By Timothy C. May
Translation: Jump, LXDAO
01 Translator’s Preface
I chose this article because of the discussion of "crypto nihilism". The comments made by the cypherpunks in 2018 are still very appropriate in 2024. ICOs have become memes, and marketing (scams) do not need to be carefully designed; mainstream investment companies and presidential campaigns have driven up the price of coins, and it is said that cryptocurrencies are no longer young.
I still don't know what is cypherpunk and what is crypto-nihilism. "There are a lot of tyrants out there" and you don't need to remember this because you live like this every day. Fortunately, I see that there are people who are working hard to overcome this, which gives me the confidence to continue exploring and pushing myself.
02 Content
What does cypherpunk legend Timothy May think of the Bitcoin whitepaper? Keep the text, throw away the parasites.
CoinDesk asked Timothy May, a cypherpunk legend and author of the “Crypto Anarchist Manifesto,” to write about his thoughts on the 10th anniversary of the bitcoin white paper.
His response was a critical 30-page essay detailing an industry he felt was out of touch with reality.
For clarity, the original information is presented in a fictitious question-and-answer format. Otherwise, the information remains the same.
CoinDesk: Now that bitcoin has become a historic event, what place do you think the white paper will occupy in the pantheon of financial cryptography advances?
Timothy May：
Let me start by saying that for the past 10 years I have been following Bitcoin and all its variants with some interest, some fascination, and a lot of frustration.
It deserves a front-row seat in the pantheon as perhaps the most important development since double-entry bookkeeping.
I can’t speak for Satoshi, but I certainly don’t think he would have imagined that Bitcoin exchanges would have draconian regulations regarding KYC, AML, passports, account freezes, and laws for reporting “suspicious activity” to local police. All this hubbub about “governance,” “regulation,” and “blockchain” is actually likely to create a surveillance state, a dossier society.
Satoshi will puke. Or at least work on the Bitcoin alternative he first described in 2008-2009. I can’t clap my hands and praise where we are, or write a praising article about the great things that have been accomplished.
Of course, Bitcoin and its variants—several forks and many altcoins—work more or less as originally intended. Bitcoins can be bought or mined, sent in a variety of fast ways, a small fee is paid, the recipient gets the Bitcoins, and she can then sell them in a dozen minutes, sometimes even faster.
There is no permission required, no central agent, not even trust between parties, and Bitcoins can be acquired and stored for years.
But the tsunami that swept through the financial world also left a lot of chaos and destruction in its wake. The wreckage of intellectual earthquakes, failed experiments, Schumpeter’s “creative destruction.” It’s not ready for prime time. Who expects their mother to “download the latest client on Github, compile it on one of these platforms, and use the terminal to reset these parameters?”
I see hundreds of millions lost to programming errors, theft, fraud, and ICOs that were poorly coded based on bad ideas but not enough talent to pull off the grand plan.
Sorry if this ruins the narrative. But I think the narrative is terrible. Satoshi did a great thing, but the story is far from over. She/he/it even admitted that the 2008 version of Bitcoin was not some final answer received from the gods.
CoinDesk: Do you feel like others in the cypherpunk community share your views? What’s attracting interest in the industry, or what’s killing it?
Timothy May：
Frankly, the novelty of Satoshi’s whitepaper (and then early uses like Silk Road) attracted many people to the Bitcoin world. If the project was about something “regulatory-compatible”, “bank-friendly”, there would be little interest. (In fact, there were some sleepy early electronic transfer projects. “SET (Secure Electronic Transfer)” is such a boring project.)
It had no interesting innovations and was 99% legalese. The cypherpunks just ignored it.
Indeed, some of us were there when the field of "financial cryptography" really got going. With the exception of the work of David Chaum, Stu Haber, Scott Stornetta, and a few others, most academic cryptographers focused primarily on the mathematics of cryptography, and they hadn't paid much attention to the "financial" aspects.
This has certainly changed over the past decade. There have been at least tens of thousands of people flocking to Bitcoin and blockchain, and major conferences are happening almost every week. Most people are probably interested in the "Bitcoin era" which began roughly in 2008-2010, but there is some important history dating back before that.
