1. What is cryptography?
Cryptography is the science of methods to ensure authentication, integrity, and confidentiality of data.
2. When and how did cryptography emerge and evolve?
Cryptography as a technique of text protection emerged along with writing – the methods of secret writing were known in the ancient civilizations of India, Mesopotamia and Egypt.
In the first period of cryptography development (approximately from the 3rd millennium B.C. to the 9th century) monoalphabetic ciphers were mainly used, the key principle of which is replacement of the alphabet of the source text by another alphabet by replacing the letters by other symbols or letters.
Monoalphabetic ciphers were known in Judea, Sparta, Ancient Greece, Ancient Rome.
During the second period (from the IX century in the Middle East, and from the XV century in Europe to the beginning of the XX century) polyalphabetic ciphers (a set of monoalphabetic ciphers used to encrypt the next symbol of the open text according to a certain rule) were spread.
In the third period, from the beginning to the middle of the XX century there was a continuation of polyalphabetic ciphers use. In parallel, a new communication technology – radio communication – appeared and developed. It allowed for instant transmission of large amounts of information, but it was not protected. The problem of reliable encryption became urgent during the First World War and became especially acute during the Second World War, because transmitters and receivers of small size became widespread, allowing warring parties to easily intercept enemy communications. The world’s leading powers were actively introducing electromechanical encryption devices and competing with each other in developing hacking techniques. Thanks to these factors, cryptography, which for centuries had remained the domain of spies, mathematicians and diplomats, began to take shape as an organized science.
The fourth period, from the mid-1970s, was marked by the transition to mathematical cryptography. By that time, such sections of mathematics as mathematical statistics, probability theory, number theory, and general algebra were finally formed, and the foundations of cybernetics and algorithm theory were laid.
A key milestone in this transition process was the publication of the work of American mathematician and cryptanalyst Claude Shannon, The Theory of Communication in Secret Systems. It was the first to present an approach to cryptography as a mathematical science. Shannon formulated its theoretical foundations and introduced the concepts with which students today begin the study of cryptography.
After World War II, the British and U.S. governments created organizations dedicated to electronic surveillance and information security – the British Government Communications Center and the U.S. National Security Agency.
In the early 1970s, James Ellis of the UK Government Communications Centre put forward the concept of public key cryptography. This system uses a public key to encrypt a message and verify an electronic signature, transmitted over an unsecured channel available for surveillance. His colleague, the British mathematician Clifford Cox, developed the mathematical basis for this model.
Neither the British Government Communications Center nor the U.S. NSA adopted public-key cryptography because there was no technology that would allow it. A computer communications network (Internet) was needed for this, but such systems were not yet developed in the 1970s.
In the 1980s, computer scientists, and in the 1990s, with the spread of the Internet, ordinary users were faced with the problem of protecting data in an open environment.
In the meantime, small groups of hackers, mathematicians, and cryptographers began working to bring public key cryptography to life. One of them was an American cryptographer, David Chaum, PhD, who is sometimes called the godfather of cipherpunks.
3. How did the cipherpunk movement come about?
Back in 1982, Chaum introduced the Blind Digital Signature, a public-key encryption model. The development made it possible to create 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.
Chaum’s ideas inspired a group of cryptographers, hackers and activists. It was they who became known as the cipherpunks – members of a movement advocating computer technology as a means to destroy state power and centralized control systems.
One of the ideologues of the movement was an American cryptographer and former top Intel researcher Timothy May. In 1987, May met the American economist, entrepreneur, and futurist Philip Salin, who founded the American Information Exchange (AMiX), an online data trading platform.
But May didn’t like the idea of an electronic marketplace where people could (cross-border and with low commissions) sell little meaningful information to each other. He dreamed of creating a global system that would allow an anonymous two-way exchange of any information and resemble a corporate whistleblower system.
May 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. In 1985, he read David Chaum’s article “Security without Identity: a Transactional System that Would 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.
He soon came to believe that such cryptography, coupled with network computing, could “destroy the structures of social power.
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 would allow people to manage their lives without governments, through cryptography, digital currencies and other decentralized tools.
In 1992, May, Electronic Frontier Foundation co-founder John Gilmore 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. Meetings like this became a regular occurrence and started a whole 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 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 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.
