In this review, we tell how the ideas of cypherpunk were born, how they influenced cryptocurrencies, and modern technologies, who formed the basis and why its popularity these days has grown again.
From the early days to today: the chronology of key events of the cypherpunk In the early 1970s, James Ellis
of the UK Government Communications Center put forward the concept of public-key cryptography. In the early 1980s
, small groups of hackers, mathematicians and cryptographers began working on the realization of this idea. One of them was an American cryptographer, Ph.D. David Chaum
, who is sometimes called the godfather of cypherpunk. This new culture has proclaimed computer technology as a means of destroying state power and centralized management systems.Key figure among the cypherpunk of the 80s
— Intel specialist Timothy C. May
. His dream was to create a global system that allows anonymous exchange of information. He created the concept of the BlackNet system. In September 1988
wrote The Crypto-Anarchist Manifesto
: people themselves, without politicians, manage their lives, use cryptography, use digital currencies, and other decentralized tools.In 1989, David Chaum
founded DigiCash an eCash digital money system with its CyberBucks and with the blind digital signature technology.Since 1992
, Timothy May, John Gilmore
(Electronic Frontier Foundation), and Eric Hughes
(University of California) have begun holding secret meetings and regular PGP-encrypted mailing through anonymous remailer servers. And finally, in 1993 Eric Hughes
published a fundamental document of the movement — А Cypherpunk's Manifesto
. The importance of confidentiality, anonymous transactions, cryptographic protection — all these ideas were subsequently implemented in cryptocurrencies.The term "cypherpunk" was first used
by hacker and programmer Jude Milhon
to a group of crypto-anarchists.In 1995, Julian Assange
, the creator of WikiLeaks, published his first post in cypherpunk mailing.In 1996, John Young and Deborah Natsios
created the Cryptome
, which published data related to security, privacy, freedom, cryptography. It is here that subsequently will be published data from the famous Edward Snowden.In 1997, cryptographer Dr. Adam Back
(you know him as CEO of Blockstream) created Hashcash, a distributed anti-spam mechanism.In 1998
, computer engineer Wei Dai
published two concepts
for creating a b-money digital payment system:
In April 2001, Bram Cohen
- Each member of the system has a copy of the system database with user funds balances (this idea found itself in Bitcoin).
- Distributed base, but not everyone has a copy. To maintain the integrity of participants, deposits, fines, and incentives are provided. This was later implemented in the Proof-of-Stake consensus algorithm.
developed the BitTorrent protocol and application.In 2002, Paul Syverson, Roger Dingledine and Nick Mathewson
presented the alpha version of the anonymity network named TOR Project.In 2004
, cypherpunk Hal Finney
created the Reusable Proof of Work (RPoW) algorithm. It was based on Adam Back's Hashcash but its drawback was centralization.In 2005
, cryptographer Nick Szabo
, who developed the concept of smart contracts in the 1990s, announced the creation of Bit Gold — a digital collectible and investment item.In October 2008
, legendary Satoshi Nakamoto
created the manifesto “Bitcoin: A Peer-to-Peer Electronic Cash System”
, which refers to the works of the cypherpunk classics Adam Back and Wei Dai
.In 2011, Ross William Ulbricht
aka Dread Pirate Roberts created the Silk Road, the first major market for illegal goods and services on the darknet.In 2016, Julian Assange
released the book "Cypherpunks: Freedom and the future of the Internet
."At the beginning of 2018, Pavel Durov
, the creator of Telegram, announced the launch of the TON multi-blockchain platform and mentioned his plans to launch TON ICO.In 2019, the Tor Project
introduced an open anti-censorship group.
Plenty of services, products, and technologies were inspired by cypherpunk: Cryptocurrencies, HD (Hierarchical Deterministic) crypto wallets, Coin Mixers, ECDHM addresses, Privacy Coins. The ideas of distribution and anonymity were also implemented in the torrents and VPN. You can see the embodiment of cybersecurity ideas in the electronic signatures and protected messengers (Telegram, Signal, and many others).Why there were so many talks about cypherpunk this spring? In April 2020
, Reddit users suggested that the letter from the famous cypherpunks mailing dated September 19, 1999, was written by Satoshi Nakamoto
himself (or someone close to him). This letter is about the functioning of ecash. Anonymous (supposed Satoshi) talks about the "public double-spending database" and Wei Dai's b-money as a possible foundation for ecash.In addition, researchers of the mystery "Who is Satoshi Nakamoto?" periodically make some noise and discover the next "secret" about one or another legendary cypherpunks. So, in May 2020, Adam Back
wrote in response to videos and new hype discussions that, despite some coincidences, he is not Satoshi.Other heroes of the scene are not idle too: in April 2020, David Chaum
received $9.7 million during the presale of the confidential coin xx, created to encourage venture investors.
