Cypherpunk

I have recently given a 7-minute smart talk on “the Philosophy and Ethics behind Blockchain” at the Saxion Smart Solutions Festival. The talk is intended for laymen who are interested in the intersection of Philosophy and Blockchain.

What follows is a video and transcript of the talk.

Purpose of my Smart Talk

The purpose of this smart talk is four-fold:

Firstly, I contend that philosophy matters if we would like to understand the practical and social implications of Blockchain;
I then give a brief description of Crypto-Anarchism, a philosophy that together with the Cypherpunk movement have deeply influenced the Blockchain space from its early beginnings;
This is then followed by a description of the essence of the Bitcoin Blockchain. I also make a comparative analysis between the Bitcoin Blockchain and Crypto-Anarchism;
Finally, I will conclude that the Blockchain space is moving towards the development of products that are very well in line with its initial philosophy. These products are Distributed Autonomous Organizations or DAOs in short.

Why Philosophy Matters

I believe that in order to understand something, and to understand where it’s going to we have to understand where it’s coming from. In other words, if we want to understand the practical and social implications of Blockchain, we cannot dismiss the philosophy that has given birth to it.

What is the Crypto-Anarchist and Cypherpunk philosophy?

The invention of Blockchain has a long and very intriguing history. Blockchain was invented in 2008 by Satoshi Nakamoto, a mysterious person or group of people whose real identity until this day has always been concealed. Although Blockchain was invented in 2008, we also know that Satoshi was heavily influenced by crypto-anarchists and cypherpunks.

In 1992, a crypto-anarchist called Timothy May invited a group of cryptographers, mathematicians, engineers, and others concerned with our liberties for a meeting. Their goal was to think of ways to protect

their privacy,
their political freedom,
and their economic freedom through the use of cryptography.

Cryptography is the science or practice of making information unintelligible. It is a means to protect your communication. For example, if you make a purchase on a webshop you actually don’t send a message to the payment service provider that includes your name, your product Y, the amount X and the time Z. What you send is a message that is scrambled into something unintelligible so that whenever a person intercepts the message – for example a malicious hacker – will not be able to understand it.

Crypto-anarchists and cypherpunks are practical idealists so they developed real-life applications that supported their ideals. They developed such things as untraceable e-mail, untraceable payments. They discussed ideas of anonymous markets, self-enforcing smart contracts, secure messaging etc. Most of the technical elements that form the foundation of Bitcoin and the Bitcoin Blockchain were already developed by this group of people.

This group of people that came together in 1992 are known as Cypherpunks. I am sure that most people know at least one person from that group. The Dutchman Robert Gonggrijp (founder of XS4ALL) was part of this group as well as Julian Assange (founder of Wikileaks).

An important question we have to raise here is:

“What are Crypto-anarchists and Cypherpunks and what do they want?”

In the words of Timothy May (1994),

“Crypto-anarchy is the cyberspatial realization of anarcho-capitalism (libertarian anarchism)… Digital cash, untraceable and anonymous (like real cash), is also coming, though various technical and practical hurdles remain… For libertarians, strong crypto provides the means by which government will be avoided.”

Working in the same philosophical tradition as John Locke. The crypto-anarchists are also strict contractarians. They believe that two parties should be allowed to engage in any social and economic activity as long as both parties agree on the said activity. In other words, they believe that every social interaction should be legitimate as long as it happens voluntarily and without coercion. They are very skeptical of centralized institutions, such as governments as – according to them – governments are monopolistic coercive institutions. They want governments to be limited, and preferably non-existent. Crypto-anarchists don’t equate anarchism with disorder. They believe that within an anarchist society – thus one without a government – rules and regulations will emerge naturally from the ground up.

“And what are cypherpunks?”

Cypherpunks are activists who are also very skeptical of centralized institutions like governments. They use cryptography as the means to preserve the freedoms they deem important.

Let’s sum up what they want.

Crypto-anarchists/Cypherpunks

Transparency: Transparency of governments

Voluntaryism: Voluntaryist social and economic interactions

Privacy: Privacy for everyone

Propertarian: Strict property rights

Free markets: No institutional monopoly of money production

Decentralization: Decentralization of power. Social order happens from the bottom-up

Overview of the workings of the Bitcoin Blockchain

Now, let’s take a look at what a Blockchain is and see how it’s related to Crypto-anarchism and Cypherpunk. The most basic explanation of Blockchain is that it is a database, distributed among a network of computers so that every computer has an exact copy of this database. Every computer on the network – also called a node – verifies every mutation of the database. When someone tries to insert malicious data into the Blockchain, the network will easily discover it. In order to hijack the database, you need to be able to hijack a majority of the nodes on the network.

This is in stark contrast with traditional, centralized networks that contain a central server. The relationship between the central server and the connected devices is called a client-server relationship. However, one could also refer to it as a master-slave relationship. The central server has an administrator. This administrator can determine who Is adding what content to the database, he stores your password, your username etc. In such a network, you have to trust the administrator that he acts properly. These type of networks are very prone for corruption, censorship and attacks. In order to attack this centralized network, all you have to do is attack this central server. Therefore, we also say that it has a single point of failure (SPOF).

This is the most basic explanation of what Blockchain is and how its contrasts with centralized networks – but it’s also a boring explanation. A question I’d like us to explore is:

“What is the essence of Blockchain?”

The essence of Blockchain, I beleive, is that it creates trust in a network of unknown participants. It is an elegant solution to the possible corruption of digital networks. In its essence, it is a technology against censorship and corruption of digital networks. There is no need to appeal to authority, because rules are set by consensus, reached through active discussions and persuasion instead of coercion.

