What is cryptoanarchism?

1. What is cryptoanarchism?

Cryptoanarchism is a form of anarchism in which cryptographically secured anonymization technologies, digital aliases and digital money are used to circumvent state control – surveillance, censorship and taxation.

2. How did cryptoanarchy originate?

In the 1940s, Western intelligence agencies began to explore the idea of involving the recipient of a message in the process of encoding it. In 1973, British mathematician Clifford Cox presented a model in which a sanctioned recipient of a message could choose two giant indivisible numbers and multiply them, producing a third giant number used as the public key. There was no need to hide it, since it was almost impossible to calculate the two original numbers.

In 1977, this concept became a working model when three MIT professors, Ron Rivest, Adi Shamir, and Leonard Adleman, released a public-key cryptographic algorithm based on the computational complexity of the large integer factorization problem and called RSA (an acronym for their last names).

The researchers speculated that RSA would be in demand, given the proliferation of email, which requires tools to ensure the privacy of messages sent over the network and confirm the authenticity of their sources.

After RSA was reported by Scientific American, the NSA concluded that RSA could limit its ability to track communications. The agency classified the algorithm as a “warfare technique” subject to federal weapons smuggling laws, which requires special permission to distribute.

In the 70s, when the first working prototypes of the Internet appeared, the issue of data protection in an open environment became urgent. In 1978, American cryptographer David Chaum, a student at the University of California, Berkeley, developed the blind digital signature method, a public key encryption model. Chaum’s development allowed for the creation of a database of people who could remain anonymous while guaranteeing the authenticity of the information they reported about themselves.

Chaum dreamed of digital voting, the process of which could be verified without revealing the identity of the voter, but primarily of digital cash. In the mid-1980s he succeeded in creating a model in which users made payments while maintaining anonymity and guaranteeing the reality of the funds. Chaum’s developments became known to a circle of cryptographers, among whom a movement was born that advocated computer technology as a means of destroying the state.

The main ideologist of this movement was an American cryptographer and former top researcher at Intel, Timothy May. In 1987, May met the American economist, entrepreneur, and futurist Philip Salin, who founded the American Information Exchange (AMiX), a data trading network.

But May didn’t like the idea of an electronic marketplace where people could (cross-border and with low commissions) sell unimportant information to each other. He dreamed of creating a global system that allowed anonymous two-way exchange of any information and resembled a corporate information system. He later finalized this concept in the form of the BlackNet system, which required a non-governmental digital currency and the ability to make untraceable payments in it.

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In 1985, he read David Chaum’s article “Security without Identity: a Transactional System that will Make Big Brother Anachronistic.” In the article, Chaum described a system that cryptographically hides the identity of the buyer. Familiarity with this idea prompted May to study public-key cryptographic security, first described by Whitfield Diffie, Ralph Merkle and Martin Hellman in 1976. May soon came to believe that public-key cryptography, together with network computing, could “destroy social power structures.

In September 1988, May wrote “The Cryptoanarchist Manifesto,” based on Karl Marx’s “Communist Manifesto”: “A specter haunts the modern world, the specter of cryptoanarchy. According to the manifesto, information technology will allow people to manage their lives without governments, but with cryptography, digital currencies and other decentralized tools.

By May’s own admission, the ideological foundation of the “Cryptoanarchist Manifesto” was a type of anarchism such as “anarcho-capitalism,” which emphasizes voluntary transactions and the free market.

3. How did the cipherpunk mailing list come about?

In 1992, Timothy May, John Gilmore (a computer scientist and one of the founders of the Electronic Frontier Foundation) and Eric Hughes (a mathematician at the University of California, Berkeley) invited 20 of their close friends to an informal meeting. During the meeting, they discussed the most pressing issues of cryptography and programming at the time.

Such meetings became a regular occurrence and started an entire movement. An email list (mailing list) was created in order to attract other people who shared the interests and basic values of the founding group. Soon the mailing list, called “Cipherpunk”, had hundreds of subscribers as they tested ciphers, exchanged ideas, and discussed new developments. The correspondence was written using the then state of the art encryption methods such as PGP. Members of the group had discussions on politics, philosophy, computer science, cryptography, and mathematics. In 1993, Eric Hughes published the “Cipherpunk Manifesto,” containing the key ideological tenets of the movement:

“Privacy is essential to the open society of the digital age. […] Privacy in an open society requires the use of cryptography. […] We cipherpunks are called to create anonymous systems. We protect our privacy with cryptography, anonymous email forwarding systems, digital signatures and electronic money. […] Cryptography will inevitably spread around the world, and with it the anonymous transaction systems it makes possible.

By 1997 the mailing list had about 2,000 subscribers and 30 posts daily. In 1995, WikiLeaks creator Julian Assange published his first post on Cryptopunk. In 2016, he published a book about the cypherpunk movement called “Cryptopunks: Freedom and the Future of the Internet.”

