Author: Wang Chao, founding member of Metropolis DAO Source: X, @cwweb3
In the late autumn of 2024, in Washington, D.C. The golden maple leaves are slowly falling from the sycamore trees of the White House, and President Biden stands at the window of the Oval Office, looking at the city he is about to leave.
Thirty-three years ago, on Capitol Hill not far away, as a senator, he proposed the famous S.266 bill. At that time, he would never have imagined that this seemingly ordinary bill would become the fuse of a "crypto war" that would last for more than thirty years. Even less would he have imagined that this war would eventually end in the victory of the cypherpunks in the final moments of his presidency.
This is a story of failure and victory, suppression and resistance, centralization and freedom, an epic that spans an entire generation. In this war that lasted for more than thirty years, a group of geeks with mathematical ideals ultimately changed the course of human civilization.
Part 1: The Eve of War
The Embers of the Cold War
This story begins even earlier.
In 1975, at the IBM research lab. A group of scientists were developing a revolutionary encryption algorithm, which later became the famous DES (Data Encryption Standard). At this time, the computer industry was at a critical juncture: personal computers were about to enter every household, and encryption technology would determine the direction of this revolution.
But just as this work was about to be completed, the National Security Agency (NSA) suddenly intervened. They demanded that the key length be reduced from 128 bits to 56 bits, citing national security reasons. This seemingly technical change actually reduced the security of the algorithm by tens of trillions of times.
In the shadow of the Cold War, no one dared to question this decision. Encryption technology was seen as military equipment and had to be strictly controlled. But as the personal computer revolution progressed, this Cold War mindset began to clash with the needs of the new era.
The War Begins
In the spring of 1991, an internal NSA report stated: "As personal computers become widespread and the Internet develops, the proliferation of encryption technology will pose a major threat to national security. We must take action before this problem gets out of control."
This report eventually landed on the desk of Senator Joe Biden. As an important member of the Judiciary Committee, he decided to take action. He introduced the S.266 bill, the "Comprehensive Crime Control Act of 1991". Section 1126 of the bill required "electronic communication service providers and equipment manufacturers to ensure that the government can obtain the plaintext content of encrypted communications."
On the surface, this was a bill aimed at crime. But in reality, it was the government's first attempt to control the keys to the entire digital world through legislation.
Chapter 2: Code is Weapon
Resistance in the Garage
While the politicians in Washington were discussing this bill, in a garage in Colorado, programmer Phil Zimmermann was quietly carrying out a revolution. His PGP (Pretty Good Privacy) software allowed ordinary people to use military-grade encryption technology.
When Zimmermann heard about the S.266 bill, he realized he had to complete PGP before the bill was passed. This became a race against time.
But completing the development was only the first step. The U.S. government listed encryption software as a munition and banned its export. Faced with this obstacle, Zimmermann came up with a brilliant idea: to publish the PGP source code as a printed book.
This was the famous "Zimmermann publishing house" incident. Because according to the First Amendment of the U.S. Constitution, publications are protected by freedom of speech. The government can regulate software, but cannot ban the export of a mathematics book.
Soon, this seemingly abstruse technical book was circulating around the world. Programmers around the world bought the book and re-entered the printed code into their computers. PGP flowed like an unstoppable undercurrent to every corner of the globe.
Voices from the Academia
The academic community also voiced opposition. In early 1992, when Congress held a series of hearings on encryption technology control, many experts from the academic community stood up to explicitly oppose the establishment of backdoor mechanisms. Their core argument was simple: encryption systems are either secure or insecure, there is no middle ground.
Under the strong opposition from the technology and academic communities, the S.266 bill ultimately failed to pass. This was the first victory for encryption freedom, but the government was obviously not going to give up easily.
Chapter 3: The Rise of Cypherpunks
The Birth of a New Force
In 1992, in Berkeley, California.
At the home of John Gilmore, the fifth employee of Sun, a group of people concerned about privacy and encryption technology began to gather regularly. These gatherings attracted two to three dozen technical experts from the Bay Area, including Intel scientist Timothy May and cryptographer Eric Hughes. Every month, this group would discuss cryptography, privacy rights, and civil liberties in the digital age in Gilmore's conference room.