In this sense, the Bitcoin Blockchain perfectly matches the philosophy of Crypto-anarchism and Cypherpunk.

Comparison between Crypto-Anarchism and the Bitcoin Blockchain

Crypto-anarchists/Cypherpunks	Bitcoin Blockchain
Transparency: Transparency of governments	Transparency: Blockchain is open source and transparent. Everyone can look into the source code and follow every transaction.
Voluntaryism: Voluntaryist social and economic interactions	Voluntaryism: Everyone is free to join and leave the network. Everyone is allowed to use Bitcoin, and not coerced into using it.
Privacy: Privacy for everyone	Privacy: Anyone, anywhere can create a Bitcoin wallet without having to provide private information. Bitcoin addresses are pseudonymous and its encouraged to use a different Bitcoin address for every transaction.
Propertarian: Strict property rights	Propertarian: When you own your private key of your wallet, no one can take it away from you.
Free markets: No institutional monopoly of money production	Free markets: Introduces competition in money production.
Decentralization: Decentralization of power. Social order happens from the bottom-up	Decentralization: Blockchain is copied and distributed over a large network of computers. There’s no need to appeal to authority to participate or to make transactions. In that sense, it is radically neutral. Everyone on the network, no matter whether you are a king or humble civil servant, is treated the same and according to pre-specified consensus rules.

What types of applications can we look forward to

Knowing where Blockchain came from. What can we say about the types of applications they would like to build? What types of applications can we look forward to in the future that hold true to this anti-censorship/anti-corruption philosophy of the Crypto-anarchists and Cypherpunks?

The ultimate types of application for them are Distributed Autonomous Organizations or DAOs for short. These are organizations, that don’t have a single point of decision-making. They have no board of directors, no select group of owners that have exclusive ownership rights, no one executive that directs the organization. These organizations, instead, are open and inclusive for anyone. They are ruled by machine consensus and not by the whims of a small group of people.

There are already DAOs. Bitcoin was the first DAO. There is no Bitcoin company, no Bitcoin executive. If you think about DAOs, imagine a Facebook without a Facebook CEO, a YouTube without a YouTube company, and an investment fund without a fund manager.

Crypto-anarchism is a subversive philosophy that extends anarchism into the world of cyberspace. Crypto-anarchists attempt to protect their privacy and political freedom through the use of information technologies. Timothy May, one of the co-founders of Cypherpunk and writer of the ‘Crypto Anarchist Manifesto’, describes Crypto-anarchism as

“the cyberspatial realization of anarcho-capitalism, transcending national boundaries and freeing individuals to make the economic arrangements they wish to make consensually.”

In this article I would like to post Timothy May’s ‘Crypto Anarchist Manifesto’, which was first spread among like-minded tech-anarchists in mid-1988 at the “Crypto ’88” conference. The Manifesto was also discussed at the first physical Cypherpunk meeting in 1992. Most people have never heard of Cypherpunk, but they might know their most notable member: Julian Assange, founder of Wikileaks.

See here the full Manifesto:

A specter is haunting the modern world, the specter of crypto anarchy.[1]

Computer technology is on the verge of providing the ability for individuals and groups to communicate and interact with each other in a totally anonymous manner. Two persons may exchange messages, conduct business, and negotiate electronic contracts without ever knowing the True Name, or legal identity, of the other. Interactions over networks will be untraceable, via extensive re- routing of encrypted packets and tamper-proof boxes which implement cryptographic protocols with nearly perfect assurance against any tampering. Reputations will be of central importance, far more important in dealings than even the credit ratings of today. These developments will alter completely the nature of government regulation, the ability to tax and control economic interactions, the ability to keep information secret, and will even alter the nature of trust and reputation.

The technology for this revolution–and it surely will be both a social and economic revolution–has existed in theory for the past decade. The methods are based upon public-key encryption, zero-knowledge interactive proof systems, and various software protocols for interaction, authentication, and verification. The focus has until now been on academic conferences in Europe and the U.S., conferences monitored closely by the National Security Agency. But only recently have computer networks and personal computers attained sufficient speed to make the ideas practically realizable. And the next ten years will bring enough additional speed to make the ideas economically feasible and essentially unstoppable. High-speed networks, ISDN, tamper-proof boxes, smart cards, satellites, Ku-band transmitters, multi-MIPS personal computers, and encryption chips now under development will be some of the enabling technologies.

The State will of course try to slow or halt the spread of this technology, citing national security concerns, use of the technology by drug dealers and tax evaders, and fears of societal disintegration. Many of these concerns will be valid; crypto anarchy will allow national secrets to be trade freely and will allow illicit and stolen materials to be traded. An anonymous computerized market will even make possible abhorrent markets for assassinations and extortion. Various criminal and foreign elements will be active users of CryptoNet. But this will not halt the spread of crypto anarchy.

Just as the technology of printing altered and reduced the power of medieval guilds and the social power structure, so too will cryptologic methods fundamentally alter the nature of corporations and of government interference in economic transactions. Combined with emerging information markets, crypto anarchy will create a liquid market for any and all material which can be put into words and pictures. And just as a seemingly minor invention like barbed wire made possible the fencing-off of vast ranches and farms, thus altering forever the concepts of land and property rights in the frontier West, so too will the seemingly minor discovery out of an arcane branch of mathematics come to be the wire clippers which dismantle the barbed wire around intellectual property.

Arise, you have nothing to lose but your barbed wire fences!

Footnote

[1] This is clearly a wordplay on the opening sentence of Karl Marx’ and Friedrich Engels’ The Communist Manifesto which reads: “A spectre is haunting Europe—the spectre of communism.”