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Cipherpunks and cryptoanarchism are not identical, but related. The term “cipherpunks” itself was first used by hacker and programmer Jude Milhon to refer to a group of cryptoanarchists. The term “crypto-anarchists” first appeared in 1993 in an article by Stephen Levy entitled “Crypto-Rebels”.

Many works by Timothy May and other pioneers of cryptoanarchy were published in 2001 in “Cryptoanarchy, Cyberstates and Pirate Utopias,” edited by American philosopher Peter Ludlow. The authors of the book demonstrate the emergence of governance structures and ideals of political sovereignty in online communities.

Ludlow sees virtual communities as laboratories for experimentation in creating new societies and governing structures. According to the philosopher, many experiments will fail; however, given the synergies of the networked world, new types of societies and governance structures that surpass traditional ones cannot be ruled out.

4. What are the goals of cryptoanarchism?

  • Protection against mass surveillance of communication on computer networks. Cryptoanarchists consider the development and use of cryptography to be the main means of liberation from state control.
  • Getting rid of censorship, especially on the Internet, as contrary to freedom of expression, through Tor, I2P, Freenet and similar networks. According to cryptoanarchists, freedom from censorship would help fight corruption and allow opposition politicians to spread their views. Cryptoanarchists aim to create a global “Internet of Trust,” a crowdfunding Internet provider that leverages collectively owned cell phone peering stations. This Internet is fully encrypted and confidential: an algorithm is integrated into the system, giving each participant in the network a signature and a reputation, depending on their merit.
  • Creating and developing a new economy based on viable alternatives to banking systems in the form of cryptocurrencies and decentralized financial services.

5. How has cryptoanarchy influenced cryptocurrencies?

The importance of privacy, anonymous transactions, cryptographic protection – all these ideas were later implemented to some extent in cryptocurrencies.

In October 2008, Satoshi Nakamoto sent the famous white paper “Bitcoin: A Digital Peer-to-peer Cash System” to the mailing list.

The paper’s content testifies to the influence of crypto-punks and crypto-anarchists. The bitcoin white paper quotes British cryptographer Adam Beck and computer engineer Wei Dai. According to Nakamoto, bitcoin “represents the realization of Wei Dai’s b-money proposal … and Nick Szabo’s Bitgold proposal.”

In turn, Way Day’s manifesto, in which he puts forward the idea of b-money, begins, “I admire Tim May’s crypto-anarchism.” After the article was published, Nakamoto continued his work and mined the genesis block of bitcoin on January 3, 2009.

The chief ideologue of cryptoanarchism, Timothy May, spoke late in life about how the cryptocurrency industry had actually changed the early ideals of the movement. In a recent interview in October 2018, he criticized the concept of legal and regulatory compliance. In his view, the spirit of crypto-anarchism is contradicted by the “draconian ‘know your customer’ rule,” the anti-money laundering law requirement, passports, account freezing, and the requirement to report suspicious activity to the “local secret police.”

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6. How has cryptoanarchism evolved?

Cryptoanarchism is not a single organized movement, but rather a set of values and views shared by a wide range of people, including WikiLeaks founder Julian Assange, former CIA and NSA employee Edward Snowden, programmers Cody Wilson and Amir Taaki, and many others. All of them embody the ideals of crypto-anarchism in one way or another.

7. What are some examples of successful implementation of the ideas of cryptoanarchism?

Paralelni Polis

The Paralelni Polis Center was founded by members of the Czech art group Ztohoven and is located in a rented three-story former factory building in downtown Prague.

According to the center’s founders, it is “a unique freedom think tank focusing on the promotion of digital freedom, cryptocurrencies, anonymization networks and free markets.

The key place in the infrastructure of Paralelni Polis is occupied by the Institute of Cryptoanarchy – a space for hackers and developers, where tools for the unlimited distribution of information on the Internet and the creation of a parallel decentralized economy, cryptocurrencies and other conditions for the development of a free society in the XXI century are available.

Paralelni Polis includes Paper Hub, a co-working space for collaborative or individual work on projects. The co-working space is open to freelancers, students and startups and combines art, social science and technology.

Free Republic of Liberland.

A virtual state claiming an uninhabited, disputed seven square kilometers of land on the western bank of the Danube between Croatia and Serbia.

As a result of the establishment of new state borders during the chaos years after the war in Croatia, the territory does not officially belong to either country.

On April 13, 2015, Czech right-wing libertarian and activist Vit Jedlicka announced the creation of an independent sovereign state on it. It did not receive diplomatic recognition from United Nations member states.

Liberland’s national motto is “live and let live,” and bitcoin is the official currency. The state has its own Wikipedia page, website, flag and emblem. The form of government is a republic with elements of direct democracy.

Hundreds of people have obtained citizenship of Liberland and more than half a million have applied. According to the founder of the new state, Liberland needs maximum personal and economic freedom, which will be achieved with the help of the latest blockchain technology.

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