What is crypto‑anarchism?

In the 1940s Western intelligence agencies explored involving the recipient of a message in the encoding process. In 1973 British mathematician Clifford Cocks presented a model in which an authorised recipient could choose two giant prime numbers and multiply them to obtain a third giant number used as a public key. There was no need to hide it because computing the two original numbers was practically impossible.

In 1977 the concept became a working model when three professors at the Massachusetts Institute of Technology (MIT)—Ron Rivest, Adi Shamir and Leonard Adleman—released a public‑key cryptographic algorithm based on the computational difficulty of factoring large integers, named RSA (after their surnames).

Researchers expected RSA to be in demand as email became widespread, providing tools to ensure the privacy of network messages and to authenticate their sources.

After Scientific American reported on RSA, the NSA concluded the algorithm could limit its ability to track communications. The agency classified it as “munitions” subject to federal arms‑smuggling laws, requiring a special licence to distribute.

In the 1970s, as the first working prototypes of the internet appeared, data protection in an open environment became pressing. In 1978 David Chaum, an American cryptographer and a student at the University of California, Berkeley, devised blind digital signatures—a public‑key encryption model. Chaum’s work allowed creation of databases of people who could remain anonymous while still guaranteeing the accuracy of information they provided about themselves.

Chaum envisaged digital voting that could be verified without revealing a voter’s identity, and above all digital cash. In the mid‑1980s he created a model in which users could make payments anonymously while guaranteeing the reality of funds. A circle of cryptographers learned of his work, and within it a movement formed that advocated computer technologies as a means of abolishing the state.

The movement’s chief ideologue was Timothy May, an American cryptographer and former Intel senior scientist. In 1987 May met Philip Salin, an American economist, entrepreneur and futurist, who founded the American Information Exchange (AMiX), an online marketplace for trading data.

May disliked the idea of an electronic venue where people could sell trivial information to each other across borders and at low fees. He imagined a global system enabling anonymous bilateral exchange of any information, akin to a corporate intelligence network. He later finalised this concept as the BlackNet system, which required a non‑governmental digital currency and the ability to make untraceable payments in it.

In 1985 he read David Chaum’s “Security without Identification: Transaction Systems to Make Big Brother Obsolete”. In the article Chaum described a system that hides a buyer’s identity using cryptographic methods. Exposure to this idea prompted May to study public‑key cryptographic protection, first described by Whitfield Diffie, Ralph Merkle and Martin Hellman in 1976. May soon concluded that public‑key cryptography, together with networked computing, could “destroy social power structures”.

In September 1988 May wrote “The Crypto Anarchist Manifesto”, modelled on Karl Marx’s “Communist Manifesto”: “A spectre is haunting the modern world, the spectre of crypto anarchy.” According to the manifesto, information technologies will allow people to run their lives without governments, using cryptography, digital currencies and other decentralised tools.

By May’s own account, the ideological foundation of “The Crypto Anarchist Manifesto” was anarcho‑capitalism, which emphasises voluntary transactions and free markets.

In 1992 Timothy May, John Gilmore (a computer specialist and one of the founders of the Electronic Frontier Foundation) and Eric Hughes (a mathematician at the University of California, Berkeley) invited 20 close friends to an informal meeting. They discussed the most topical questions in cryptography and programming.

Such meetings became regular and seeded a movement. A mailing list was created to attract others who shared the founders’ interests and core values. Soon the list, called “Cypherpunks”, had hundreds of subscribers testing ciphers, exchanging ideas and debating new developments. Correspondence used the latest methods at the time, such as PGP. Members debated politics, philosophy, computer science, cryptography and mathematics. In 1993 Eric Hughes published “A Cypherpunk’s Manifesto”, setting out the movement’s key tenets:

“Privacy is necessary for an open society in the electronic age. […] Privacy in an open society requires cryptography. […] We, the cypherpunks, are dedicated to building anonymous systems. We defend our privacy with cryptography, anonymous mail forwarding systems, digital signatures, and electronic money. […] Cryptography will inevitably spread worldwide, and with it the anonymous transaction systems it makes possible.”

