How bitcoin revived the cypherpunks

How bitcoin revived the cypherpunks

bitcoin Blockchain Cryptocurrency
November 13, 2017 by Akshita Ghusingha

A cypherpunk is anyone who advocates cryptography as a strong tool for privacy, social expression, and social and political change. Cypherpunks have been active advocates of a decentralised state and pro-privacy movements since the 1980s. Bitcoin cypherpunks were one such group who envisioned the use of decentralised economic activity where the tyrannical role of state and corporations would diminish.


The concept initiated with a clear and simple motive – everyone in this world needs some sort of privacy and should have the choice whether he wants to reveal his personal information or not.

“The people in this room hope for a world where an individual’s informational footprints – everything from an opinion on abortion to the medical record of an actual abortion – can be traced only if the individual involved chooses to reveal them”

But this is almost impossible in a world where government monitoring and corporate control of private information has a strong foothold. Cypherpunks came up with ideas like digital currency, identity protection and true promotion of freedom and expression through the use of technology. “We must defend our own privacy if we expect to have any”. These ideologies took root in the early nineties and began to flourish with the coming of the twenty-first century.

Cypherpunks initiated by organising in the Silicon Valley. Online, they used the “cypherpunk electronic mailing list” to widespread cryptography and reach out to more members. It was initiated by Timothy May, Eric Hughes and John Gilmore.

In Tim May’s document “The Crypto Anarchist”, he envisions a world where two persons could exchange words or conduct business without ever knowing each other’s true identity. He is an anarchist who believes that since governments and organisations exploit our personal information rather than protecting it, cypherpunks must emerge to protect privacy through cryptography and writing codes. He believed that privacy is a right, not a privilege.


While cypherpunks had been creating and experimenting with each other’s work in the 1990s, the idea actually took shape in the early 2000s. This occurred by the creation of “Cypherpunk money”. Cypherpunks believed that true privacy is only possible when third-party roles are eliminated. For this, decentralisation and peer-to-peer marketplace were the solutions.

In 1998, Wei Dei published essays in cypherpunks mailing-list called “B-money”. It was an “anonymous, distributed electronic cash system” which Wei Dei developed after getting fascinated by Tim May’s crypto anarchy essay. Wei Dei’s essay described two protocols. One of them was “proof of work”, which became very famous and revolutionising soon. It exposed the idea of creating money for the ones that verify the transactions.

In 2004, RPOW (Reusable Proof of Works) was introduced by Hal Finney. RPOWs were built on Back’s Hashcash and were unique cryptographic tokens that could only be used once. Although, their validation and protection against double-spending had to performed by a central server.

In 2005, Nick Szabo introduced the idea of “bit gold”. It was an improved idea built upon Hal Finney’s RPOWs version. This idea was also a kind of response to “Digi Cash” that was handed to the banks by Chaum. He proposed various ideas for a decentralised digital currency. Firstly, he proposed that the units of digital coins should be valued upon the amount of computational work performed to create them. Secondly, he wanted the money to be decentralized with no “trusted central authority” such as banks or governments.

Although, Szabo’s proposal left many problems. For instance, some of the questions that were raised by the community members had concerns about recognition of cryptocurrency, its acceptance as a currency in the society and its legitimacy and transfer controls while the exchange between two people. These hurdles disabled cryptocurrency to be enforced in practice.

However, in 2008, an anonymous, unidentified author, with the pseudonym of Satoshi Nakamoto published the “bitcoin whitepaper” which transformed the dream of cypherpunk money into reality. Before Bitcoin, “b-money” and “bit gold” were launched in the cryptocurrency market. But their drawbacks and eventual failures shut down talks of cypherpunk currency in the market.

But in 2008, Satoshi Nakamoto published a white paper called “Bitcoin: a peer-to-peer Electronic Cash System”. This publication brought a lot of attention in the crypto world. As a result, in January 2009 the software client was released. A big amount of computer scientist and cryptographers tested the Bitcoin’s protocols. Early users were attached to the political and economic message that the digital money gave birth to. It was finally realised that a world without third-parties inform banks and governments were after-all possible.

The Bitcoin Network received support from all the initial developers and enthusiasts of Bitcoin. In its initial release, Nakamoto mined 50 BTC. He transacted 10 Bitcoins to Finney, who was one of the first supporters, adopters, contributor to Bitcoin. He also became the receiver of the first bitcoin transaction ever. Other early supporters were Wei Dai, creator of bitcoin predecessor “b-money”. And Nick Szabo, the creator of “Bit Gold” which was the predecessor of Bitcoin.

After mining a million bitcoins in the earlier days, Nakamoto left Bitcoin and disappeared from any involvement in the platform. He (kind of) handed over the reins to cypherpunk Gavin Andresen, who then became the bitcoin lead developer at the Bitcoin Foundation and anything that is closest to an official public face for the Bitcoin community.

Since then, the Bitcoin community grew bigger as the platform became more widespread and more coins were mined. More core members joined in the development. Though, due to the increasing size of Bitcoin, and problems of centralisation by ASIC chip holders, Bitcoin has faced many forks since then. A fork is basically when the currency gets separated into a different unit. Forks into – Bitcoin Cash (BCC), Bitcoin Gold (BCG) and upcoming SegwitX were initiated by Bitcoin cypherpunks, who were enthusiastic to revive the core value of Bitcoin – decentralisation.

Therefore, Bitcoin travelled a journey from 1980’s cypherpunk concept of privacy rights to 2000’s cypherpunk cryptocurrency enthusiasm and current efforts by members who still want to withhold the decentralisation agenda of Bitcoin.

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