What is cryptography?
Cryptography is the science of methods for ensuring authentication, integrity and confidentiality of data. Why does it exist? Let’s find out!
How was cryptography evolving and when?
Cryptography as a text protection technique evolved alongside writing; cryptographic methods were known in ancient civilizations such as India, Mesopotamia, and Egypt.
In the first period of cryptography’s development (roughly from the third millennium BC to the IX century), monoalphabetic ciphers were primarily used, with the key principle being to replace the alphabet of the source text with another alphabet by replacing letters with other symbols or letters.
Judea, Sparta, Ancient Greece, and Ancient Rome all had monoalphabetic ciphers.
In the second period, Polyalphabetic ciphers (a set of monoalphabetic ciphers used to encrypt another plaintext character according to a certain rule) became popular (from the IX century in the Middle East to the beginning of the XX century in Europe).
In the third period — polyalphabetic ciphers were still in use from the beginning to the middle of the XX century. At the same time, a new communication technology was emerging and developing: radio communication. It enabled the transmission of large amounts of data but was not secure. The issue of reliable encryption became urgent during World War I, and it became especially acute during World War II, because small transmitters and receivers were widely used, allowing belligerents to easily intercept enemy messages. The world’s leading powers actively introduced electromechanical encryption devices and competed to develop hacking techniques. Because of these factors, cryptography, which had been the domain of spies, mathematicians, and diplomats for centuries, began to emerge as a science.
The fourth period — from the middle to the 70s of the XX century — was marked by the transition to mathematical cryptography.
By that time, mathematical statistics, probability theory, number theory, and general algebra had been established, as had the foundations of cybernetics and algorithm theory.
The publication of Claude Shannon’s “Theory of communication in secret systems” by the American mathematician and cryptanalyst was a watershed moment in this transition process.
It was the first time an approach to cryptography was presented as a mathematical science.
Shannon established its theoretical foundations and introduced the concepts that students today use to begin studying cryptography.
Following WWII, the governments of the United Kingdom and the United States established organizations to deal with electronic surveillance and information security — the UK Government Communications Center and the US National Security Agency.
In the early 1970s, James Ellis, an employee of the UK Government Communications Center, proposed the concept of public key cryptography.
In this system, a public key sent over an unsecured channel that can be monitored is used to encrypt the message and validate the electronic signature. Clifford Cox, a British mathematician, developed the mathematical foundation for this model.
Because there was no technology that would allow it, neither the British Government Communications Centre nor the American NSA adopted public-key cryptography. However, the Internet was required for this purpose, but such systems had not yet been developed in the 1970s.
Ordinary users were already confronted with the problem of data protection in an open environment in the 1980s, and with the spread of the Internet in the 1990s.
Meanwhile, small groups of hackers, mathematicians, and cryptographers began developing public-key cryptography. One of them was Doctor of Sciences David Chaum, an American cryptographer known as the godfather of cypherpunks.
How did the cypherpunks movement appear?
Chaum pioneered the blind digital signature method — a public key encryption model — in 1982. The development enabled the creation of a database of people who could remain anonymous while ensuring the accuracy of the information they provided about themselves. Chaum fantasized about digital voting, which can be verified without revealing the voter’s identity, but first and foremost about digital cash.
Chaum’s ideas sparked the interest of a group of cryptographers, hackers, and activists. They became known as cypherpunks, members of a movement that advocated using computer technology to undermine state power and centralized control systems.
Timothy May, an American cryptographer and former Intel leading researcher, was one of the movement’s ideologists. In 1987, May met American economist, entrepreneur, and futurist PhilipSalin, who founded the American Information Exchange (AMiX), a network platform for data trading.
May, on the other hand, did not like the idea of an electronic platform where people could sell each other little meaningful information (cross-border and with low commissions). He envisioned a global system that allows for the anonymous two-way exchange of any information and resembles a corporate information system.
May then finalized this concept in the form of the BlackNet system, which required a non-governmental digital currency and the ability to make untraceable payments in it. In 1985, he read David Chaum’s article “Security without Identification Card Computers to make Big Brother Obsolete.” In the article, Chaum described a system that hides the identity of the buyer using cryptographic methods. Familiarity with this idea prompted May to study cryptographic protection with a public key.
He quickly concluded that such cryptography, combined with network computing, had the potential to “destroy the structures of social power.”
In September 1988, May wrote The Crypto Anarchist Manifesto based on Karl Marx’s Communist Manifesto: “A ghost haunts the modern world, the ghost of cryptoanarchy.” According to the manifesto, using cryptography, digital currencies, and other decentralized tools, information technology enables people to manage their lives without the intervention of governments.
In 1992, May , one of the Electronic Frontier Foundation’s founders, John Gilmore, and Eric Hughes, a mathematician at the University of California, Berkeley, invited 20 of their close friends to an informal gathering. They discussed the most pressing issues in cryptography and programming at the time during the meeting. Such gatherings became more frequent, heralding the start of a larger movement. To attract other people who share the founders’ group’s interests and basic values, an e-mail newsletter (mailing list) was created. The newsletter quickly grew to hundreds of subscribers, who tested cyphers, exchanged ideas, and discussed new developments.The correspondence was conducted using the most recent encryption methods available at the time, such as PGP. The group discussed politics, philosophy, computer science, cryptography, and mathematics.
