Pre-Bitcoin:
Libertarian Dreams In the face of increasingly powerful banks and national agencies, the Cypherpunks and Crypto-anarchists of the late 1980s advocated the use of cryptography to preserve privacy, which they defined as the power to selectively reveal oneself. They sought to develop an anonymous digital transaction system. In October 2008, Satoshi Nakamoto released the Bitcoin whitepaper, which outlined, for the first time, an anonymous, trustless, decentralized cryptocurrency.Bitcoin was built upon a history of failed cryptocurrencies, including Digicash, Hashcash, and B-money. Bitcoin relies on Proof-of-Work, a peer validation protocol introduced by Hashcash, that expends computational power to solve cryptographic puzzles and to cast votes. As in Digicash, each node in Bitcoin maintains their own identity through public and private keys, authenticating transactions using blind signatures. As in B-money, every Bitcoin full node maintains a copy of the blockchain. Bitcoin is a deflationary currency, with 21 million total bitcoins that will be slowly introduced to the bitcoin supply via block rewards.
The first transaction using Bitcoin to purchase a tangible asset occured in 2010, when Laszlo Hanyecz exchanged 10,000 bitcoin for $25 worth of pizza. This exchange gave bitcoins real value, a first step towards legitimacy. Early Bitcoin: Scandals, Hacks, and Illegal Activity As Bitcoin began increasing in popularity, it also began facing increasing cases of thefts, hacks, and illegal activity. The first was a large hack on Magic: The Gathering Online Exchange (Mt. Gox), one of the first Bitcoin exchange website created in 2010. Bitcoin was also used for the purchase of illegal substances on the dark web, especially through the website “Silk Road,” nicknamed the “eBay for Drugs.” As Bitcoin became more accessible and useful to the public, it steadily grew in value, reaching a bubble in 2013.
Altcoins, such as Litecoin, ZCash, Stellar, Ripple, Ethereum, Dogecoin, DASH, and Monero, began popping up soon after Bitcoin’s success, each serving a different functionality.
In 2014, merchants, such as Overstock.com and PayPal (with Coinbase), started accepting Bitcoin. Bitcoin startups and wallet companies, including Coinbase, Bitpay, and Blockchain.info, started appearing around this time as well. Around this time, people started to differentiate between the term blockchain from Bitcoin.Scalability Debates and Ethereum Bitcoin is far from perfect. One of the biggest technological challenges Bitcoin faces is that of scalability. Such issues raise concern of decentralized governance. Currently, Bitcoin users may propose Bitcoin Improvement Protocols on online forums and gather ad hoc community votes on proposed matters.
Another influential blockchain platform is Ethereum. While Bitcoin is a storage of value, Ethereum is a platform designed to execute arbitrary code called “smart contracts”. Users pay for code execution using Ethereum’s internal token, called ether. With Ethereum’s introduction, Distributed Autonomous Organizations (DAOs), programs on the Ethereum blockchain that create a distributed government, gained popularity. “The DAO” was a decentralized Venture Capital DAO that suffered a $120 M hack in 2016. Disagreement about whether to roll back the history of transactions to before the hack led to two versions of Ethereum. Ethereum(the main chain) rewound the transaction history to before the hack, whereas Ethereum Classic continued the original chain despite the hack. While concerns of the SEC’s reaction to The DAO hack initially lowered Ethereum’s price, the growing popularity of Initial Coin Offerings and cryptocurrency exchange-traded-funds increased Ethereum’s price overall. Economic and political changes in early 2017 along with an expansion of the crypto user base to include millennials further contributed to growth in Ethereum value and transaction volume.Enterprise Blockchain Meanwhile, banks started seeking ways to apply blockchain technology leading to an increased interest in “private blockchains.” Enterprise blockchain technologies today include R3’s Corda, Chain, JP Morgan’s Quorum and Juno, Digital Asset Holdings, and IBM’s hyperledger. Blockchain has come a long way — from online ideation amongst Cypherpunks to adoption by JP Morgan Chase.