History is a natural way for people to understand things…it tells you a story, a linear narrative.
I won’t speculate too much about the future. From 1988 to 1998, I expressed my thoughts on some of the “obvious” consequences of The Crypto Anarchist Manifesto in 1988 and the cypherpunk groups and mailing lists that started in 1992.
CoinDesk: It sounds like you think bitcoin isn’t really living up to its ideals, or that the bitcoin community isn’t staying true to its cypherpunk roots.
Timothy May：
Yes, I think the greed and the hype and all that noise about “Go to the moon!” and “HODL” is the biggest hype wave I’ve ever seen.
The hype is not just about the huge “Dutch tulip” type price increase, but about hundreds of companies, thousands of participants and endless coverage, and hero worship. This is much more hype than we saw during the dot-com bubble. I think there is too much publicity going on in those conference presentations, white papers and press conferences, and too much “skill” is going on.
People and companies are trying to stake out territory, with some filing dozens or even hundreds of patents on obvious variations of the underlying concept, even though the subject matter was widely discussed in the 1990s. I expect the patent system to reject some of these (though probably only if the giants get into legal battles).
The tension between privacy (or anonymity) and the “customer identity vetting” approach is one of the core issues. It’s “decentralized, anarchic, peer-to-peer” versus “centralized, permissioned, backdoors.” Understand that the explicit vision of many in the privacy community — the cypherpunks, Satoshi, other pioneers — is a permissionless, peer-to-peer money transfer system that some envision replacing “fiat” currencies.
One of the main pioneers, David Chaum, was very visionary about the issue of “buyer anonymity.” For example, a large store could receive payment for goods without knowing the identity of the buyer. (This is obviously not the case today, where stores such as Walmart and Costco keep detailed records of customer purchases, and police investigators can purchase these records or obtain them through subpoenas. In some countries, even more insidious means are used.)
Keep in mind that there are many reasons why buyers might not want to reveal purchasing preferences. But both buyers and sellers need to prevent tracking: in many countries, sellers of contraceptive information may be at greater risk than people who simply purchase such information. There is also blasphemy and offense to religion, history, law, and political activism. Approaches like Digicash focus on buyer anonymity (like a shopper in a store or a driver on a toll road), but lack a key element: most sellers are tracked because of their speech or politics.
Fortunately, buyers and sellers are essentially isomorphic, with only some arrows changing in some direction ("first-class objects"). What Satoshi did was basically resolve the tension of "buyer"/"seller" traceability by making both buyers and sellers untraceable. Obviously not perfect, which is why there is so much follow-up activity.
CoinDesk: So, what you’re saying is that bitcoin and cryptocurrency innovators need to fight against existing powers, rather than work with them, to achieve true innovation?
Timothy May：
Yes, if cryptocurrencies are just going to be another PayPal, another bank transfer system, that won’t make a lot of sense to a lot of people. What’s exciting is bypassing the gatekeepers, the fee collectors, the middlemen who decide whether, for example, Wikileaks can receive donations and allow people to send money abroad.
Attempting to be “regulation friendly” will likely kill the main uses of cryptocurrencies that are more than just “another form of PayPal or Visa.”
The more general use of “blockchain” technology is another matter. Many uses are likely to be regulatory compliant. Of course, many of the proposed uses — like putting supply chain records or whatever on various public or private blockchains — don’t make a lot of sense. Many people point out that these “distributed ledgers” aren’t even new, just some variation of databases with backups. Moreover, it’s naive to think that companies want to make contracts, material purchases, shipping dates, and so on public.
Remember, much of the excitement about Bitcoin was about getting around controls and enabling novel uses like Silk Road. It was something cool and futuristic, not just another PayPal.
CoinDesk: So, you’re saying we should think outside the box and try to think in various ways and apply technology novelly rather than just reinventing what we already know?
Timothy May：
People should do what interests them. That's how most innovative things like BitTorrent, Mix-nets, Bitcoin, etc. were born. So, I'm not sure if "try to think in a variety of ways" is the best way to put it. My hunch is that ideologically driven people do interesting things. Corporate people probably don't do well with "try to think in a variety of ways."