As you can see from the Satoshi Nakamoto's mentions and from the stories of DigiCash, Hashcash, RPoW, Bit Gold, the movement of cypherpunk influenced a lot the emergence of cryptocurrencies. As governments and corporations restrict freedom and interfere with confidentiality, cypherpunk ideas will periodically rise in popularity. And this confrontation will not end in the coming decades.
Satoshi Nakamoto's Bitcoin whitepaper was first published on "crypto punk". In a narrower sense, "crypto punk" is an encrypted email system. submitted by
In 1992, Tim May, a senior scientist at Intel, launched the password punk mailing list organization. In 1993, Eric Hughes wrote a book called Crypto Punk Manifesto. This is also the first time that the term "cypherpunk" has appeared.
"Cryptopunk" has about 1,400 users. The topics discussed include mathematics, cryptography, computer technology, politics and philosophy, as well as personal issues. Early members include many IT elites, such as Assange, the founder of "WikiLeaks", Bram Cohen, author of BT Download, Sir Tim Berners-Lee, the inventor of the World Wide Web, and Nick Szabo who proposed the concept of smart contracts, Sean Parker, one of the founders of Facebook.
Of course, it also includes Satoshi Nakamoto, the inventor of Bitcoin. According to statistics, before the birth of Bitcoin, as many as 10 kinds of cryptocurrencies and payment systems have been discussed and invented by punk members., but all failed.
What is Bitcoin? A brief history. submitted by
Okay. So we know that cryptocurrencies are non-state issued currencies that seek to maintain value through scarcity (usually), security (hopefully), and easy transferability regardless of national borders (indubitably
Bitcoin does all of these things...but so do other cryptocurrencies. Why is Bitcoin special? Let's start with a bit of history.
Beginning in the 1980s, a group of developers and activists formed a list serve and named themselves the Cypherpunks
. This group was obsessed with societal privacy and anonymity. They believed that only complete privacy and security could guarantee a free and open society and that the government could not be relied upon to ensure it. Members of the group sought different modes to achieve this goal. Among others:
Bram Cohen: BitTorrent -> Peer to Peer information sharing
Nick Szabo: Bit Gold -> predecessor of Bitcoin, originator of smart contracts
Julian Assange: WikiLeaks -> classified and secret document archive and disclosure
Another person (?) on this list was "Satoshi Nakamoto" who, in his seminal whitepaper
in 2009, outlined Bitcoin. Note that "Satoshi Nakamoto" is in quotation marks because his or her or their true identity is thus far unconfirmed. Regardless, Nakamoto's whitepaper conceptualized Bitcoin and in the process created the idea of the blockchain and solved the double spending problem
. The double spending problem was something that had plagued digital currencies since they were first proposed. The problem, characterized by a digital currency's lack of physical permanence and resultant ability to be copied, forged, or otherwise falsified, prevent digital currency from progressing past the point of "internet money".
Nakamoto managed to resolve double-spending this via implementation of the blockchain. Let me explain how:
Traditional transactions are pretty straightforward. Party A gives Party B some number of dollars. Party B accepts this money without concern because, the possibility of counterfeiting not withstanding, he is pretty sure that the dollars that he is receiving are legitimate. Since dollars are physical, they can only be spent in one place at a time
. Image 1
This works great when both parties are confident that the money being transacted can only be spent once as is the case with physical money. Digital money is intangible by its nature and therefore, double spending is a concern.
Say that Party A has BitCash A. He wants to purchase goods from Party B and Party C. The goods to be purchased EACH cost BitCash A. If Party A is honest, he will only purchase one of the goods since he can't afford both. Party A is a bad dude, though, and decides to try to pull a fast one on Party B and Party C. Since BitCash is just internet money, it's easily reproducible and requires only a quick copy and paste to dupe the system. Party A sends BitCash A to Party B as well as to Party C. Someone is loses money (likely the whole network since this is a fatal flaw in the currency and indicates underlying unreliability). Image 2
For those of you wondering how credit cards and other digital systems alleviate this issue, they do it through a centralized ledger. In other words, a third party is needed to mediate transactions and to ensure that money only exists in one place at a time. While this works in the context of traditional banking, this system goes against the ethos of Bitcoin, which is predicated on decentralization, privacy, and anonymity. Additionally, the idea of trusting a third party to verify all transactions introduced a single point of potential failure, something that cryptocurrencies sought to avoid.