These gatherings quickly became the birthplace of the cypherpunk movement. The participants realized that the emergence of the S.266 bill heralded a lasting battle over civil liberties in the digital age. After a few meetings, they decided not to let physical constraints become an obstacle, and created the cypherpunk mailing list. The name comes from the combination of "cipher" (Cypher) and "punk" (Punk). Soon, this mailing list attracted hundreds of members, including computer scientists, cryptographers, and libertarians.
The Declaration of Independence of the Digital Age
In March 1993, Eric Hughes published the "Cypherpunk Manifesto". This document, later seen as the Declaration of Independence of the digital age, began with the words:
"Privacy is necessary for an open society in the digital age. Privacy is not secrecy. A private matter is something one doesn't want the whole world to know, but a secret matter is something one doesn't want any person to know. Privacy is the power to selectively reveal oneself to the world."
This passage quickly spread on the early Internet. It accurately expressed the core idea of an emerging group: in the digital age, privacy is not a privilege, but a fundamental human right. And the tool to protect this right is encryption technology.
The Government's Counterattack
The rise of the cypherpunks made the Clinton administration uneasy. In April 1993, the White House launched a new plan: the Clipper Chip.
This was a carefully designed trap. The government claimed that this encryption chip would meet both privacy protection and law enforcement needs. They even convinced AT&T to commit to purchasing 1 million chips.
But this plan soon encountered a fatal blow. In June 1994, AT&T researcher Matt Blaze published a paper proving that the security of the Clipper Chip was illusory. This discovery embarrassed the government, and AT&T immediately abandoned the procurement plan.
More importantly, this incident made the public clearly aware for the first time: government-controlled encryption systems are not trustworthy.
Beneath these public battles, there were deeper undercurrents stirring. In 1994, in Amsterdam. A group of cypherpunks held a secret meeting. They discussed an even more subversive idea: digital currency.
"The real reason the government wants to control encryption is to control money," said one participant, "if we can create a currency that is not under their control, that will be the real revolution."
Chapter 4: The Evolution of the System
Netscape's Dilemma
In 1995, in Silicon Valley.
A company called Netscape was rewriting history. This company, co-founded by the 24-year-old Marc Andreessen and the experienced Jim Clark, was bringing the Internet into the lives of ordinary people. On August 9, Netscape went public. The opening price was $28, and the closing price reached $58.25, with the company's market value surpassing $2.9 billion overnight. This was the beginning of the Internet era.
During this critical period, the Netscape team developed the SSL encryption protocol. But due to U.S. government export controls, they had to release two versions:
U.S. version: using 128-bit strong encryption
International version: only 40-bit encryption
This dual standard soon proved to be disastrous. A French student cracked the 40-bit SSL in just 8 days. This news shocked the business world. "This is the result of government regulation," the Netscape engineers angrily said, "they are not protecting security, but creating vulnerabilities."
In 2009, Marc Andreessen, the co-founder of Netscape, and Ben Horowitz co-founded the a16z venture capital firm, which quickly became one of the most active investment institutions in the crypto field. As a businessman, Marc Andreessen had to succumb to the government's demands. But as an investor, Marc Andreessen continued to support the crypto war.
The Rise of the Open Source Movement
In the crypto war, there was an unexpected ally: the open source movement.
In 1991, a Finnish student named Linus Torvalds released the first version of Linux. To avoid US export controls, he deliberately placed the encryption modules outside the core. This seemingly compromising decision actually allowed Linux to spread freely around the world.
The open source movement has changed the landscape of the entire tech world. The ideas of the crypto-anarchists, once seen as idealistic, began to bear fruit in reality:
Code should be free
Knowledge should be shared
Decentralization is the future
Microsoft's Bill Gates called open source a "computer virus", but he was wrong - open source has become the future.
The crypto war also greatly supported the open source movement itself. In 1996, in the case of Daniel Bernstein v. the US government over the export control of encryption software, the court ruled for the first time that computer code is a form of speech protected by the First Amendment. This landmark decision cleared the legal obstacles for the open source movement. Today, open source software has become the foundation of the internet.
The First Stage of the War Ends
By 1999, the situation had become irreversible. The Clinton administration finally relaxed the decades-long export controls on encryption technology. At the time, The Economist magazine commented: "This is not just a war about technology, but a war about freedom."
The fruits of the war are changing the world:
PGP has become the standard for email encryption
SSL/TLS protects all online transactions
Linux and open source software have transformed the entire tech industry
Encryption technology has become the infrastructure of the digital age
But this is just the beginning. The crypto-anarchists' sights are set on an even more ambitious target: the monetary system itself.
