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

Thirty-three years ago, on Capitol Hill not far away, he, as a senator, proposed the famous S.266 bill. At that time, he would never have imagined that this seemingly ordinary bill would become the fuse for a ‘encryption war’ that lasted for over thirty 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 of failure and victory, oppression 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 Vestiges of the Cold War

This story begins much earlier.

In 1975, IBM Research Lab. 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 every household, and encryption technology would determine the direction of this revolution.

But just as the project was about to be completed, the US National Security Agency (NSA) suddenly intervened. They demanded that the Secret Key length be reduced from 128 bits to 56 bits on the grounds of national security. This seemingly technical change actually caused the security of the Algorithm to drop by trillions of times.

In the shadow of the Cold War, no one dared to question this decision. encryption technology was considered a military equipment and had to be strictly controlled. However, with the advancement of personal computer revolution, this Cold War mentality began to clash sharply with the demands of the new era.

War Begins

In the spring of 1991, an internal NSA report stated: “With the popularization of personal computers and the development of the Internet, the diffusion of encryption technology will become a significant 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 are obligated to ensure that the government can obtain the Plaintext content of encryption communications.”

On the surface, this is a bill aimed at 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

Rebellion in the Garage

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

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

But completing the development is just the first step. The US government classifies encryption software as military supplies and prohibits exports. Faced with this obstacle, Zimmermann came up with a brilliant idea: to print the source code of PGP as a book for publication.

This is the famous “Zimmermann Publishing House” incident. Because according to the First Amendment of 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 around the world. Programmers around the world bought the book and re-entered the printed code into the computer. PGP is like an unstoppable undercurrent, quietly flowing into every corner of the world.

The voice of the academic community

The academic community 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 explicitly against the establishment of backdoor mechanisms. Their core argument is simple: encryption systems are either secure or insecure, with no middle ground.

In the face of strong opposition from the tech and academic communities, the S.266 bill ultimately failed to pass. This is the first victory for encryption freedom, but the government clearly will not give up easily.

Chapter 3: The Rise of Cypherpunks

The Birth of Emerging Forces

1992, Berkeley, California.

At the home of John Gilmore, the fifth employee of the company Sun, a group of people concerned about privacy and encryption technology began to meet regularly. These gatherings attracted twenty to thirty technical experts from the Bay Area, including Intel scientist Timothy May and cryptographer Eric Hughes. Every month, this group of people would discuss cryptography, privacy rights, and digital era civil liberties in the meeting room at Gilmore’s house.

These gatherings quickly developed into the birthplace of the Cypherpunk movement. Participants realized that the emergence of the S.266 bill heralded a protracted battle for digital-age civil liberties. After several meetings, they decided not to let physical constraints become barriers, so they created the Cypherpunk mailing list. The name is a combination of “cypher” and “punk”. Soon, this 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, which later became known as the independent declaration of the digital age, reads:

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

This passage quickly spread on the early Internet. It accurately expresses 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.

Government Counterattack

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

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

But this plan soon suffered 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 promptly abandoned its procurement plan.

More importantly, this incident has made the public realize for the first time that government-controlled encryption systems are not trustworthy.

Beneath these public battles, there are deeper undercurrents surging. In 1994, Amsterdam. A secret gathering of Cypherpunks. They were discussing a more subversive idea: Digital Money.

“The real reason the government controls encryption is to control money,” said one participant. “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. This company, founded by 24-year-old Marc Andreessen and experienced Jim Clark, brought the Internet into the lives of ordinary people. On August 9th, Netscape went public. The Opening Price was $28, and the closing price reached $58.25. The company’s market capitalization exceeded $2.9 billion overnight. This is the beginning of the Internet era.

At this critical time, the Netscape team developed the SSL encryptionprotocol. However, due to the export control of the U.S. government, they had to release two versions:

· US version: use 128-bit strong encryption

· International version: Can only use 40 digits of encryption

This double standard was quickly proven to be disastrous. A French student cracked a 40-bit SSL in just 8 days. The news shocked the business community. ‘This is the result of government regulation,’ angry Netscape engineers 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 firm, which quickly became one of the most active investment institutions in the encryption field. As an entrepreneur, Marc Andreessen had to yield to government demands. But as an investor, Marc Andreessen continues 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. To bypass US export controls, he deliberately placed the encryption module outside the kernel. This seemingly compromising decision allowed Linux to spread freely worldwide.

The Open Source movement has changed the entire landscape of the technology world. The Cypherpunk ideas that were once seen as idealistic 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. United States government’s export control of encryption software, the court ruled for the first time: 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 phase of the war is over

By 1999, the situation had become irreversible. The Clinton administration eventually relaxed the decades-long export control on encryption technology. 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 became the standard for email encryption

· SSL/TLS protects all online transactions

· Linux and Open Source software have changed the entire technology industry

· encryption technology has become the foundation of the digital age

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

Chapter 5: Currency Wars

Pioneer of Digital Money

In 1990, cryptographer David Chaum founded DigiCash, which opened the pioneering combination of cryptography and electronic payments. DigiCash created a system through ‘blind signatures’ technology that could protect privacy and prevent Double Spending. Although the company eventually declared bankruptcy in 1998, its influence was profound.

