33 years of encryption war: started with Biden, ended with Biden

Original author: Chao (X: @cw web3)

In the late autumn of 2024, Washington, D.C. The golden maple leaves are slowly falling from the tulip trees of the White House. President Biden stands at the window of the Oval Office, looking at the city that he is about to bid farewell to.

Thirty-three years ago, not far away on Capitol Hill, 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 catalyst for a “encryption war” that lasted for more than 30 years. He would never have imagined that this war would ultimately end in the final moments of his presidency with the victory of the cypherpunks.

This is a story about 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 One: The Eve of War

The Embers of the Cold War

This story starts from an earlier time.

In 1975, at the IBM Research Laboratory, a group of scientists were developing a revolutionary Encryption Algorithm, which later became the famous DES (Data Encryption Standard). At that time, the computer industry was at a critical moment: personal computers were about to enter thousands of households, 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 cited national security reasons and requested the Secret Key length to be reduced from 128 bits to 56 bits. This seemingly technical change actually caused a drop in Algorithm security by tens of trillions of times.

In the shadow of the Cold War, no one dares to question this decision. Encryption technology is regarded as a military weapon and must be strictly controlled. But with the advancement of personal computer revolution, this Cold War mentality begins to clash sharply with the demands of the new era.

War Begins

In the spring of 1991, an internal NSA report stated: “With the popularity of personal computers and the development of the Internet, the proliferation of encryption technology will become a major threat to national security. We must take action on this issue before it gets out of control.”

The report ended up on Senator Joe Biden’s desk. 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 states: “Electronic communication service providers and device manufacturers have an obligation to ensure that the government can obtain the plaintext content of encrypted communications.”

On the surface, this is a bill targeting crime. But in reality, it is the government’s first attempt to control the key to the entire digital world through legislation.

Chapter 2: Code Is the Weapon

Resistance in the Garage

While politicians in Washington were discussing this bill, in a garage in Colorado, programmer Phil Zimmermann was silently leading a revolution. The PGP (Pretty Good Privacy) software he developed allows ordinary people to use military-grade encryption technology.

When Zimmermann heard about the S.266 bill, he realized that PGP had to be completed before the bill was passed. This turned into a race against time.

But completing the development is just the first step. The U.S. government classifies encryption software as munitions and prohibits exports. Faced with this obstacle, Zimmermann came up with a brilliant idea: publishing the source code of PGP in book form.

This is the famous “Zimmerman Publishing House” incident. Because according to the First Amendment to the United States Constitution, publications are protected by freedom of speech. The government can regulate software, but cannot prohibit the export of a mathematics book.

Soon, this seemingly obscure technical book spread worldwide. Programmers around the world bought the book and re-entered the printed code into computers. PGP is like an unstoppable undercurrent, quietly flowing into every corner of the world.

Academic Voices

The academic community has also raised objections. In early 1992, when Congress held a series of hearings on the control of encryption technology, many experts in the academic community came out in clear opposition to the establishment of backdoor mechanisms. Their core argument is very simple: encryption systems are either secure or insecure, there is no middle ground.

Amidst strong opposition from the technology and academic communities, the S.266 bill ultimately failed to pass. This is the first victory for encryption freedom, but the government clearly won’t give up easily.

Chapter 3: The Rise of Cypherpunks

The Birth of Emerging Power

1992, 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 meet regularly. These gatherings attracted two or three dozen technical experts from the Bay Area, including Intel scientist Timothy May and cryptographer Eric Hughes. Every month, this group would gather in the meeting room at Gilmore’s home to discuss cryptography, privacy, and digital-era civil liberties.

These gatherings quickly developed into the birthplace of the Cypherpunk movement. Participants realized that the emergence of the S.266 bill heralded a protracted struggle for digital age civil liberties. After several meetings, they decided not to let physical barriers stand in the way, so they created the Cypherpunk mailing list. The name is a combination of “cypher” and “punk”. Soon, the mailing list attracted hundreds of members, including computer scientists, cryptographers, and libertarians.