Chapter Five: The Currency War
Pioneers of Digital Currency
In 1990, the cryptographer David Chaum founded DigiCash, pioneering the combination of cryptography and electronic payments. DigiCash created a system that could protect privacy and prevent double spending using "blind signatures". Although the company declared bankruptcy in 1998, its impact was far-reaching.
Over the next decade, a series of groundbreaking ideas emerged:
In 1997, Adam Back invented Hashcash. This system, initially used to combat spam, was the first to practically implement the concept of "proof-of-work".
In 1998, Wei Dai published the B-money proposal. This was the first complete description of a distributed digital currency system, where participants create money by solving computational puzzles, known as PoW. Wei Dai's contribution was so important that years later, Ethereum founder Vitalik Buterin named the smallest unit of Ether as "Wei" to honor this pioneer.
Between 1998 and 2005, Nick Szabo proposed the BitGold concept. He not only cleverly combined proof-of-work with value storage, but also introduced the revolutionary idea of "smart contracts".
The Birth of Bitcoin
The work of these pioneers seemed to have touched the edge of the dream, but they always lacked the final piece of the puzzle. How to achieve consensus among all participants without a centralized institution? This question had plagued cryptographers for 20 years.
On October 31, 2008, a mysterious figure using the pseudonym Satoshi Nakamoto published the Bitcoin whitepaper on a cryptography mailing list. This proposal cleverly integrated multiple existing technologies:
Adopting a proof-of-work system similar to Hashcash
Borrowing the decentralized design concept from B-money
Using Merkle trees for transaction verification
Innovatively proposing the blockchain to solve the double spend problem
This new system solved the problems that all previous digital currency proposals had failed to solve: how to reach consensus in a completely decentralized manner.
More importantly, the timing of this proposal was very delicate. Just a month earlier, the collapse of Lehman Brothers had triggered a global financial crisis. People began to question the stability of the traditional financial system.
On January 3, 2009, the Genesis Block of Bitcoin was born. Satoshi Nakamoto wrote a sentence in the block: "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks"
This headline from The Times not only recorded the time of the block's creation, but also silently protested the traditional financial system.
The recipient of the first Bitcoin transaction was Hal Finney, who had previously interned at DigiCash. When he received 10 Bitcoins from Satoshi Nakamoto in 2009, he simply tweeted: "Running Bitcoin."
This ordinary tweet became one of the most famous records in the history of digital currency. From the DigiCash lab, to the crypto-anarchist mailing list, and then to the birth of Bitcoin, a revolution that had been brewing for nearly 20 years finally found its new form.
The First Conflict
In 2011, Bitcoin caught the attention of Washington for the first time.
After being blocked by credit card companies and banks, WikiLeaks began accepting Bitcoin donations. This allowed the world to see the true power of Bitcoin: it is uncensorable and unblockable.
Senator Charles Schumer immediately held a press conference to warn that Bitcoin is a "digital form of money laundering". This was the first time the US government publicly took a stance against Bitcoin.
The Storm Arrives
In 2013, an unexpected crisis gave Bitcoin new recognition.
The Cyprus banking crisis erupted, with the government directly confiscating deposits from customer accounts. This allowed the whole world to see the fragility of the traditional financial system: your deposits do not truly belong to you.
The price of Bitcoin surged past $1,000 for the first time. But this was followed by the government's harsher crackdown. That same year, the FBI seized 144,000 Bitcoins by shutting down the Dark Web marketplace "Silk Road". The government seemed to be proving that Bitcoin is a tool for criminals.
The Counterattack of the Institutions
In 2014, cryptocurrencies encountered their first major crisis. The world's largest Bitcoin exchange, Mt. Gox, suddenly closed down, with 850,000 Bitcoins vanishing into thin air, equivalent to 7% of the total Bitcoin network at the time.
Governments around the world, citing the need to protect investors, began to tighten regulations. In 2015, New York State introduced the strict BitLicense regime, a regulatory framework dubbed the "mirror of digital currency operators", forcing many cryptocurrency companies to leave New York.
But each crisis has made the industry stronger, and more importantly, these crises have proven a key point: even if centralized exchanges may fail, the Bitcoin network itself remains as solid as a rock. This is the value of decentralized design.