Money is speech. Checks, IOUs, delivery contracts, hawala banks, all are used as forms of money. Nick Szabo points out that Bitcoin and some other cryptocurrencies have most or all of the properties of gold, and more: they are weightless, difficult to steal or seize, and can be sent over the crudest wires in just minutes, unlike gold bars that require long cargo flights.
But there is nothing sacrosanct about paper money, coins, or official-looking checks. These are “centralized” systems that rely on “trusted third parties” like banks or nation-states, guaranteed by law or imperial authority to ensure their value.
By contrast, sending Bitcoin is the equivalent of “saying” a number (the math is more complicated than that, but that’s roughly the idea). Prohibiting the saying of a number is the equivalent of prohibiting a certain kind of speech. This doesn’t mean that technology can’t be stopped. There was “printing PGP code,” or Cody Wilson’s Defense Distributed, and the circuit court ruled that the printed word is rarely outside the scope of the First Amendment.
CoinDesk: Isn’t this a good example of how if we were to rebuild the entire economy, or parts of it, on blockchain, we wouldn’t need some censorship resistance [the ability to enforce law]?
Timothy May：
It is inevitable that there will be some contact with the legal system in the United States or elsewhere in the world. Slogans like “code is law” are mostly aspirations, not realities.
The Bitcoin system, in terms of Bitcoin (the cryptocurrency) itself, is largely independent of law. The payment nature of Bitcoin makes it independent of chargebacks, cancellations, and other legal issues. This may change. But in Bitcoin's current system, it is generally unclear who the parties to a transaction are, what jurisdictions they are located in, or even what laws apply.
Still, I think that almost every new technology has some uses that some people don't like. Gutenberg's printing press certainly wasn't popular with the Catholic Church. Examples abound. But does this mean that printing presses should be officially licensed or regulated?
New technologies often have some unwelcome or worse uses (e.g. what was unwelcome to the Soviet Union may not be so unwelcome to Americans). Information about contraception is banned in Ireland, Saudi Arabia, etc. Examples are many: weapons, fire, printing presses, telephones, copiers, computers, tape recorders.
CoinDesk: Are there any blockchains or cryptocurrencies that are on the right track? In your opinion, has Bitcoin fulfilled its promise?
Timothy May：
As I said, Bitcoin is mostly working as planned. Money can be moved, stored (in Bitcoin), and even used as a vehicle for speculation. I can’t say the same for its dozens of major variants and hundreds of minor ones. It’s hard to see clear and understandable “use cases” in any of them.
To me, talk of “reputation tokens”, “attention tokens”, “charity tokens” all seem immature. And none of them have been as successful as Bitcoin. Even Ethereum, which has a very different approach than Bitcoin, has yet to see interesting applications (at least that I have seen. I admit that I don’t have the time or inclination to spend hours a day following comments on Reddit and Twitter).
As a rapidly evolving industry, there are multiple forking paths in "blockchain": private blockchains, bank-controlled blockchains, public blockchains, and even using the Bitcoin blockchain itself. Some uses may prove useful, but some seem speculative and toy-like. Seriously: Marriage proposals on the blockchain?
There is a huge amount of confusion with a multitude of small companies, large consortiums, alternative cryptocurrencies, initial coin offerings (ICOs), conferences, trade shows, forks, new protocols, and yet there is a new conference almost every week.
People fly from Tokyo to Kiev to Cancun to attend the latest 3-5 day circuit party. The smallest conferences attract only a few hundred fans, and the largest apparently attract 8,000 people. You can contrast this with the direct promotion of credit cards, or the relatively clean promotion of Bitcoin. People can't possibly spend the mental energy to read technical documents and follow weekly announcements and debates. The mental transaction cost is too high, and the gain is too small.
From what I can tell, the people moving “large” amounts of money are using basic forms like Bitcoin or Bitcoin Cash, not things like Lightning, Avalanche, or any of the other 30 to 100 new things.
CoinDesk: It sounds like you’re at least optimistic about the use case for cryptocurrencies in terms of value transfer.
