# Cypherpunk ## "The Quest for Digital Cash" by [[Alex Gladstein]] https://bitcoinmagazine.com/culture/bitcoin-adam-back-and-digital-cash - [ ] Read it if you want to learn more https://www.youtube.com/watch?v=D5AoGDxLGuU&t=2s ### Twitter thread summary https://twitter.com/gladstein/status/1448317332695093251?s=20 ### [[Cypherpunk]] ideas ![[Pasted image 20211201222128.png]] - Crypto anarchy requires **medium of exchange** (Bitcoin) and a way to enforce contracts (hmm...) ![[Pasted image 20211201222119.png]] - "There has never been a government that didn't sooner or later try to reduce the freedom of its subjects and gain more control over them, and there probably never will be one." - "Therefore, instead of trying to convince our current goernment not to try, we'll develop the technology that will make it impossible for the government to succeed." - Efforts to influence the government (e.g., hlobbying and propaganda) are important only in so far sa to delay its attempted crackdown long enough for the technology to mature and come into wide use. ![[Pasted image 20211201222614.png]] - "Unforgeable costliness" ### History of Innovations in the path towards [[Bitcoin]] - [[DigiCash]] by [[David Chaum]]: failed because it was centralized - [[Hashcash]] by [[Adam Back]]: Introduced partial-hash collision puzzles as an anti-spam tactic - Proof-of-Work - [[b-money]] by [[Wei Dai]]: First to integrate Hashcash into a digital currency - [[Bit gold]] by [[Nick Szabo]]: Linked the [[Cypherpunk]] movement to [[Hard Money]] - "Unforgeable costliness" - [[RPOW]] (Reusable Proof-of-work) by [[Hal Finney]]: Final innovation that led up to Bitcoin - [[Bitcoin]]: The [[b-money]] that integrated [[RPOW]] ### [[Cypherpunk]]s would not be focused on hard money were it not for [[Nick Szabo]] and [[Satoshi Nakamoto]] "The key was to combine the ability to make private transactions outside of the banking system *with* the ability to hold an asset that could not be debased." "This last feature was not top of mind for the cypherpunks before the late 1990s. Szabo had certainly aimed for it with bit gold, and others inspired by Austrian economists like Hayek and Rothbard had long discussed getting the creation of money out of government hands." "Still, generally, cypherpunks prioritized privacy over monetary policy in early visions of digital cash. The ambivalence towards monetary policy shown by privacy advocates is still evident today, with many civil liberties groups ignoring or being outright hostile to Bitcoin." "The 21M limit and “hard money” qualities proved foundational to achieving privacy through digital cash. Yet digital rights advocacy groups have largely not recognized the role that proof of work and an unchanging monetary policy can play in protecting human rights." "To underline the primary importance of scarcity and predictable monetary issuance in the making of digital cash, Nakamoto released Bitcoin not after a government surveillance scandal, but in the wake of the Global Financial Crisis and money printing experiments of 07/08." - That's a big idea - by referencing monetary expansion, Satoshi highlights how Bitcoin must be committed to a hard limit - It ensures that Bitcoin is always committed to this vision - that despite the privacy-oriented focus of the Cypherpunks and other civil liberties groups, that hard money would always be important to Bitcoin "Nakamoto did not think highly of the model of bureaucrats increasing debt to save ever-more financialized economies, accusing them of breaching the public's trust:" ![[Pasted image 20211201224626.png]] Back was struck by Bitcoin's algorithmic issuance, Nakamoto's disappearance, and the currency's predictable monetary policy -- all factors which in retrospect may be sine qua non for decentralized digital cash: ### Last innovations - Integration of [[RPOW]] - Anonymous founder - Algorithmic issuance - Predictable monetary policy - Algorithmic difficulty adjustment "Back was struck by Bitcoin's algorithmic issuance, Nakamoto's disappearance, and the currency's predictable monetary policy -- all factors which in retrospect may be sine qua non for decentralized digital cash" "Back also thought Nakamoto's so-called “difficulty algorithm” was a significant scientific breakthrough. This trick addressed a concern Back had originally had for Hashcash, where users with faster computers could eventually overwhelm the system." ![[Pasted image 20211201224911.png]] "In Bitcoin, Nakamoto prevented this from happening by programming the network to reset the difficulty required to successfully mine a block every two weeks. If the market crashed, or some catastrophic event happened..." "..for