How Online Privacy Concerns Today is Rooted in the Internet’s Early Days

Bitcoin is at the forefront of future-thinking approaches to payments, investing and a range of other applications that extend far beyond its role as a digital currency. While Bitcoin represents the future of digital currency, its prioritization of censorship resistance has links back to the cypherpunk movement, which first emerged in the 1980s and became prevalent in the 1990s as internet adoption began to pick up steam.

Tracing contemporary privacy concerns back to early online privacy activists can be an enlightening way to develop a sense of where Bitcoin may be headed in the future. Some of the top figures who advocate for online privacy, including Timothy May, have links to the original cypherpunk movement. Assange penned the 2012 book Cypherpunks: Freedom and the Future of the Internet, which bolstered mainstream awareness of the cypherpunk movement.

Cypherpunks tend to believe in the power of cryptography and other online privacy strategies centered around combating widespread digital surveillance. For decades, cypherpunks have been designing strategies and platforms to preserve online privacy for those who recognize its importance. Let’s dive into the history of the cypherpunk movement and how its adherents and principles are having a continued impact on the Bitcoin landscape.

Who Were the Original Cypherpunks?

In the early nineties, a group of computer scientists, programmers, and cryptographers assembled with mathematician Eric Hughes in order to discuss what they saw as the looming threat of increased surveillance facilitated by the burgeoning internet infrastructure. These early internet activists shared a libertarian sensibility—believing that the state should hold only minimal involvement in citizens’ private lives. The cypherpunk movement grew out of monthly meetings between this group and its name was a play on the cyberpunk genre of science fiction coined by Jude Milhon, which itself drew influence from early hacker culture.

The group created the first anonymous remailer,  the cypherpunk mailing list, in which they developed visionary ideas about online privacy. Tim May—who previously worked at Intel—was a founding member and prolific contributor to the cypherpunks electronic mailing list. He also put forth the idea of tools enabling anonymous browsing of the web as well as the idea of anonymous online marketplaces and anonymous whistleblowing systems—all of which are ideas that have seen a number of applications in the years since. The cypherpunks communicated in a brash, jargon-laden style, and their mailing list grew into a core hub of the discussion and development of online privacy strategies. The mailing list became defunct in the early 2000s, but by then the movement was fully up and running and had developed anonymous ways of communicating and sharing resources online.

Is the Cypherpunk Movement Active Today?

In his work “A Cypherpunk’s Manifesto” Eric Hughes wrote “Privacy is the power to selectively reveal oneself to the world.” Frequently, politicians and those who run large social media companies assert that privacy can no longer be expected online, and that only those who have something to hide should be worried about being watched. As Glenn Greenwald pointed out in an influential TedTalk about online privacy in 2014, we make countless choices every day about what we choose to reveal and obscure from others in our lives and we should protect our right to be able to do so online.

Many online privacy-minded applications and initiatives were either created by people with links to the original cypherpunk movement, or were directly inspired by its philosophies. As mentioned, Julian Assange was an active member of the cypherpunk mailing list and his WikiLeaks organization was directly inspired by the cypherpunk focus on the need for anonymous whistleblowing resources. Other influential people associated with the cypherpunk ideologies include Jacob Appelbaum, who was not involved with creating the cypherpunk mailing list but was later a core member of the team that developed the open-source anonymous communication platform, Tor; Adam Back, who created Hashcash (a proof-of-work algorithm) and Blockstream (a company providing products and services built around Bitcoin), and Bram Cohen, who created BitTorrent.

In 2008, Satoshi Nakamoto published the Bitcoin whitepaper using concepts that drew directly from the work of Adam Back, with whom Nakamoto had been in contact. In Bitcoin’s whitepaper, Nakamoto referenced the revolutionary concept of a currency in which transactions are publicly viewable while utilizing private keys to sign unique transactions. Bitcoin was a leap forward in the development of the kind of cryptocurrency first posited by the cypherpunk movement.

Recent Cypherpunk Developments

Much of the appeal of Bitcoin and some other cryptocurrencies is centered around the values championed by the cypherpunk movement. Decentralized, anonymous currency rooted in cryptography offers resistance to unnecessary (and ultimately corrupt) government interference. Ideally, cryptocurrencies place privacy and transacting power back into the hands of individuals who are able to control what information they share.