Timothy May：
It would be a tragic mistake if, in the race to develop (and profit from) what are confusingly called “cryptocurrencies,” we ended up developing the most archival or surveillance society the world has ever seen. I’m just saying there is a danger of that.
Under the "customer identity review" regulations, cryptocurrency transfers will not be like our current ordinary cash transactions, or even wire transfers, checks, etc. If a set of "is a person" authentication and "know your customer" governance systems are established, the situation will be worse than it is now. Some countries are already hoping this will happen.
We need to oppose the “internet driver’s license”.
CoinDesk: It’s possible. While you could argue that the internet today isn’t exactly what was envisioned, it still plays a role in advancing human progress.
Timothy May：
I'm just saying that we might end up regulating money and money transfers similar to how we regulate speech. Is that an exaggeration? If Alice is forbidden from saying "I'll give you a burger today, and I'll pay you a dollar next week," isn't that a restriction of speech? The same can be said about books and publishing: "Know your reader." Alas!
What I'm saying is that there are two paths: freedom vs. permission and centralized systems.
This fork was widely discussed about 25 years ago. Governments and law enforcement didn't really object: they saw the fork coming. Today we have tracking, widely used scanners (in elevators, key points), encryption tools, cash, privacy protection, tracking tools, scanning, forced decryption, backdoors, escrow, etc.
In an age when a person’s smartphone or computer may carry gigabytes of photos, communications, business information—far more information than an entire house could carry when the Bill of Rights was written—the casual interception of phones and computers is alarming. Many countries are worse off than the United States. We need new tools to protect data, and lawmakers need to be educated.
Signs of corporatization of blockchain are showing: there are several large consortiums and even cartels that want to “comply with regulation.”
One might think that legal protections and judicial oversight would prevent excesses…at least in the U.S. and some other countries. However, we know that even the U.S. has engaged in brutality (purges of Mormons, killing and forced death of Native Americans, lynchings, illegal imprisonment of people of Japanese descent).
What would some countries do with a strong “know your author” (an extension of “know your customer”)?
CoinDesk: Are we still talking about technology? Isn’t this about power and the balance of power? Even if the internet becomes more centralized, aren’t there good things that come from it?
Timothy May：
Of course, the Internet tsunami has brought many benefits.
But some countries are already using vast databases — with the help of search engine companies — to compile “citizen trustworthiness” ratings that can be used to exclude them from banking, hotel, travel services, and social media giants are eagerly helping to build the machinery that profiles society (they claim otherwise, but their actions speak for themselves).
I don’t want to sound like a leftist complaining about Big Brother, but any civil libertarian or real libertarian has reason to be afraid. In fact, many authors predicted this archive society decades ago, and the tools have improved by leaps and bounds since then.
In thermodynamics and mechanical systems, moving parts have "degrees of freedom." A piston can move up and down, a rotor can spin, and so on. I believe social systems and economies can be described in a similar way. Some things add degrees of freedom, and some things "lock" them.
CoinDesk: Have you considered writing something like a definitive work on the current crypto era, a new interpretation of your previous work?
Timothy May：
No, I have no such plans. I spent a lot of time between 1992 and 1995, writing for hours every day. I don't want to do it again. It's a bit of a shame that I haven't written a real book on this topic, but I accept that.
CoinDesk: Let’s go back a little bit to your history. Do you see any parallels between the cypherpunk era and crypto today, given your knowledge of it?
Timothy May：
About 30 years ago, I became interested in the potential of strong cryptography. I wasn't so much concerned with the "sending secret messages" part of it as I was with its implications for money, for bypassing borders, for letting people transact without government control, for voluntary association.
I called it "crypto-anarchism" and wrote the Crypto-Anarchist Manifesto in 1988, which was loosely based in form on another famous manifesto. It was based on "anarcho-capitalism", a well-known variant of anarchism (nothing to do with Russian anarchists or syndicalists, it's just about free trade and voluntary exchange).
At the time, there was one main conference, Crypto, and two less popular ones, EuroCrypt and AsiaCrypt. There were almost no papers at academic conferences that dealt with the connection between cryptography and economics and institutions (politics, if you want to call it that). Some papers related to game theory were very important, such as the astounding work "Zero Knowledge Interactive Proof Systems" by Micali, Goldwasser, and Rackoff.