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

In 1997, Adam Back invented Hashcash. This system, initially used to combat spam, first put the concept of “Proof of Work” into practice.

In 1998, Wei Dai published the B-money proposal. This was the first complete description of a distributed Digital Money system, where participants create currency by solving computational problems, which is what we know as PoW. Wei Dai’s contribution was so important that years later, Ethereum founder Vitalik Buterin named the smallest currency unit of Ethereum ‘Wei’ as a tribute to this pioneer.

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

The Birth of BTC

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 BTC White Paper on a cryptography mailing list. This scheme cleverly integrates multiple existing technologies:

· Adopted a Proof of Work system similar to Hashcash

· Borrowed the Decentralization design concept from B-money

· Using Merkle trees for transaction verification

· Innovatively proposed the Block chain to solve the Double Spending problem

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 the release of this plan is very delicate. Just a month ago, Lehman Brothers collapsed, and the global financial crisis broke out. People began to question the stability of the TradFi 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 is not only a record of the time of Block creation, but also a silent accusation against the TradFi system.

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

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

First Conflict

In 2011, BTC first caught the attention of Washington.

After being blocked by credit card companies and banks, WikiLeaks began accepting BTC donations, which demonstrated the true power of BTC 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 against BTC.

The Storm is Coming

In 2013, an unexpected crisis gave Bitcoin new recognition.

The Cyprus banking crisis erupted, and the government directly enforced the deposit levy from the account holders. This has exposed the vulnerability of the TradFi system to the world: your deposits do not truly belong to you.

The price of Bitcoin first broke through $1000. But it was followed by a more severe government crackdown. In the same year, the FBI seized the ‘Silk Road’ darknet market and captured 144,000 BTC. The government seems to be proving that BTC is the tool of criminals.

The Counterattack of the System

In 2014, Cryptocurrency experienced its first major crisis. The world’s largest BTC exchange, Mt.Gox, suddenly shut down, and 850,000 BTC disappeared into thin air. This accounted for 7% of the total BTC on the entire network at that time.

Governments around the world have begun to strengthen regulation in the name of protecting investors. 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 solid as a rock. This is exactly where the value of Decentralization design lies.

Institutional Breakthrough

2017 marked a significant turning point for Crypto Assets. In that year, Bitcoin surged from $1000 to $20000. But more importantly, there was an institutional breakthrough: the Chicago Mercantile exchange (CME) and the Chicago Options exchange (CBOE) introduced BTC futures contracts.

This marks the beginning of Wall Street’s formal acceptance of this once underground asset. The attitude of regulatory agencies has also subtly changed from complete denial to trying 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 in various countries. Against this backdrop, institutional investors began to re-examine the value of Bitcoin (01928374656574839201).

In August, MicroStrategy CEO Michael Saylor announced the conversion of the company’s reserve funds into BTC. This decision triggered a chain reaction in the corporate world. By February 2021, TSL announced the purchase of $1.5 billion worth of BTC, which sent 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 now. Under the surface of regulatory storms, Crypto Assets have deeply penetrated every corner of modern society: over 50 million Americans hold Crypto Assets, mainstream payment companies are integrating encryption payments, Wall Street has established complete Crypto Asset business lines, and traditional Financial Institutions are beginning to offer Crypto Asset services to customers.

More importantly, the new generation has fully embraced the concept of Cypherpunk. For them, Decentralization and digital sovereignty are not revolutionary concepts, but a matter of course. This shift 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 cold 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 subtly change, shifting from mere suppression to seeking reasonable regulatory frameworks.

Turning Point in History

In 2024, an ironic turn of events occurred. Trump will support encryption innovation as an important campaign policy, promising to create a more friendly regulatory environment for the encryption industry. His running mate, Ohio Senator J.D. Vance, is a holder of Bitcoin and has 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 turn of events is so natural: when a revolution finally prevails, 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 allows everyone to obtain 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 changes the world.

From the initial resistance of cryptographers and programmers to the use of Crypto Assets by billions of people today; from geeky experiments in garages to the power shaking 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 for a generation, the cypherpunks have been underestimated time and time again. They have been called idealists, extremists, and even criminals. But they simply stubbornly believe: the truth of mathematics will eventually overcome the power of politics, and the freedom of Decentralization will eventually overcome 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 that illuminates a new civilization. It is reconstructing every aspect of human society: when Wallet becomes encryption, when contracts are executed by programs, when organizations are managed by code, when trust is built on mathematics, the world stands at the threshold of a new civilization.

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

This is a gift for cypherpunks, 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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