Declaration of Independence in the Digital Age

In March 1993, Eric Hughes published the “Cypherpunk Manifesto”. The opening of this document, later regarded as a declaration of independence for the digital age, reads:

“Privacy is necessary to maintain openness in an open society. Privacy is not secrecy. A private matter is something you don’t want the whole world to know, but not something you don’t want anyone to know. Privacy is selectively displaying one’s abilities to the world.”

This passage quickly spread on the early Internet. It accurately expressed the core idea of a new emerging group: in the digital age, privacy is not a privilege, but a basic human right. And the tool to protect this right is encryption technology.

Government’s Counterattack

The rise of Cypherpunk has made the Clinton administration uneasy. In April 1993, the White House launched a new plan: Clipper Chip.

This is a carefully designed trap. The government claims that this encryption chip will simultaneously meet privacy protection and law enforcement needs. They even persuaded AT&T to commit to purchasing 1 million chips.

But the plan was soon dealt a fatal blow. In June 1994, AT&T researcher Matt Blaze published a paper proving that the security of the Clipper Chip was a sham. This discovery embarrassed the government, and AT&T immediately abandoned its procurement plans.

What’s more important is that this incident has made the public clearly realize for the first time that government-controlled encryption systems are not trustworthy.

Beneath these public battles, there are deeper undercurrents at play. 1994, Amsterdam. A secret meeting of Cypherpunks. They were discussing a more disruptive idea: Digital Money.

“The real reason for government control of encryption is to control money,” one participant said, “If we can create an uncontrolled currency, that would be a real revolution.”

Chapter 4: Evolution of the System

The dilemma of Netscape

1995, Silicon Valley.

A company called Netscape is rewriting history. Founded by 24-year-old Marc Andreessen and experienced Jim Clark, the company brought the Internet into the lives of ordinary people. On August 9th, Netscape went public. Opening Price $28, closing at $58.25, the company’s market capitalization surpassed $2.9 billion overnight. This is the beginning of the Internet era.

During this critical period, the Netscape team developed the SSL encryption protocol. However, due to export controls imposed by the US government, they had to release two versions:

• US version: using 128-bit strong encryption
• International version: can only use 40 bits encryption

This double standard was quickly proven to be disastrous. A French student cracked 40 SSL in just 8 days. The news shocked the business community. ‘This is the result of government regulation,’ angry engineers at Netscape said, ‘they are not protecting security, but creating vulnerabilities.’

In 2009, Marc Andreessen, co-founder of Netscape, and Ben Horowitz co-founded the a16z venture capital company, which quickly became one of the most active investment institutions in the encryption field. As a company, Marc Andreessen had to yield to government demands. But as an investor, Marc Andreessen continued to support this encryption war.

The Rise of the Open Source Movement

In the encryption war, there is an unexpected ally: the Open Source movement.

In 1991, a Finnish student named Linus Torvalds released the first version of Linux. In order to avoid US export controls, he deliberately placed the encryption module outside the kernel. This seemingly compromised decision instead allowed Linux to spread freely around the world.

The Open Source movement has changed the entire landscape of the tech world. The once-idealistic Cypherpunk ideas are now bearing 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 password war also greatly supported the Open Source movement itself. In 1996, in the case of Daniel Bernstein v. US government’s 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 of the Constitution. This landmark ruling 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 is over

By 1999, the situation was irreversible. The Clinton administration finally relaxed decades-long encryption technology export controls. The Economist at the time commented, “This is not just a war about technology, but also a war about freedom.”

The fruits of 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 technology industry
• The encryption technology has become the infrastructure of the digital age

But this is just the beginning. The gaze of the crypto punks has already turned to a more ambitious target: the monetary system itself.