example, when the Chinese Communist Party kicked half the world’s Bitcoin miners offline in May 2021 -- then the total global amount of energy spent mining Bitcoin would go down, and it would take longer than normal to mine blocks." ### Remaining problem: [[Bitcoin Privacy]] - but auditable ledger was the right design decision These innovations combined made Back think that Bitcoin could potentially succeed where other digital currency attempts had failed. However, one glaring problem remained: Bitcoin was not very private. To make a decentralized mint, Nakamoto was forced to rely on an open ledger system, where anyone could publicly view all transactions. It was the only way to ensure auditability, but it sacrificed privacy. Back says he still thinks this was the right engineering decision. There had been more work done in the area of private digital currencies since DigiCash. In 1999, security researchers published a paper called “Auditable Anonymous Electronic Cash,” around the idea of using zero-knowledge proofs: [https://cs.tau.ac.il/~amnon/Papers/ST.crypto99.pdf](https://t.co/itSaonXMJY) More than a decade later, the “Zerocoin” paper was published as an optimization of this concept. But the math required for these anonymous transactions was so complicated that it made each transaction very large and each spend time-consuming: [https://ieeexplore.ieee.org/document/6547123](https://t.co/XuXOquzLO3) - Which led to Zerocash (Chiesa) and finally [[Zcash]] "If Nakamato had used a Zerocoin-type model, each transaction would have been > 100kb, the ledger would have grown huge, and only a handful of people with specialized datacenter equipment could have run a full node, introducing collusion, censorship, or even a betrayal of 21M." "Back said that he is, in retrospect, glad that he did not mention the 1999 paper to Nakamoto in his emails. Creating decentralized digital cash was the most crucial part: privacy, he thought, could be programmed in later." - Idea: Could I continue my work on [[Dmix]] and ### [[Adam Back]]'s vision for [[Bitcoin Privacy]]: [[Confidential Transactions]] "By 2013, Back decided Bitcoin had demonstrated enough stability to be the foundation for decentralized digital cash. He realized he could take some of his applied cryptography experience and help make the system more private." "Back’s biggest vision for Bitcoin was something called Confidential Transactions. Currently, a user exposes the amount of bitcoin they send with each transaction." "This enables auditability of the system — everyone at home running the Bitcoin software can ensure that there are only a certain number of coins — but it also enables surveillance to happen on the blockchain." "If a govt can pair a Bitcoin address with a real-world identity, they can follow the funds. Confidential Transactions (CT) would hide the transaction amount, making surveillance much more difficult or perhaps even impossible when used in conjunction with CoinJoin techniques." "Back realized it would be extremely difficult to implement CT as the community prioritized security and audibility over privacy. So he helped create an experimental testbed for Bitcoin technology, so that he could test out ideas like CT without harming the network." "Back raised money and teamed up with noted Bitcoin Core developer [[Greg Maxwell]] and investor Austin Hill and launched [[Blockstream]], which is today one of the world’s biggest Bitcoin companies:" Back still thinks it's possible to get CT transactions small enough to implement in Bitcoin. It's still several years away, at best, from being added, but he continues on his quest. For now, users can improve privacy through CoinJoin, CoinSwap, Lightning, Mercury, or Liquid. "In particular, the Lightning Network — another area where Back’s team at Blockstream invests heavily through work on c-lightning — helps users spend bitcoin more cheaply, quickly, and privately." - What if I build a mixing solution based on [[Lightning]] - Some combination of splice in / out ### [[CBDC]]s CBDCs aim to replace paper money with electronic credits that can be easily surveilled, confiscated, auto-taxed, and debased via negative interest rates. They pave the way for social engineering, pinpoint censorship and deplatforming, and expiration dates on money. ### Documentary https://twitter.com/jimepstein/status/1313840749386125313?s=19 Inspired in part by @gladstein's terrific piece in @BitcoinMagazine, I've posted to YT my complete 4-pt documentary, "Cypherpunks Write Code," about the 1990s roots of bitcoin as one video. Watch it here: https://twitter.com/jimepstein/status/1455243582189752326 https://youtu.be/9vM0oIEhMag