The blockchain space has expanded to include not only major financial institutions, but also the general public. Initial Coin Offerings, equity-less fundraising schemes for new crypto startups that allow anyone to participate, and the advent of Cryptokitties, an online marketplace for virtual cats, indicate the spread of blockchain across communities and also to popular culture.
Back to activism.net/cypherpunk/ A Cypherpunk’s Manifesto by Eric Hughes Privacy is necessary for an open society in the electronic age. Privacy is not secrecy. A private matter is something one doesn’t want the whole world to know, but a secret matter is something one doesn’t want anybody to know. Privacy is the power to selectively reveal oneself to the world.
If two parties have some sort of dealings, then each has a memory of their interaction. Each party can speak about their own memory of this; how could anyone prevent it? One could pass laws against it, but the freedom of speech, even more than privacy, is fundamental to an open society; we seek not to restrict any speech at all. If many parties speak together in the same forum, each can speak to all the others and aggregate together knowledge about individuals and other parties. The power of electronic communications has enabled such group speech, and it will not go away merely because we might want it to.
Since we desire privacy, we must ensure that each party to a transaction have knowledge only of that which is directly necessary for that transaction. Since any information can be spoken of, we must ensure that we reveal as little as possible. In most cases personal identity is not salient. When I purchase a magazine at a store and hand cash to the clerk, there is no need to know who I am. When I ask my electronic mail provider to send and receive messages, my provider need not know to whom I am speaking or what I am saying or what others are saying to me; my provider only need know how to get the message there and how much I owe them in fees. When my identity is revealed by the underlying mechanism of the transaction, I have no privacy. I cannot here selectively reveal myself; I must always reveal myself.
Therefore, privacy in an open society requires anonymous transaction systems. Until now, cash has been the primary such system. An anonymous transaction system is not a secret transaction system. An anonymous system empowers individuals to reveal their identity when desired and only when desired; this is the essence of privacy.
Privacy in an open society also requires cryptography. If I say something, I want it heard only by those for whom I intend it. If the content of my speech is available to the world, I have no privacy. To encrypt is to indicate the desire for privacy, and to encrypt with weak cryptography is to indicate not too much desire for privacy. Furthermore, to reveal one’s identity with assurance when the default is anonymity requires the cryptographic signature.
We cannot expect governments, corporations, or other large, faceless organizations to grant us privacy out of their beneficence. It is to their advantage to speak of us, and we should expect that they will speak. To try to prevent their speech is to fight against the realities of information. Information does not just want to be free, it longs to be free. Information expands to fill the available storage space. Information is Rumor’s younger, stronger cousin; Information is fleeter of foot, has more eyes, knows more, and understands less than Rumor.
We must defend our own privacy if we expect to have any. We must come together and create systems which allow anonymous transactions to take place. People have been defending their own privacy for centuries with whispers, darkness, envelopes, closed doors, secret handshakes, and couriers. The technologies of the past did not allow for strong privacy, but electronic technologies do.
We the Cypherpunks are dedicated to building anonymous systems. We are defending our privacy with cryptography, with anonymous mail forwarding systems, with digital signatures, and with electronic money.
Cypherpunks write code. We know that someone has to write software to defend privacy, and since we can’t get privacy unless we all do, we’re going to write it. We publish our code so that our fellow Cypherpunks may practice and play with it. Our code is free for all to use, worldwide. We don’t much care if you don’t approve of the software we write. We know that software can’t be destroyed and that a widely dispersed system can’t be shut down.
Cypherpunks deplore regulations on cryptography, for encryption is fundamentally a private act. The act of encryption, in fact, removes information from the public realm. Even laws against cryptography reach only so far as a nation’s border and the arm of its violence. Cryptography will ineluctably spread over the whole globe, and with it the anonymous transactions systems that it makes possible.
For privacy to be widespread it must be part of a social contract. People must come and together deploy these systems for the common good. Privacy only extends so far as the cooperation of one’s fellows in society. We the Cypherpunks seek your questions and your concerns and hope we may engage you so that we do not deceive ourselves. We will not, however, be moved out of our course because some may disagree with our goals.
The Cypherpunks are actively engaged in making the networks safer for privacy. Let us proceed together apace.
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