The above issue remained unsolved until Nakamoto's invention of Bitcoin. Nakamoto introduced the idea of the blockchain, a constantly updated decentralized universal ledger that existed everywhere and nowhere, that was maintained by multiple parties on the network, and that was permanently reliable. Each transaction had to be verified by multiple parties (known as miners
) as being legitimate before becoming irreversibly codified in the universal ledger known as the blockchain. Should a party seek to double spend, one of the transactions put forth would be rejected: either the one that was placed second, or the one that received fewer confirmations from the network. By relying on a second party system, the double spending problem was solved. Image 3
In the above case, Party A attempts to double spend his Bitcoin A to Party B and Party C. Both proposed transactions are sent to miners to verify. Only one of the two is accepted by the network and added to the blockchain. In this case, the Bitcoin A sent to Party B is confirmed as legitimate while the proposed transaction to Party C is rejected. Bitcoin A is NOT double spent. Party B ends up with Bitcoin A and Party C ends up with nothing.
With the double spending problem and others worked out, Bitcoin became a viable mode for transaction. The first official Bitcoin transaction occurred on January 12, 2009 between Nakamoto and Hal Finney. Bitcoin ceased to be theoretical and entered the real world. Exchanges began carrying Bitcoin and facilitating its transfer between people. Over the next several years Bitcoin's value grew from fractions of a cent to over $11000
(as of 12/3/17). Image 4 Image 5 Image 6
In addition to its own growth, Bitcoin is also responsible for the rise of cryptocurrencies in general as the majority of cryptocurrencies today have used Bitcoin as their foundational model. Image 7 Controversies
Bitcoin's ascent has been marred by several controversies both internal and external. Advantages of Bitcoin over other cryptocurrencies
I've broken down the major advantages of Bitcoin as follows: Image 8 Ubiquity/cachet
: Ultimately, much of the advantage that Bitcoin possesses boils down to its place as the cryptocurrency leader. Odds are that when people say "cryptocurrency", they really mean Bitcoin. There's value to being at the top of the market and its position affords it a host of benefits. It has the largest user base of any of the cryptocurrencies which fuels its dollar value. Because it was first to market, and because of its users, it also has a robust development community working both internally and externally. One of the perks of investing in Bitcoin is the exposure that one gets to Bitcoin forks. Bitcoin Cash, a fork that occurred on August 1, 2017, is currently trading over $1600/coin. Every user of Bitcoin received Bitcoin Cash...just for holding Bitcoin. There have been other forks since, and there will continue to be forks in the future, all adding potential value to a Bitcoin investment. Furthermore, Bitcoin is relatively established and more robust to insults than other cryptocurrencies, making it a safer store of value.
In order to be unseated as the clear crypto king, a new product would need to show up that is not only qualitatively better than Bitcoin, but better enough that it makes ditching the Bitcoin environment worth it. Technology
: Bitcoin was the first cryptocurrency to reliably show that digital money could be used for transactions and as stores of value. As mentioned above, most cryptocurrencies today use the Bitcoin white paper as their model. We know that the foundations of Bitcoin are comparatively sound and that it is stable. This stability has allowed a healthy ecosystem of development to take root. Interested in buying a hardware wallet for your Bitcoin? They exist. More interested in creating a free online wallet? Those exist. Interested in mining? It's easy, albeit expensive to get started. The technology being proven has allowed the adjacent technologies to thrive. Price
: While most would consider an $11000 entry tag to be a massive barrier to entry and potentially stifling, it's actually a major boon to Bitcoin. The price tag attracts investors and users, which encourages development, which makes the product more functional, which attracts users, which increases price, etc. Bitcoin is worth something and makes it difficult to dismiss. Furthermore, its high price tempers volatility and manipulation. Unlike other currencies that are worth pennies or dollars, Bitcoin is able to weather large capital inflows and outflows and is less prone to overt market manipulation precisely because its market cap is so high. Risks Image 9 Internal Technology
: While Bitcoin functions completely adequately today, it will need to scale tremendously
to reach its potential. While the technology behind Bitcoin is impressive, it pales in comparison to established modes of exchange. VISA averages 2000 transactions per second and has a peak capacity of 56000 transactions per second. Bitcoin presently averages 7 transactions per second. Certain solutions are being explored, like the Lightning Network
, but there are no guarantees that there will be successful implementation.
As can be said with any technology, Bitcoin is fundamentally dependent on its underlying code. Thus far it has had only one major exposed flaw (which resulted in the accidental creation of 184 billion Bitcoin). Development
: Mentioned above was the advantage conveyed by forks. They can provide additional value. This is a good thing. They can also create competitors. This is a bad thing. While it is unlikely that a Bitcoin offshoot will unseat Bitcoin outright, there is the risk of market cannibalization and confusion with each new iteration. Which is the real Bitcoin? External Legislative
: Because Bitcoin can so ably provide for functions that were once strictly in the government domain, it is likely to become the target of governmental limits at some point. We've already seen China try to crack down on Bitcoin and it's reasonable to assume that other countries will follow suit.