Alongside the continued growth and development of Bitcoin—which maintains its cypherpunk-influenced integrity—there has also been a movement towards cryptocurrencies that have moved away from decentralized models. In the interest of mainstream growth and adoption, they stray from the individual privacy efforts that are central to the cypherpunk vision. Converting centralized (fiat) currency into Bitcoin often requires the use of centralized exchanges and the regulations these entail, which typically degrade users’ privacy. Many new Bitcoin users utilize centralized exchanges like Coinbase and Kraken, which collect extensive personal information and have policies that threaten transaction privacy.

Bitcoin is central to the development of a forward-thinking movement towards individuals holding the keys to their own Bitcoin. However, there are aspects inherent to Bitcoin that have privacy concerns that innovators are taking steps to combat. The fact that every Bitcoin transaction and address balance is viewable to anyone on the blockchain is key to the decentralized authentication of Bitcoin transactions, as it avoids the need for middlemen. When each transaction’s details can be viewed, it ensures nobody breaks the rules.

While Bitcoin addresses are not directly linked to users’ identities, they certainly can be. Once one active address’ identity is revealed, the privacy of each party that has engaged in transactions with the compromised address can be threatened. Additionally, “know your customer” requirements from online merchants, which verify users’ identities over time as a security function, can disturb users’ privacy when ostensibly anonymous transactions are connected to these transactions.

Coinjoin as a Contemporary Cypherpunk Innovation

An important concept when it comes to Bitcoin’s ability to provide an anonymous and private payment method is fungibility. Fungibility refers to the ability of an asset to be exchanged freely for the same denomination of the same asset. For instance, an unmarked $20 bill’s value does not depend on the bill’s provenance. On the other hand, non-fungible stores of value include artworks, which are unique and where previous ownership is factored into an item’s worth.

Bitcoin is designed to be a fully fungible currency, but this can be threatened when certain coins can be linked through their transaction history to an unscrupulous user or exchange. One technique associated with restoring fungibility for Bitcoin users is Coinjoin. Coinjoin is an obfuscation strategy that severs the tie between previous transactions by joining coins together, which effectively anonymizes them.

CoinJoin activity itself can be viewed on the blockchain and there is still a limit to the success of this obfuscation strategy. Some users may feel that coins that have undergone this process are undesirable. For this reason, the widespread adoption of Coinjoin may be necessary in order to create a situation where obfuscation is destigmatized and seen as a privacy-retaining tool, rather than as a sign of suspicious activity.

The growing mainstream adoption of Bitcoin is an example of destigmatization of this nature, as the link between Bitcoin and anonymous online marketplaces like Silk Road (wherein users paid in bitcoin for goods and services that were illegal in certain jurisdictions) became less of a focus.

Wasabi Wallet as a Tool for Cypherpunks

One groundbreaking tool that goes a long way towards making Bitcoin adhere to the privacy standards that the original cypherpunks strove for is Wasabi Wallet—a privacy-focused, non-custodial Bitcoin wallet. Wasabi Wallet uses Coinjoin obfuscation and integrates Tor as a strategy to prevent network deanonymization attacks.

One challenge faced by Bitcoin wallet developers is how to ensure the privacy of users while also making wallets user-friendly and accessible to those without extensive technical knowledge. The original cypherpunk movement was composed of developers, programmers, mathematicians, and cryptographers. The movement’s motto — “cypherpunks write code” — refers both to the programming skills of the community and the focus on encryption. These days, widespread adoption among those without specialized knowledge is the goal of many developers of Bitcoin-related tools.

Wasabi Wallet is a desktop wallet, which tends to allow for more robust software than mobile offerings. It prevents third party access to users’ wallet information, increased fungibility provided by Coinjoin technology, and offers the privacy benefits of the Tor onion network.

The recently-launched Wasabi Wallet 2.0 provides a revamped interface. Wasabi Wallet lets users choose between three coinjoin strategies, depending on whether their main priority is maximizing privacy, maximizing speed or minimizing costs. Users can easily view their wallet’s privatization progress and can also implement Discreet Mode, which further hides sensitive information.

Bitcoin and other cryptocurrencies tend to naturally attract those who value online privacy and who see the benefits of being in control of how information is collected and distributed. Wasabi makes it easy to send and receive Bitcoin with more privacy than other services suited to average bitcoin users. Coinjoin and other anonymization strategies implemented by Wasabi are paving the way towards a landscape in which it’s possible for all Bitcoin users to be cypherpunks, even without specialized knowledge.