasure writing this series. I hope you have enjoyed it. History is rich and full of surprises. It simply takes some effort to look around.

Starting point is 01:56:31 There is a lot to be gained, knowledge, gratitude, and wisdom. Next time, look into it. You will find richness and delight on par with the creation of public key cryptography and the cypherpunks themselves. The before Bitcoin series pays homage to all the heroes who fought to protect privacy, freedom, and liberty. While the spotlight of this series did land on a select few, I want to also address those individuals who names were not mentioned, the names that fell through the cracks of history, the early internet engineers that wrote and maintained code for public infrastructure, the cryptographers who sought to protect the freedom of speech and privacy,

Starting point is 01:57:05 the vendors who risk their freedom to enable free commerce of contraband goods, the contributors who answered the stack exchange queries, the open source project managers, and the whistleblowers who sacrifice their own bringing to bring injustice into the light. Thank you. And thank you, Peter, for writing this. We hope you enjoyed the video. If you did, head over to Bankless HQ right now to develop your crypto investing skills and learn how to free yourself from banks and gain your financial independence. We recommend joining our daily newsletter, podcast, and community as a bankless premium subscriber

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Bankless - 61 - Before Bitcoin | Peter Pan

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