In 1993, Eric Hughes published the Cypherpunk Manifesto, contained the key provisions of this movement:
«Privacy is necessary for an open society in the electronic age. […] Privacy in an open society also requires cryptography. […] 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. […] Cryptography will ineluctably spread over the whole globe, and with it the anonymous transactions systems that it makes possible».
The significance of confidentiality, anonymous transactions, and cryptographic protection were all later implemented in one form or another, and to some extent, in cryptocurrencies.
By 1997, the mailing list had about 2,000 subscribers and 30 messages daily. In 1995, WikiLeaks creator Julian Assange published his first post in Cypherpunk. In 2016, he published a book about the cypherpunk movement called “Cypherpunks: Freedom and the Future of the Internet”.
The term “cypherpunk” was first used by hacker and programmer Jude Milhon to address a group of crypto anarchists. Cypherpunk and crypto anarchism are not identical, but related currents that share virtually the same values. Crypto Anarchism (cryptoanarchy) is a kind of anarchism in which anonymization technologies, digital pseudonyms and digital money protected by cryptography are used to free themselves from state control — surveillance, censorship and taxation.
How did the movement of cypherpunks affect the emergence of cryptocurrencies?
DigiCash was founded in 1989 in Amsterdam by David Chaum. It specialized in digital money and payment systems, with the eCash digital money system and the CyberBucks monetary unit serving as its flagship product. eCash made use of Chaum’s blind digital signature technology. Despite the fact that the system was tested by some banks and that Microsoft allegedly negotiated the integration of eCash into Windows 95, the company failed commercially.
In 1997, British cryptographer Adam Beck developed Hashcash, an anti-spam mechanism based on the requirement that emails be sent with a certain amount of computing power. As a result, sending spam became economically unprofitable.
A year later, computer engineer Wei Dai published a proposal to create another digital payment system called b-money. The author of the system proposed two concepts. The first step was to develop a protocol in which each participant keeps a copy of the database with information about how much money the user has. The second concept was a variation on the previous one in which not every network participant had a copy of the registry. Instead, new concepts such as regular users and servers were introduced. At the same time, only network node servers kept copies of the registry. Simultaneously, the network participants’ honesty was ensured by deposits into a special account, which was used for rewards or fines in the event of evidence of unfair behavior.
This first concept was subsequently adopted by the creator of bitcoin Satoshi Nakamoto, while the second turned out to be the closest to what is known today as Proof-of-Stake.
In 2004, the cryptopunk Hal Finney based on Adam Beck’s Hashcash created the Reusable Proof of Work (RPoW) algorithm.
The idea was to create unique cryptographic tokens that, like unspent bitcoin outputs, could only be used once. The disadvantage of this mechanism was that validation and protection against double spending were still performed by the central server.
In 2005, cryptographer Nick Szabo, who pioneered the concept of smart contracts in the 1990s, announced the creation of Bit Gold, a digital collectible and capital investment. Bit Gold was based on Hill Finney’s RPAW proposal, but instead of a one-time use of coins, he assumed that they would have different values calculated based on the computing power used to create them.
In October 2008, Satoshi Nakamoto sent a white paper “Bitcoin: a Digital peer-to-peer cash System” to the mailing list. The content of Nakamoto’s work testifies to the influence of cypherpunks and crypto anarchists. The bitcoin white paper quotes Adam Black and Wei Dai. According to Nakamoto, bitcoin “represents the implementation of Wei Dai’s b-money offer and Nick Szabo’s Bit Gold offer.” In turn, Wei Dai’s manifesto, in which he puts forward the idea of b-money, begins with the words: “I admire Tim May’s crypto-anarchism.” After the publication of the article, Nakamoto continued his work and on January 3, 2009, he created the genesis block.
The appearance of bitcoin was the beginning of numerous technological improvements and innovations based on an already working system, which cypherpunks enthusiastically began to expand and modify.
How is the cypherpunk movement developing?
Modern cryptopanks include cryptographer and pioneer in the field of smart contracts Nick Szabo, BitTorrent developer Bram Cohen, Tor browser creator Jacob Appelbaum, WikiLeaks founder Julian Assange, who in 2016 published a book about the cypherpunk movement called “Cypherpunks: Freedom and the Future of the Internet”, as well as many other developers and hackers.
Many Internet processes are now influenced by cypherpunk activities. Torrents, VPNs, and electronic signatures were all created directly or indirectly by cypherpunk.
In 1993, in the Cypherpunk Manifesto, Eric Hughes noted:
«Cypherpanks write code. We know that someone must continue to write code in order to protect information, and since we see no other way to protect our data, we continue to do so […] Our code is available to anyone on earth. We don’t really care that some people don’t like what we do. We know that our programs cannot be destroyed, and the growing network cannot be stopped».
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