In this war that has lasted over thirty years, a group of geeks with mathematical ideals ultimately changed the course of human civilization.
Author: Chao
In late autumn 2024, Washington D.C. Golden maple leaves are slowly falling from the sycamore trees of the White House, as President Biden stands by the window of the Oval Office, looking at the city he is about to say goodbye to.
Thirty-three years ago, not far from here on Capitol Hill, he, as a senator, proposed the famous S.266 bill. At that time, he could never have imagined that this seemingly ordinary bill would become the fuse for a "cryptographic war" lasting over thirty years. Nor could he have imagined that this war would ultimately end in victory for the cypherpunks at the final moments of his presidency.
This is a story of failure and victory, suppression and resistance, centralization and freedom, an epic spanning an entire generation. In this war that has lasted over thirty years, a group of geeks with mathematical ideals ultimately changed the course of human civilization.
Part One: The Eve of War
The Embers of the Cold War
This story begins much earlier.
In 1975, at IBM's research lab, a group of scientists was developing a revolutionary encryption algorithm, which later became known as DES (Data Encryption Standard). At this time, the computer industry was at a critical juncture: personal computers were about to enter thousands of households, and encryption technology would determine the direction of this revolution.
But just as this work was nearing completion, the National Security Agency (NSA) suddenly intervened. They demanded, citing national security, to reduce the key length from 128 bits to 56 bits. This seemingly technical change actually reduced the algorithm's security by trillions of times.
In the shadow of the Cold War, no one dared to question this decision. Cryptographic technology was seen as military equipment and had to be strictly controlled. But as the personal computer revolution progressed, this Cold War mentality began to clash sharply with the demands of a new era.
The War Begins
In the spring of 1991, an internal NSA report stated: "With the proliferation of personal computers and the development of the internet, the spread of encryption technology will become a significant threat to national security. We must act before this issue spirals out of control."
This report eventually landed on Senator Joe Biden's desk. As an important member of the Judiciary Committee, he decided to take action. He proposed the S.266 bill (1991 Comprehensive Anti-Crime Act). Section 1126 of the bill required: "Electronic communication service providers and device manufacturers are obliged to ensure that the government can access the plaintext content of encrypted communications."
On the surface, this is a bill targeting crime. But in reality, it was the government's first attempt to control the keys to the entire digital world through legislation.
Chapter Two: Code is Weapon
The Resistance in the Garage
While politicians in Washington were discussing this bill, in a garage in Colorado, programmer Phil Zimmermann was conducting a silent revolution. The PGP (Pretty Good Privacy) software he developed allowed ordinary people to use military-grade encryption technology.
When Zimmermann heard about the S.266 bill, he realized he had to finish PGP before the bill passed. It became a race against time.
But completing the development was only the first step. The U.S. government classified encryption software as military supplies, banning its export. Faced with this obstacle, Zimmermann came up with a brilliant idea: to print the source code of PGP as a book.
This is the famous "Zimmermann Publishing" incident. Because according to the First Amendment of the U.S. Constitution, publications are protected by freedom of speech. The government can regulate software, but cannot prohibit the export of a mathematics book.
Soon, this seemingly obscure technical book circulated globally. Programmers around the world purchased it and re-entered the printed code into their computers. PGP flowed quietly to every corner of the globe like an unstoppable undercurrent.
Voices from Academia
The academic community also raised objections. In early 1992, when Congress held a series of hearings on the regulation of encryption technology, many experts from academia stood up to explicitly oppose the establishment of backdoor mechanisms. Their core argument was simple: encryption systems are either secure or insecure; there is no middle ground.
Amidst the strong opposition from the tech and academic communities, the S.266 bill ultimately failed to pass. This was the first victory for cryptographic freedom, but the government clearly would not easily give up.
Chapter Three: The Rise of Cypherpunks
The Birth of Emerging Forces
In 1992, Berkeley, California.
At the home of John Gilmore, the fifth employee of Sun Microsystems, a group of people concerned with privacy and encryption technology began meeting regularly. These gatherings attracted twenty to thirty technical experts from the Bay Area, including Intel scientist Timothy May and cryptographer Eric Hughes. Every month, this group would meet in Gilmore's conference room to discuss cryptography, privacy rights, and civil liberties in the digital age.