Chapter 5: Currency Wars

The Pioneer of Digital Money

In 1990, cryptographer David Chaum founded DigiCash, which pioneered the combination of cryptography and electronic payments. DigiCash created a system that could protect privacy and prevent Double Spending through the use of “blind signatures”. Although the company eventually went bankrupt in 1998, its impact was profound.

In the next decade, a series of groundbreaking ideas emerged successively:

In 1997, Adam Back invented Hashcash. This system, initially used to combat spam, first operationalized 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 Money system, in which participants create money by solving computational puzzles, which is what we know as PoW. Wei Dai’s contribution was so important that years later, Ethereum’s founder Vitalik Buterin named the smallest currency unit of Ethereum “Wei” to show respect to this pioneer.

Between 1998 and 2005, Nick Szabo proposed the BitGold concept. He not only ingeniously combined Proof of Work with value storage, but also put forward the revolutionary concept of “smart contracts”.

The Birth of Bitcoin

The work of these pioneers seems to have touched the edge of the dream, but always lacked the final piece of the puzzle. How to achieve Consensus among all participants in transactions without a centralized institution? This question has plagued cryptographers for a full 20 years.

On October 31, 2008, a mysterious figure named Satoshi Nakamoto published the BTCWhite Paper on a cryptography mailing list. The scheme cleverly integrated multiple existing technologies:

• Uses a Proof of Work system similar to Hashcash
• Borrowed the Decentralization design concept from B-money
• Using Merkle tree for transaction verification
• Innovatively proposed the use of Block chain to solve the Double Spending issue

This new system solves the problem that all previous Digital Money solutions have failed to solve: how to achieve Consensus in a fully Decentralization situation.

More importantly, the timing of this scheme’s release is very delicate. Just a month ago, Lehman Brothers collapsed, and the global financial crisis erupted. People began to question the stability of the TradFi system.

On January 3, 2009, the Genesis Block of BTC 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 records the time of Block generation, but also silently accuses the TradFi system.

The recipient of the first BTC transaction was Hal Finney, who had previously interned at DigiCash. When he received 10 BTC from Satoshi Nakamoto in January 2009, he simply wrote on Twitter, “Running BTC.”

This ordinary tweet has become one of the most famous records in the history of Digital Money. From the laboratory of DigiCash, to the Cypherpunk mailing list, and then to the birth of Bitcoin, a revolution that has been brewing for nearly twenty years has finally found its new form.

First Conflict

In 2011, Bitcoin first caught the attention of Washington.

After being blocked by credit card companies and banks, WikiLeaks began accepting BTC donations. This allowed the world to see the true power of Bitcoin for the first time: it is uncensorable and unstoppable.

Senator Charles Schumer immediately issued a warning at a press conference, stating that BTC is a “digital form of Money Laundering tool”. This is the first public statement by the US government regarding BTC.

Storm is Coming

In 2013, an unexpected crisis gave BTC a new recognition.

The Cyprus banking crisis erupted, and the government directly levied deposits from the account of depositors. This has exposed the vulnerability of the TradFi system to the world: your deposits do not really belong to you.

BTC price broke $1,000 for the first time. But it was followed by a tougher crackdown by the government. In the same year, the FBI seized the Darknet market ‘Silk Road’ and confiscated 144,000 BTC. The government seemed to be proving that BTC is a tool for criminals.

The Counterattack of the System

In 2014, Cryptocurrency experienced its first major crisis. The world’s largest BTC exchange, Mt.Gox, suddenly closed, and 850,000 BTC vanished into thin air. This amounted to 7% of the total BTC on the network at the time.

Governments around the world have begun to strengthen regulation in the name of investor protection. In 2015, the state of New York introduced a strict BitLicense system, which is known as the “Digital Money industry’s demon mirror,” forcing many cryptocurrency companies to leave New York.

But every crisis makes this industry stronger, and more importantly, these crises prove a key point: even if centralized exchanges may fail, the BTC network itself remains rock solid. This is where the value of Decentralization design lies.