I spent several years exploring these ideas. After retiring from Intel in 1986 (thank you, the 100-fold increase in stock price!), I spent many hours a day reading cryptography papers and thinking about new structures that might be possible.
For example, data havens in cyberspace, new financial institutions, timed-release crypto, digital dead drops through steganography, and of course digital currencies.
Around that time, I met Eric Hughes, who was visiting me at my place near Santa Cruz. We planned a get-together to bring together some of the smartest people we knew to discuss this stuff, and we met in the late summer of 1992 at his newly rented house in the Oakland Hills.
CoinDesk: You mentioned the impact of cryptography on money… Was there any anticipation at the time that something like Bitcoin or cryptocurrency would emerge?
Timothy May：
Ironically, at the first meeting, I handed out some Monopoly money that I had bought at a toy store. (Ironically, years later, when Bitcoin was first traded in 2009-2011, it looked like toy money to most people — see the pizza story!) I handed these out to people and used them to simulate a world of strong cryptography — with data havens, black markets, and mixers (Remailers, or “Mixes”, as Chaum called them). Systems like what would become Silk Road were very interesting. (More than one journalist has asked me why I didn’t widely distribute the BlackNet proof of concept. My answer is usually “Because I don’t want to be arrested and jailed.” In the US, coming up with ideas and writing about them is, at least for now, protected speech.)
We started meeting at least once a month, and quickly formed a mailing list. John Gilmore and Hugh Daniel moderated the mailing list. There was no moderation, no filtering, no “censorship” (in the broad sense, not just government censorship). The “no moderation” policy was combined with “no leaders.”
While about 20 people wrote 80% of the articles and messages, there was no real structure. (We also thought this would better protect us from government prosecution.)
This, of course, fits in with a multi-center, distributed, permissionless, peer-to-peer structure. It's a form of anarchism, truly "An arch" or "No top." David Friedman explored this in his famous The Machinery of Freedom from the mid-1970s. And Bruce Benson's Enterprise of Law.
He studies the role of legal systems without a ruling authority. Anarchism is, of course, the default and preferred mode for most people—choosing what they eat, who they associate with, what they watch and read. And whenever a government or tyrant tries to restrict people’s choices, they usually find ways around the restrictions: contraception, underground literature, illegal radio reception, copying tapes, USB sticks…
This may have influenced Satoshi Nakamoto's later design of Bitcoin.
CoinDesk: Do you remember your reaction when you first saw Satoshi’s message? How do you remember feeling about those ideas?
Timothy May：
I was doing other things at the time and wasn’t paying attention to these debates. My friend Nick Szabo mentioned some of these topics around 2006-2008. Like many people, I was only mildly interested when I first heard about Satoshi’s white paper and the early “toy” transactions. It seemed unlikely that it would become as big as it is today.
He/she/they discussed how digital currencies might work, and what would be necessary to make them interesting. Then in 2008, Satoshi released “their” white paper, sparking a lot of debate, but also a lot of skepticism.
In early 2009, a beta version of "Bitcoin" was released. Hal Finney and Satoshi Nakamoto made the first Bitcoin transaction. There were a few other people as well. Satoshi himself (themselves?) even said that the value of Bitcoin would most likely either go to zero or get very high. I think a lot of people either didn't pay attention to it or thought it would go to zero and be just another piece of rubble on the information superhighway.
That famous pizza-buying incident shows that most people think of it as essentially toy money.
CoinDesk: Do you still think of it as play money, or has its slowly increasing value convinced you otherwise?
Timothy May：
No, it is not just toy money anymore. It has not been for the last few years. But it has not become a replacement for cash. For bank transfers, hawala, etc., it does function. It functions as a money transfer system, for the black market, etc.
I’ve never seen such hype, such craziness. Not even during the dot-com bubble, when Pets.com and people were talking about how much money they made buying “JDS Uniphase” stock. (After the bubble burst, the joke in Silicon Valley was “Is this new startup called Space Available?” There were empty buildings everywhere.)