Institutional Breakthroughs
2017 marked an important turning point for cryptocurrencies. That year, Bitcoin skyrocketed from $1,000 to $20,000. But more importantly, there were institutional breakthroughs: the Chicago Mercantile Exchange (CME) and the Chicago Board Options Exchange (CBOE) launched Bitcoin futures contracts.
This signaled that Wall Street had officially embraced what was once an underground asset. The attitude of regulators also began to subtly change, from outright rejection to attempts to understand and regulate.
But the real turning point came in 2020. The COVID-19 pandemic triggered unprecedented monetary expansion by governments around the world. In this context, institutional investors began to re-evaluate the value of Bitcoin.
In August, MicroStrategy CEO Michael Saylor announced that the company would convert its reserve funds into Bitcoin. This decision triggered a chain reaction in the corporate world. By February 2021, Tesla announced a $15 billion investment in Bitcoin, shocking the entire financial industry.
Chapter Six: The Final Battle
In 2021, the Biden administration launched a comprehensive crackdown on the cryptocurrency industry. This time, the government's attack was more organized and comprehensive than ever before. Thirty-three years ago, after the failure of the S.266 bill, the government could no longer stop the development of encryption technology. Now, they are trying to control cryptocurrencies through regulation.
But the situation is different now. Beneath the surface of the regulatory storm, cryptocurrencies have become deeply embedded in every corner of modern society: over 50 million Americans hold cryptocurrencies, mainstream payment companies are integrating cryptocurrency payments, Wall Street has established a complete cryptocurrency business line, and traditional financial institutions are starting to provide cryptocurrency services for their clients.
More importantly, a new generation has fully embraced the ideas of the cypherpunks. For them, decentralization and digital sovereignty are not revolutionary concepts, but natural occurrences. This shift in mindset is more profound than any technological innovation.
In 2022, the cryptocurrency market experienced a severe crisis. The collapse of FTX plunged the entire industry into a deep freeze. In 2023, the cryptocurrency industry began to recover. Each crisis has made the industry more mature and more regulated. The attitude of regulatory authorities has also begun to change subtly, from simple suppression to seeking a reasonable regulatory framework.
A Historical Turning Point
In 2024, an ironic twist occurred. Trump made support for cryptocurrency innovation an important campaign policy, promising to create a more friendly regulatory environment for the cryptocurrency industry. His running mate, Ohio Senator J.D. Vance, is a Bitcoin holder and has been at the forefront of cryptocurrency innovation for years. They won the presidential election in a landslide.
Thirty-three years ago, when Biden proposed the S.266 bill, he believed he was defending order. But history is always full of irony: it was this very bill that became the fuse for a revolution that would change human civilization. Now, he is about to hand over the presidency to a successor who supports cryptocurrencies. This twist came so naturally: when a revolution ultimately triumphs, even its former opponents must acknowledge its value.
But for the cypherpunks, gaining government recognition has never been the ultimate goal. As Satoshi Nakamoto said years ago, Bitcoin is a tool that can give everyone financial sovereignty. The government's attitude is just a milestone on the road, witnessing how cryptocurrency technology has evolved from an underground movement to mainstream adoption, from a technical experiment to a force that changes the world.
From the initial resistance of cryptographers and programmers, to today's billions of people using cryptocurrencies; from the garage experiments of geeks, to the power to shake the global financial system; from being seen as a utopian ideal, to becoming the foundation of a new world. In this war that has lasted a generation, the cypherpunks have been underestimated time and time again. They have been called idealists, extremists, and even criminals. But they have stubbornly believed that the truth of mathematics will ultimately defeat the power of politics, and that the freedom of decentralization will ultimately defeat the control of centralization.
Now, their dream is becoming a reality. Cryptocurrency technology is no longer a weapon hidden in the dark, but a torch illuminating a new civilization. It is reshaping every aspect of human society: when wallets become cryptographic, when contracts are executed by code, when organizations are managed by code, and when trust is built on mathematics, the world stands at the doorstep of a new civilization.
In the history books of the future, 2024 may be recorded as the year of the victory of the cryptocurrency revolution. But the real victory is not in the recognition of any government, but in the awakening of countless ordinary people.
This is the gift of the cypherpunks, a new world built with code and protected by mathematics. In this world, freedom, privacy, and trust are no longer slogans, but embedded in every line of code, every block, and every peer-to-peer connection.
