Cypherpunks: The Activists Behind Decentralized Money

The digital world is growing, and surveillance is growing with it. Governments, companies, and even other individuals are now pretty capable of following our virtual steps —including the financial ones. That’s why a group of activists emerged in the late 20th century with a mission to safeguard individual liberties through the development of decentralized money.

These activists, known as cypherpunks, laid the groundwork for the creation and popularization of cryptocurrencies like Bitcoin. The term "cypherpunk" is a blend of "cypher," referring to cryptography, and "punk," which reflects their rebellious and nonconformist nature. So, they’re mostly computer science and cryptography experts aiming to create new digital tools to foster privacy and social change.

The movement gained momentum in the 1980s and 1990s as individuals concerned about the increasing surveillance and control of digital communications and transactions sought ways to counteract these trends. We can say it started with David Chaum, an American cryptographer who is widely recognized for inventing the first forms of digital cash —no, it wasn’t Satoshi Nakamoto alone.

A prolific mailing list

The first Cypherpunk mailing list started in 1992 as an initiative by Eric Hughes, Timothy C. May, John Gilmore, and Judith Milhon. For more references, Hughes invented the first anonymous remailer (a server to increase privacy in emails), and May discovered the Alpha Strike issue in computer chips. Gilmore is one of the founders of the Electronic Frontier Foundation (EFF) to defend digital rights. For her part, Milhon helped to create the first public computerized bulletin board system, besides being a writer and editor (she coined the “Cypherpunks” name).

In 1993, Hughes wrote and shared the Cypherpunk Manifesto, which describes the main purpose of the group and this kind of activism:

“Privacy is necessary for an open society in the electronic age (…) We cannot expect governments, corporations, or other large, faceless organizations to grant us privacy (…) We must defend our own privacy if we expect to have any (…) Cypherpunks write code. We know that someone has to write software to defend privacy, and (…) we're going to write it.”

The number of subscribers to the list (and, likely, to the movement) reached over 2,000 individuals by 1997. But this isn’t the reason why we’re stating that the mailing list was prolific. From this mailing list and this ideal came up numerous talented people that developed a diverse set of digital tools to fight for privacy.

To name a few of them: Julian Assange (WikiLeaks), Adam Back (Hashcash & Blockstream), Eric Blossom (GNU Radio Project), Phil Zimmerman (PGP Protocol), Bram Cohen (BitTorrent & Chia), Hal Finney (First Proof-of-Work), Nick Szabo (First Smart Contracts), Wei Dai (B-Money), Zooko Wilcox (Zcash), and, of course, Satoshi Nakamoto (Bitcoin). Most of them are still alive and active in 2023.

Before and after Bitcoin

One of the most significant contributions of cypherpunks was their role in conceptualizing and promoting the idea of decentralized digital currencies. Influenced by the works of cryptographic pioneers like David Chaum, who introduced the concept of "e-cash," and Wei Dai, who proposed the idea of "b-money," cypherpunks envisioned a system where money could be transferred electronically without the need for intermediaries.

This vision laid the foundation for the creation of Bitcoin, the first and most well-known cryptocurrency. As we mentioned above, Nakamoto didn’t do it all by themselves. The process was more like putting together puzzle pieces: Hal Finney’s PoW, some features from e-cash, Hashcash, and b-money, public-key cryptography by Ralph Merkle, and time-stamping by W.S. Stornetta and Stuart Haber.

Finally, in 2008, Nakamoto published the Bitcoin whitepaper. It describes a peer-to-peer electronic cash system that utilized cryptographic techniques to secure transactions and maintain a public ledger. The principles of decentralization, pseudonymity, and cryptographic security closely aligned with the cypherpunk ideals, making Bitcoin the first realization of their vision.

Decentralization didn’t stop there though. Directed Acyclic Graph (DAG) systems are the next step of decentralization. A DAG-based cryptosystem like Obyte doesn’t have miners or intermediaries at all. It doesn’t have blocks, either. Only Order Providers (OPs) whose transactions serve as waypoints for ordering everything else —but they don’t have other powers and aren’t needed to “accept” transactions, like Bitcoin miners. By eliminating such big power centers as miners, DAG achieves more even distribution of power than blockchains.

Cypherpunks' visionary contributions formed the puzzle of cryptocurrency evolution. Bitcoin's whitepaper, embracing decentralization and cryptographic security, materialized cypherpunk ideals. As technology advances, DAG systems like Obyte emerge, furthering decentralization without middlemen.

Featured Vector Image by jcomp / Freepik