Together, let's create cutting-edge solutions that empower individuals and promote digital freedom while maintaining the highest standards of cryptographic protection. Happy coding! 😄 🍿

tcmay@netcom.com

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!

Bitcoin & bitcoin network

1. Bitcoin’s Purpose: A Peer-to-Peer Electronic Cash System • Electronic Cash: Satoshi Nakamoto designed Bitcoin as a peer-to-peer electronic cash system, as clearly stated in the title of the white paper. The goal was to create a decentralized currency that allows direct transfers of value between individuals without the need for intermediaries like banks. • Global Payments: Bitcoin was intended to be a global payment system, accessible to anyone with an internet connection. The idea was that billions of people could use it for everyday transactions, thereby democratizing money.
2. Designing for Scalability: Block Size and Network Growth • Block Size Considerations: Satoshi implemented a 1 MB block size limit to protect the nascent network from spam and potential attacks. However, he did not suggest this limit should be permanent. In fact, Satoshi hinted that the block size could be increased as needed, as the network and technology matured. • Network Growth: Satoshi expected the network to grow over time, with more users and more nodes contributing to its security and decentralization. As the network grows, the infrastructure (hardware, internet bandwidth, etc.) would also improve, potentially allowing for larger blocks without compromising decentralization.
3. Security and Decentralization: Removing Opcodes • Security First: Satoshi removed certain opcodes from Bitcoin’s scripting language to avoid vulnerabilities and ensure the system was secure, especially in its early stages. His priority was to create a robust foundation that could resist attacks and function reliably. • Potential for Reintroduction: While Satoshi removed these opcodes, he did not preclude their future reintroduction. As the network becomes more secure and mature, there could be opportunities to safely expand Bitcoin's scripting capabilities, unlocking more complex features while maintaining security.
4. Satoshi's Vision of Full Nodes and SPV • Running a Full Node: Satoshi envisioned a network where some users would run full nodes, verifying all transactions and blocks, while others could use Simplified Payment Verification (SPV) wallets. SPV allows users to verify transactions without downloading the entire blockchain, making it possible for millions to use Bitcoin without each having to run a full node. • Decentralization: By encouraging the use of SPV for most users while still maintaining a healthy network of full nodes, Satoshi aimed to strike a balance between accessibility and decentralization.
5. Privacy on Layer 1 • Financial Privacy: Satoshi valued privacy, as evident in the design of Bitcoin addresses and the pseudonymous nature of transactions. While not completely private, Bitcoin was designed to provide a degree of privacy in transactions. • Potential for Privacy Enhancements: Satoshi’s original design did not fully address advanced privacy concerns (e.g., transaction tracing). However, within the scripting language and the structure of Bitcoin transactions, there was potential to develop more privacy-focused features on Layer 1. Enhancements like transaction mixing, stealth addresses, or other techniques could have been areas Satoshi might have explored further, considering his focus on creating a truly peer-to-peer and private electronic cash system.
6. Satoshi's Adaptive Approach • Incremental Changes: Satoshi believed in an adaptive approach, where changes to the network could be made gradually, based on the needs of the community and the growth of the network. This is reflected in his discussions about potentially increasing the block size and the flexibility of the Bitcoin protocol. • Community Consensus: Satoshi valued the input of the community and understood that as Bitcoin grew, decisions about its future would increasingly be made by the broader community of developers, miners, and users.
7. Future Proofing Bitcoin • Long-Term Vision: Satoshi’s design choices were made with the long-term success of Bitcoin in mind. He focused on building a system that was secure, decentralized, and capable of evolving over time. • Remaining True to the Vision: To stay true to Satoshi's vision, it would be essential to maintain the core principles of decentralization, security, and the capability of the network to grow and scale as needed. Increasing the block size as the network and technology permit, exploring safe reintroduction of opcodes, and enhancing privacy could all align with what Satoshi originally envisioned.