I still think crypto is too complicated...coins, forks, shards, off-chain networks, DAGs, proof of work vs proof of stake, it's impossible for the average person to keep up with it all. What are the real use cases? People talk about eventually replacing the banking system or credit cards, PayPal, etc., which is great, but what does it do now?
The most convincing examples I hear are people transferring money to people blocked by PayPal, Visa (etc), or banks and wire transfers. The rest is hype, propaganda, HODL, get-rich-quick garbage.
CoinDesk: So you think this is a bad thing. You don’t buy into the argument that things have been built up somewhat haphazardly over time…
Timothy May：
Things do get built in a haphazard way sometimes. Planes crash, dams fail, engineers learn. But there are many glaring flaws in the entire ecosystem. Programming errors, conceptual errors, poor security approaches. Hundreds of millions of dollars have been lost, stolen, locked in time safes of errors.
If a bank lost this amount of money in an “oops, my pot!” situation, there would surely be a huge outcry. When the safe is pried open, the manufacturer studies the flaws - what we now call the “attack surface” - and makes improvements. Not only is the customer - the bank - encouraged to upgrade, but their insurance rates are reduced with the new safe. We urgently need to introduce similar mechanisms in cryptocurrencies and exchanges.
Universities can’t even train basic “cryptocurrency engineers” fast enough, let alone researchers. Cryptocurrency requires knowledge of many complex fields: game theory, probability, finance, programming.
Any child can understand what something like a quarter can "do," she'll see others use quarters and dollar bills, and the principles of operation will be clear.
When I first got my card, I didn’t spend a lot of time reading the manual, let alone downloading wallets, cold storage tools, or keeping up with protocol updates. It just works, and money doesn’t disappear.
CoinDesk: It sounds like you don’t like the way innovation and speculation are intertwined in this industry…
Timothy May：
Innovation is good. I’ve seen a lot of it in the chip industry. But we don’t have weekly meetings! And we don’t announce new products that are only the most sketchy of ideas. We don’t start new companies so haphazardly. We also don’t raise $100 million in an ICO from, frankly, naive speculators hoping to catch the next Bitcoin.
I have friends who work at cryptocurrency companies and exchanges whose main interest seems to be speculation. That’s why they often keep their crypto on exchanges: for quick trades, shorting, hedging, but not for buying things or moving assets outside of regular channels.
CoinDesk: Yet you seem to be quite knowledgeable about the subject…and it sounds like you may have specific ideas about what it “should” be.
Timothy May：
I probably spend too much time following threads on Reddit and Twitter (I don’t have a Twitter account).
What is it “supposed” to be? As the saying goes, Main Street will find its own use for technology. Once upon a time, Silk Road and its variants drove widespread use. More recently, it’s been HODLing, or speculation. I hear online gambling is one of Ethereum’s main uses. Let the fools burn their money.
Are all these bubbles and hype worth it? Will cryptocurrencies change the world? Probably. The future is undoubtedly online, electronic, and paperless.
But at the end of the day, there was too much hype, too much publicity, and too few people who really understood the concepts. It was almost like people realized there was a whole world out there, and then thousands of people started building boats in their backyards.
Some will succeed, but most will either stop building ships or sink at sea.
We used to place a lot of emphasis on manifestos, which were not a way of imposing identity, but rather suggestions on how to proceed. A bit like giving advice to a cat… you can’t command a cat, you can only give advice, and sometimes they accept it.
Final Thoughts
Don’t use something just because it sounds cool…only use it if it actually solves some problem (and so far, cryptocurrencies solve problems for a small subset of people, at least in the first world).
Most of the problems we think of cannot be solved by cryptocurrency or any other technology (most people aren’t interested in things like “better donation systems”).
If you are involved in dangerous transactions - drugs, birth control information - engage in strict "operational safety" practices... look at how Ross Ulbricht got caught.
Mathematics is not law.
Cryptocurrency is still a long way from being usable by the average person (even a techie).
Focus on liberty and freedom of trade and speech, and return to the original motivation. Don't spend time trying to create a government-friendly financial alternative.
Remember, there are many tyrants out there.