These gatherings quickly developed into the birthplace of the cypherpunk movement. Participants realized that the emergence of the S.266 bill signified a prolonged battle over civil liberties in the digital age. After several meetings, they decided not to let physical constraints become a barrier, and thus created the cypherpunk mailing list. The name comes from the combination of "cypher" and "punk." Soon, this mailing list attracted hundreds of members, including computer scientists, cryptographers, and libertarians.
The Declaration of Independence of the Digital Age
In March 1993, Eric Hughes published the (Cypherpunk Manifesto). This document, which would later be seen as the Declaration of Independence of the digital age, opened with:
"Privacy is necessary for an open society to remain open. Privacy is not secrecy. A private matter is something you do not want the whole world to know, but it is not something you don't want anyone to know. Privacy is the ability to selectively reveal oneself to the world."
This statement quickly spread across the early internet. It accurately expressed the core idea of an emerging group: in the digital age, privacy is not a privilege but a fundamental human right. And the tool to protect this right is cryptographic technology.
The Government's Counterattack
The rise of cypherpunks made the Clinton administration uneasy. In April 1993, the White House launched a new initiative: the Clipper Chip.
This is a carefully designed trap. The government claims that this crypto chip will satisfy both privacy protection and law enforcement needs. They even persuaded AT&T to commit to purchasing one million units.
But this plan soon encountered a fatal blow. In June 1994, AT&T researcher Matt Blaze published a paper proving that the security of the Clipper Chip was essentially non-existent. This discovery embarrassed the government, and AT&T subsequently abandoned the procurement plan.
More importantly, this incident made the public clearly realize for the first time: government-controlled encryption systems are untrustworthy.
Beneath these public battles, deeper currents were flowing. In 1994, Amsterdam. A group of cypherpunks held secret meetings. They discussed a more disruptive idea: digital currency.
"The real reason the government wants to control encryption is to control money," said one participant, "If we can create a form of currency that is uncontrollable, that would be the real revolution."
Chapter Four: The Evolution of the System
The Dilemma of Netscape
In 1995, Silicon Valley.
A company named Netscape is rewriting history. Founded by 24-year-old Marc Andreessen and veteran Jim Clark, this company brought the internet into the lives of ordinary people. On August 9, Netscape went public. The opening price was $28, closing at $58.25, with the company's market value surpassing $2.9 billion overnight. This marked the beginning of the internet era.
During this critical period, the Netscape team developed the SSL encryption protocol. But due to U.S. government export controls, they had to release two versions:
U.S. Version: Use 128-bit strong encryption
International Version: Only 40-bit encryption is allowed.
This double standard quickly proved disastrous. A French student cracked the 40-bit SSL in just eight days. This news shocked the business world. "This is the result of government regulation," Netscape's engineers fumed, "They are not protecting security; they are creating vulnerabilities."
In 2009, Netscape co-founder Marc Andreessen and Ben Horowitz co-founded a16z, a venture capital firm that quickly became one of the most active investment institutions in the crypto space. As a business, Marc Andreessen had to yield to government demands. But as an investor, Marc Andreessen continued to support this crypto war.
The Rise of the Open Source Movement
In the cryptographic war, there was an unexpected ally: the open-source movement.
In 1991, a Finnish student named Linus Torvalds released the first version of Linux. To avoid U.S. export controls, he specifically placed the encryption module outside the core. This seemingly compromising decision allowed Linux to spread freely around the world.
The open-source movement changed the landscape of the entire tech world. The ideals of cypherpunks, once viewed as idealistic, began to bear fruit in reality:
Code should be free.
Knowledge should be shared.
Decentralization is the future.
Bill Gates of Microsoft called open source a "computer virus," but he was wrong; open source became the future.
The cryptographic war also greatly supported the open-source movement itself. In 1996, in the case of Bernstein v. U.S. government regarding the export control of encryption software, the court ruled for the first time: computer code is a form of speech protected by the First Amendment. This landmark ruling cleared legal barriers for the open-source movement. Today, open-source software has become the foundation of the internet.
The First Phase of the War Ends
By 1999, the situation had become irreversible. The Clinton administration finally relaxed the decades-long export control on encryption technology. At that time, The Economist commented: "This is not just a war about technology, but a war about freedom."
The results of the war are changing the world:
PGP became the standard for email encryption.
SSL/TLS protects all online transactions.
Linux and open-source software changed the entire tech industry.