Despite this risk, however, Bitcoin has proven to be incredibly resilient and is still traded by the Chinese
. Since the Chinese ban, Bitcoin's price has nearly doubled from $6000 to over $11000 today (12/3/17). Competitive
: I mentioned earlier that one of Bitcoin's main advantages was that it was first to market. While this is a tremendous benefit today, it does not guarantee ongoing success. History is littered with famous "firsts to market" that were overtaken by savvy competitors. The World
was the first ISP to market. Magnavox
released the first video game console. You'd be hard pressed to find someone that equates ISPs with The World or video game consoles with Magnavox.
Bitcoin is not on the precipice of being overtaken by another cryptocurrency. However, the risk of an existing competitor, or more likely a new competitor that doesn't yet exist, supplanting Bitcoin is always a possibility and investors should mitigate risk appropriately. Investment opportunities
: Bitcoin provides the surest cryptocurrency investment for the reasons mentioned above. Its status as the cryptocurrency leader makes it the most stable investment in the arena. Furthermore, its cachet makes it an attractive investment to lay investors looking for exposure to this particular market which subsequently makes it an even more attractive investment. While many may balk at investing in something whose single unit is priced at more than $11000 and that has experienced explosive growth, I believe that Bitcoin still has opportunity for upward movement.
The number I keep coming back to is $7.8T (trillion). That's the market cap for gold. I use this as a bench mark because I see Bitcoin supplanting gold as a storage of wealth from fiat currencies. As I've discussed, the blockchain provides permanence in a way that is akin to gold's physical permanence.
The present market cap for ALL cryptocurrencies is $340B (billion). Bitcoin presently accounts for 55% of the cryptocurrency market cap with $188B.
Assuming that over the next year growth slows over the next year and that Bitcoin loses some of its dominance, I still think that it's reasonable to project an approximate Bitcoin value of $50000. This assumes that the crypto market continues to grow, albeit at a slower relative pace and still does not approach gold's market cap. Image 10
This is bullish and I assume that no major stumbling blocks present themselves. I am drawn to the fact that market penetration is still relatively low and that institutional money has barely begun to enter the market. These two factors mean that organic growth can continue for the foreseeable future. Conclusion
Bitcoin represents the present pinnacle of the cryptocurrency market. As an investment, it provides the best combination of stability and potential growth precisely because it is the market leader. Through its innovation of the blockchain, it has spurred the cryptocurrency explosion that we have witnessed over the last several years.
BitTorrent, Inc. is a private company established on September 22, 2004, by Bram Cohen, Ross Cohen, and Ashwin Navin. The company is currently a part of TRON Foundation and is an active participant in its ventures. However, both Cohen brothers are not a part of the company anymore. Chia Network develops a blockchain and smart transaction platform created by the inventor of BitTorrent, Bram Cohen. It implements the first new Nakamoto consensus algorithm since Bitcoin in 2008. It implements the first new Nakamoto consensus algorithm since Bitcoin in 2008. However, I then read that Adam Back, Nick Szabo, and now Bram Cohen all supported core's general roadmap. They give good technical (hard forks can be dangerous, bigger blocks make the network possibly less safe in the future) and socio-economical arguments (bitcoin's value prop depends on security, trust and decentralization). Bram Cohen (1975) es un programador informático estadounidense, más conocido como el autor del protocolo peer-to-peer (P2P) BitTorrent, así como del primer programa que utilizara el protocolo, conocido como BitTorrent. También es el co-fundador de CodeCon, co-autor de Codeville, y organizador de la reunión P2P-hackers en el Área de la Bahía de San Francisco. Bram Cohen (born October 12, 1975)  is an American computer programmer, best known as the author of the peer-to-peer (P2P) BitTorrent protocol, as well as the first file sharing program to use the protocol, also known as BitTorrent.He is also the co-founder of CodeCon and organizer of the San Francisco Bay Area P2P-hackers meeting, and was the co-author of Codeville.
Bram Cohen, founder of BitTorrent, speaks to Stanford Engineering ... Larry Chiang 4,038 views. 11:47. Consensus Algorithms, Blockchain Technology and Bitcoin UCL - by Andreas M. Antonopoulos ... Bram Cohen, author of the BitTorrent protocol, spoke about data structures for scaling Bitcoin. ... Bram Cohen, author of the BitTorrent protocol, spoke about data structures for scaling Bitcoin ... Bram Cohen, creator of BitTorrent, talks about Proof of Space and Time, the consensus algorithm for his new Chia Network blockchain. Berkeley Bitcoin Meetup - Bram Cohen from Chia Network - Duration: 53:38. Blockchain at Berkeley 690 views. 53:38. I turn Car Compressor into Working Engine - Duration: 34:59. For those wanting to prepare for Bram Cohen's talk, the following links or references may be helpful. The original Bitcoin paper, which introduced the blockchain. Bitcoin (Wikipedia) .