Conclusion Satoshi Nakamoto’s vision for Bitcoin was to create a secure, decentralized, and global peer-to-peer electronic cash system. His decisions, such as capping the block size at 1 MB and removing certain opcodes, were made with the early network's security and stability in mind. However, Satoshi left the door open for Bitcoin to evolve. His writings suggest that as the network grew and technology improved, Bitcoin could scale by increasing block size and potentially reintroducing or creating new opcodes to enhance functionality and privacy. Staying true to Satoshi’s vision means focusing on these core principles, ensuring that Bitcoin remains decentralized, secure, and capable of serving as a global payment system for billions of people.

                    by Eric Hughes

Privacy is necessary for an open society in the electronic 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 anybody to know. Privacy is the power to selectively reveal oneself to the world.

If two parties have some sort of dealings, then each has a memory of their interaction. Each party can speak about their own memory of this; how could anyone prevent it? One could pass laws against it, but the freedom of speech, even more than privacy, is fundamental to an open society; we seek not to restrict any speech at all. If many parties speak together in the same forum, each can speak to all the others and aggregate together knowledge about individuals and other parties. The power of electronic communications has enabled such group speech, and it will not go away merely because we might want it to.

Since we desire privacy, we must ensure that each party to a transaction have knowledge only of that which is directly necessary for that transaction. Since any information can be spoken of, we must ensure that we reveal as little as possible. In most cases personal identity is not salient. When I purchase a magazine at a store and hand cash to the clerk, there is no need to know who I am. When I ask my electronic mail provider to send and receive messages, my provider need not know to whom I am speaking or what I am saying or what others are saying to me; my provider only need know how to get the message there and how much I owe them in fees. When my identity is revealed by the underlying mechanism of the transaction, I have no privacy. I cannot here selectively reveal myself; I must always reveal myself.

Therefore, privacy in an open society requires anonymous transaction systems. Until now, cash has been the primary such system. An anonymous transaction system is not a secret transaction system. An anonymous system empowers individuals to reveal their identity when desired and only when desired; this is the essence of privacy.

Privacy in an open society also requires cryptography. If I say something, I want it heard only by those for whom I intend it. If the content of my speech is available to the world, I have no privacy. To encrypt is to indicate the desire for privacy, and to encrypt with weak cryptography is to indicate not too much desire for privacy. Furthermore, to reveal one's identity with assurance when the default is anonymity requires the cryptographic signature.

We cannot expect governments, corporations, or other large, faceless organizations to grant us privacy out of their beneficence. It is to their advantage to speak of us, and we should expect that they will speak. To try to prevent their speech is to fight against the realities of information. Information does not just want to be free, it longs to be free. Information expands to fill the available storage space. Information is Rumor's younger, stronger cousin; Information is fleeter of foot, has more eyes, knows more, and understands less than Rumor.

We must defend our own privacy if we expect to have any. We must come together and create systems which allow anonymous transactions to take place. People have been defending their own privacy for centuries with whispers, darkness, envelopes, closed doors, secret handshakes, and couriers. The technologies of the past did not allow for strong privacy, but electronic technologies do.

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.

Cypherpunks write code. We know that someone has to write software to defend privacy, and since we can't get privacy unless we all do, we're going to write it. We publish our code so that our fellow Cypherpunks may practice and play with it. Our code is free for all to use, worldwide. We don't much care if you don't approve of the software we write. We know that software can't be destroyed and that a widely dispersed system can't be shut down.

Cypherpunks deplore regulations on cryptography, for encryption is fundamentally a private act. The act of encryption, in fact, removes information from the public realm. Even laws against cryptography reach only so far as a nation's border and the arm of its violence. Cryptography will ineluctably spread over the whole globe, and with it the anonymous transactions systems that it makes possible.

For privacy to be widespread it must be part of a social contract. People must come and together deploy these systems for the common good. Privacy only extends so far as the cooperation of one's fellows in society. We the Cypherpunks seek your questions and your concerns and hope we may engage you so that we do not deceive ourselves. We will not, however, be moved out of our course because some may disagree with our goals.

The Cypherpunks are actively engaged in making the networks safer for privacy. Let us proceed together apace.

Onward.

Eric Hughes hughes@soda.berkeley.edu

9 March 1993