Cryptographic technology became the infrastructure of the digital age.
But this is just the beginning. The cypherpunks' gaze has already turned to a more ambitious goal: the monetary system itself.
Chapter Five: The Currency War
Pioneers of digital currency
In 1990, cryptographer David Chaum founded DigiCash, pioneering the combination of cryptography and electronic payments. DigiCash created a system that protected privacy while preventing double spending through "blind signature" technology. Although the company eventually declared bankruptcy in 1998, its impact was profound.
In the next decade, a series of groundbreaking ideas emerged:
In 1997, Adam Back invented Hashcash. This system, initially used to combat spam, was the first to practically apply the concept of "proof of work."
In 1998, Wei Dai published the B-money proposal. This was the first complete description of a distributed digital currency system, where participants create currency by solving computational problems, which is what we know as PoW. Wei Dai's contribution was so significant that years later Ethereum founder Vitalik Buterin named Ethereum's smallest currency unit "Wei" in tribute to this pioneer.
Between 1998 and 2005, Nick Szabo proposed the BitGold concept. He ingeniously combined proof of work with value storage and proposed the revolutionary concept of "smart contracts."
The Birth of Bitcoin
The work of these pioneers seemed to touch the edge of their dreams but always lacked the final piece of the puzzle. How to achieve consensus among all participants without a centralized authority? This question puzzled cryptographers for twenty years.
On October 31, 2008, a mysterious figure using the pseudonym Satoshi Nakamoto published the Bitcoin white paper on a cryptography mailing list. This proposal cleverly integrated several existing technologies:
Adopted a proof-of-work system similar to Hashcash.
Drew on the decentralized design philosophy of B-money.
Used Merkle trees for transaction verification.
Innovatively proposed blockchain to solve the double-spending problem.
This new system solved the problem that previous digital currency schemes had failed to address: how to reach consensus in a completely decentralized manner.
More importantly, the timing of the release of this plan was very delicate. Just a month earlier, Lehman Brothers had collapsed, leading to a full-blown global financial crisis. People began to question the stability of the traditional financial system.
On January 3, 2009, the genesis block of Bitcoin was born. Satoshi Nakamoto wrote a phrase in the block: "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks".
This headline from The Times is not only a record of the time of block generation but also a silent accusation against the traditional financial system.
The recipient of the first Bitcoin transaction was Hal Finney, who had previously interned at DigiCash. When he received 10 Bitcoins from Satoshi Nakamoto in January 2009, he simply tweeted: "Running Bitcoin."
This ordinary tweet became one of the most famous records in the history of digital currency. From the DigiCash laboratory to the cypherpunks' mailing list, and then to the birth of Bitcoin, a revolution brewing for nearly twenty years finally found its new form.
The First Conflict
In 2011, Bitcoin first caught the attention of Washington.
After WikiLeaks faced blockades from credit card companies and banks, it began accepting Bitcoin donations. This allowed the world to see the true power of Bitcoin for the first time: it is uncensorable and unblockable.
Senator Charles Schumer subsequently issued a warning at a press conference, stating that Bitcoin is a "digital form of money laundering tool." This was the first public statement from the U.S. government regarding Bitcoin.
The Storm Approaches
In 2013, an unexpected crisis gave Bitcoin new recognition.
The Cyprus banking crisis erupted, with the government directly confiscating deposits from savers' accounts. This revealed to the world the fragility of the traditional financial system: your deposits do not truly belong to you.
The price of Bitcoin first broke through $1,000. But what followed was a harsher government crackdown. In the same year, the FBI shut down the dark web marketplace Silk Road, seizing 144,000 Bitcoins. The government seemed to be proving that Bitcoin was a tool for criminals.
The backlash of the system.
In 2014, cryptocurrency faced its first major crisis. The world's largest Bitcoin exchange, Mt. Gox, suddenly closed, and 850,000 Bitcoins disappeared into thin air. This accounted for 7% of the total Bitcoin in circulation at the time.
Governments around the world began to strengthen regulations under the guise of protecting investors. In 2015, New York State launched a strict BitLicense regime, a regulatory framework known as the "mirror for digital currency operators," forcing several cryptocurrency companies to leave New York.
But every crisis has made this industry stronger, and more importantly, these crises have proven a key point: even if centralized exchanges may fail, the Bitcoin network itself remains rock solid. This is precisely the value of decentralized design.