The importance of privacy, anonymous transactions, cryptographic protection – all these ideas were later implemented in some form or degree in cryptocurrencies.
By 1997, 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 “Cipherpunks: Freedom and the Future of the Internet.”
The term “cipherpunks” was first used by hacker and programmer Jude Milhon to refer to a group of cryptoanarchists. Cryptopunk and cryptoanarchism are not identical, but related currents, sharing virtually the same values. Cryptoanarchism (cryptoanarchy) is a kind of anarchism in which anonymization technologies, digital pseudonyms and digital money protected by cryptography are used to free oneself from state control – surveillance, censorship and taxation.
4. How did the cryptocurrency movement influence the emergence of cryptocurrencies?
In 1989, David Chaum founded DigiCash in Amsterdam. It specialized in digital money and payment systems, and its flagship product was the eCash digital money system with the monetary unit CyberBucks. eCash used Chowm’s blind digital signature technology. Although the system was even tested by some banks, and Microsoft was allegedly in talks to integrate eCash into Windows 95, the venture was not a commercial success.
In 1997, British cryptographer Adam Beck created Hashcash, an anti-spam mechanism, the essence of which was to use a certain amount of processing power to send emails. This made sending spam economically unprofitable.
A year later, computer engineer Wei Dai published a proposal for another digital payment system called b-money. The author of the system proposed two concepts. The first was to create a protocol where each participant maintained a copy of the database with information about how much money the user had. The second concept was a modification of the previous one, with the difference that a copy of the registry was not kept by every network participant. Instead, new concepts were introduced: regular users and servers. Only servers, which are the nodes of the network, stored copies of the registry. The honesty of network participants was ensured by making deposits into a special account, which was used for rewards or fines in case of proof of unscrupulous behavior.
It was the first concept that bitcoin creator Satoshi Nakamoto later adopted, while the second one was closest to what is known today as Proof-of-Stake.
In 2004, cipherpunk Hal Finney created the Reusable Proof of Work (RPoW) algorithm based on Adam Beck’s Hashcash. The idea was to create unique cryptographic tokens that, similar to the unspent outputs in bitcoin, could only be used once. The disadvantage of this mechanism was that validation and protection against double spending was still done through a central server.
In 2005, cryptographer Nick Szabo, who had developed the concept of smart contracts in the 1990s, announced the creation of Bit Gold, a digital object for collecting and investing capital. Bit Gold was created based on a proposal by RPOW Hal Finney, but instead of a one-time use of coins, envisioned that they would have varying values, calculated based on the computing power involved in creating them.
In October 2008, Satoshi Nakamoto submitted a mailing list white paper, “Bitcoin: A Digital Peer-to-peer Cash System. The content of Nakamoto’s paper attests to the influence of the crypto-punks and crypto-anarchists. The bitcoin white paper quotes Adam Beck and Wei Dai. According to Nakamoto, bitcoin “represents a realization of Wei Dai’s b-money proposal… and Nick Szabo’s Bit Gold proposal.” In turn, Wei Dai’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 on January 3, 2009, he made a genesis block.
The emergence of bitcoin was the beginning of numerous technological improvements and innovations based on an already working system, which crypto-anarchists enthusiastically began to expand and modify.
5. How has the crypto-punk movement evolved?
Today’s coders include cryptographer and smart contracts pioneer Nick Szabo, BitTorrent developer Bram Cohen, Tor browser creator Jacob Applebaum, WikiLeaks founder Julian Assange, who in 2016 published a book about the coders movement called “Coders: Freedom and the Future of the Internet,” and many other developers and hackers.
These days, many processes on the Internet are influenced by the activities of cypherpunks. Torrents, VPNs, electronic signatures – these phenomena were created either directly by the codebreakers or with their ideas and developments.
In 1993, Eric Hughes noted in “The Cipherpunks Manifesto”:
“Cipherpunks write code. We know that someone has to keep writing code in order to protect information, and since we see no other way to protect our data, we keep doing it […] Our code is available to anyone on earth. We don’t care too much if some people don’t like what we do. We know that our software cannot be destroyed and that the growing network is unstoppable.