Institutional Breakthrough

2017 marked an important turning point for cryptocurrency. That year, Bitcoin surged from $1000 to $20000. But more importantly, there was an institutional breakthrough: the Chicago Mercantile Exchange (CME) and the Chicago Board Options Exchange (CBOE) launched Bitcoin futures contracts.

This marks the official acceptance of this once underground asset by Wall Street. Regulatory attitudes are also starting to subtly shift, from outright denial to attempting to understand and regulate.

But the real turning point came in 2020. The outbreak of the COVID-19 pandemic led to an unprecedented expansion of currencies worldwide. In this context, institutional investors began to reevaluate the value of Bitcoin (BTC).

In August, MicroStrategy CEO Michael Saylor announced that the company’s reserve funds would be converted to BTC. This decision has triggered a chain reaction in the corporate world. By February 2021, TSL announced the purchase of $1.5 billion in BTC, sending shockwaves throughout the financial industry.

Chapter 6: The Final Battle

In 2021, the Biden administration launched a comprehensive crackdown on the encryption industry. This time, the government’s crackdown is 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 cryptocurrency through regulation.

But the situation is different. Under the surface regulatory storm, Crypto Assets has deeply penetrated every corner of modern society: over 50 million Americans hold Crypto Assets, mainstream payment companies are embracing encryption payments, Wall Street has established a complete Crypto Assets business line, and traditional Financial Institutions are starting to provide Crypto Assets services to clients.

More importantly, the new generation has fully embraced the idea of Cypherpunk. For them, Decentralization and digital sovereignty are not revolutionary concepts, but a matter of course. This change in mindset is more profound than any technological innovation.

In 2022, the encryption market experienced a severe crisis. The collapse of FTX plunged the entire industry into a winter. In 2023, the encryption industry began to recover. Each crisis makes the industry more mature and standardized. The attitude of regulatory agencies has also started to undergo subtle changes, shifting from simply suppressing to seeking a reasonable regulatory framework.

Turning Point in History

In 2024, an ironic turn of events occurred. Trump made the support of encryption innovation an important campaign policy, promising to create a more friendly regulatory environment for the encryption industry. His running mate, Ohio Senator J.D. Vance, was a holder of BTC himself and had been at the forefront of encryption innovation for many years. They won the presidential election in a sweeping manner.

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 bill that became the catalyst for a revolution that changed human civilization. Now, he is about to hand over the presidency to a successor who supports encryption. This turning point is so natural: when a revolution finally succeeds, even former opponents have to acknowledge its value.

But for cypherpunks, winning government recognition has never been the ultimate goal. As Satoshi Nakamoto said, BTC is a tool that can give everyone financial sovereignty. The government’s attitude is just a milestone on the road, witnessing how encryption technology has moved from underground movements to mainstream life, and how it has evolved from a technical experiment to a force that can change the world.

From the initial resistance of cryptographers and programmers to today, when hundreds of millions of people use Crypto Assets; from geek experiments in garages to the force shaking the global financial system; from being seen as the utopian ideal to becoming the foundation of a new world. In this war that has lasted for a generation, the cypherpunks have been underestimated time and time again. They have been called idealists, extremists, and even criminals. But they just stubbornly believe: the truth of mathematics will eventually conquer the power of politics, and the freedom of Decentralization will eventually conquer the control of centralization.

Now, their dreams are becoming a reality. encryption technology is no longer a weapon hidden in the dark, but a torch illuminating the new civilization. It is reconstructing every aspect of human society: when Wallet becomes a code, when contracts are executed by programs, when organizations are managed by code, when trust is built on mathematics, the world is standing at the door of a new civilization.

In the future history books, 2024 may be recorded as the year of victory in the encryption revolution. But the real victory is not in the recognition of a government, but in the awakening of millions of ordinary people. 01928374656574839201

This is a gift for the password punk, a new world built by code and protected by mathematics. In this world, freedom, privacy, and trust are no longer slogans, but are embedded in every line of code, every Block, and every peer-to-peer connection.

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