Systemic Breakthrough
2017 marked an important turning point for cryptocurrency. This year, Bitcoin skyrocketed from $1,000 to $20,000. But more importantly, it was a systemic breakthrough: the Chicago Mercantile Exchange (CME) and the Chicago Board Options Exchange (CBOE) launched Bitcoin futures contracts.
This marked the formal acceptance of this once underground asset by Wall Street. The attitude of regulators also began to shift subtly, from outright denial to an attempt to understand and regulate.
But the real turning point occurred in 2020. The outbreak of the COVID-19 pandemic led countries to initiate unprecedented monetary expansion. Against this backdrop, institutional investors began to reassess the value of Bitcoin.
In August, MicroStrategy CEO Michael Saylor announced that the company would convert its reserves into Bitcoin. This decision triggered a chain reaction in the business world. By February 2021, Tesla announced the purchase of $1.5 billion in Bitcoin, shocking the entire financial sector.
Chapter Six: The Final Battle
In 2021, the Biden administration launched a comprehensive crackdown on the crypto industry. This time, the government's crackdown was more organized and comprehensive than ever before. Thirty-three years ago, after the failure of the S.266 bill, the government could no longer stop the development of cryptographic technology. Now, they are attempting to control cryptocurrencies through regulation.
But the situation has changed. Beneath the surface of regulatory storms, cryptocurrency has deeply rooted itself in every corner of modern society: over 50 million Americans hold cryptocurrencies, mainstream payment companies are integrating crypto payments, Wall Street has established a complete cryptocurrency business line, and traditional financial institutions are beginning to offer cryptocurrency services to clients.
More importantly, the new generation has fully embraced the ideas of cypherpunks. For them, decentralization and digital sovereignty are not revolutionary concepts, but rather taken for granted. This shift in perception is more significant than any technological innovation.
In 2022, the crypto market experienced a severe crisis. The sudden collapse of FTX plunged the entire industry into winter. In 2023, the crypto industry began to recover. Each crisis made the industry more mature and more regulated. The attitude of regulators also began to change subtly, from mere suppression to seeking a reasonable regulatory framework.
The Turning Point of History
In 2024, a paradoxical turning point emerged. Trump made supporting crypto innovation an important campaign policy, promising to create a more favorable regulatory environment for the crypto industry. His running mate, Ohio Senator J.D. Vance, is himself a Bitcoin holder and has stood at the forefront of crypto innovation for years. They won the presidential election in a sweeping manner.
Thirty-three years ago, when Biden proposed the S.266 bill, he believed he was defending order. But history is always ironic: it was precisely this bill that became the fuse of a revolution that would change human civilization. Now, he is about to hand the presidency to a successor who supports cryptocurrency. This turning point came so naturally: when a revolution finally succeeds, even former opponents must acknowledge its value.
But for the cypherpunks, winning government recognition has never been the ultimate goal. As Satoshi Nakamoto once said, Bitcoin is a tool that provides financial sovereignty to everyone. The government's attitude is merely a road sign, witnessing how cryptographic technology has transitioned from an underground movement to mainstream life, from a technological experiment to a force that changes the world.
From the initial resistance of cryptographers and programmers to the current use of cryptocurrencies by hundreds of millions; from geek experiments in garages to a force shaking the global financial system; from being viewed as a utopian ideal to soon becoming the foundation of a new world. In this war that has lasted a generation, the cypherpunks have been underestimated time and time again. They have been labeled idealists, extremists, and even criminals. But they stubbornly believe: the truth of mathematics will ultimately triumph over political power, and decentralized freedom will prevail over centralized control.
Now, their dreams are becoming reality. Cryptographic technology is no longer a weapon hidden in the dark, but a torch illuminating a new civilization. It is reconstructing every aspect of human society: when wallets become passwords, when contracts are executed by programs, when organizations are managed by code, when trust is built on mathematics, the world stands on the brink of a new civilization.
In future history books, 2024 may be recorded as the year of victory for the crypto revolution. But the true victory lies not in the recognition of a particular government, but in the awakening of countless ordinary people.
This is a gift from the cypherpunks, a new world built by code and protected by mathematics. In this world, freedom, privacy, and trust are no longer slogans, but are embedded in every line of code, every block, and every peer-to-peer connection.