By 1997 the mailing list had about 2,000 subscribers and 30 messages a day. In 1995 the founder of WikiLeaks, Julian Assange, published his first post on “Cypherpunks”. In 2016 he released a book about the movement titled “Cypherpunks: Freedom and the Future of the Internet”.

Cypherpunk and crypto‑anarchism are related but not identical. The term “cypherpunks” was first used by hacker and programmer Jude Milhon to refer to a group of crypto‑anarchists. The term “crypto‑anarchists” first appeared in 1993 in an article by Steven Levy, “Crypto‑Rebels”.

Many writings by Timothy May and other pioneers of crypto‑anarchy were published in 2001 in the anthology “Crypto Anarchy, Cyberstates, and Pirate Utopias”, edited by the American philosopher Peter Ludlow. The contributors show governance structures emerging within online communities and the rise of ideals of political sovereignty.

Ludlow views virtual communities as laboratories for experiments in building new societies and governance structures. Many experiments will fail, he argues, but given the synergies of the networked world, new types of society and governance may emerge that surpass the traditional.

• Protection against mass surveillance of communications on computer networks. Crypto‑anarchists see the development and use of cryptography as the primary means of liberation from state control.
• Elimination of censorship, especially on the internet, as contrary to freedom of expression, via Tor, I2P, Freenet and similar networks. In the crypto‑anarchist view, freedom from censorship helps fight corruption and lets opposition politicians spread their views. They seek to create a global “Internet of Trust”—a crowdfunded internet service provider that uses peer‑to‑peer cellular base stations in collective ownership. This internet is fully encrypted and private: the system includes an algorithm that gives each network participant a signature and reputation according to merit.
• Creation and development of a new economy based on viable alternatives to banking systems in the form of cryptocurrencies and decentralised financial services.

The importance of privacy, anonymous transactions and cryptographic protection—all were realised, to varying degrees, in cryptocurrencies.

In October 2008 Satoshi Nakamoto sent the mailing list the famous white paper “Bitcoin: A Peer‑to‑Peer Electronic Cash System”.

The paper shows the influence of cypherpunks and crypto‑anarchists. It cites British cryptographer Adam Back and computer engineer Wei Dai. In Nakamoto’s words, Bitcoin “is an implementation of Wei Dai’s b‑money proposal … and Nick Szabo’s Bit gold proposal”.

Dai’s own manifesto proposing b‑money begins: “I admire Tim May’s crypto‑anarchism.” After publishing the paper, Nakamoto continued work and on January 3rd 2009 mined Bitcoin’s genesis block.

Late in life the chief ideologue of crypto‑anarchism, Timothy May, said the cryptocurrency industry had in effect departed from the movement’s early ideals. In his last interview, in October 2018, he criticised the drive for legal and regulatory compliance. In his view, the spirit of crypto‑anarchism is at odds with “the draconian ‘know your customer’ rules, anti‑money‑laundering compliance, passports, account freezes and the requirement to report ‘suspicious activity’ to the local secret police”.

Paralelni Polis

Paralelni Polis was founded by members of the Czech art group Ztohoven and occupies a rented three‑storey former factory in central Prague.

According to its founders, it is a “unique freedom ‘think tank’ focused on popularising digital freedom, cryptocurrencies, anonymisation networks and free markets”.

At the core of Paralelni Polis is the Institute of Cryptoanarchy—a space for hackers and developers with tools for unfettered distribution of information on the internet and for creating a parallel decentralised economy, cryptocurrencies and other conditions for a free society in the 21st century.

Paralelni Polis includes the Paper Hub co‑working space for collaborative or individual work on projects. It is open to freelancers, students and startups and combines art, the social sciences and technology.

Free Republic of Liberland

A virtual state claiming an uninhabited, disputed seven‑square‑kilometre plot on the west bank of the Danube between Croatia and Serbia.

After borders were redrawn amid the chaos following the war in Croatia, the territory officially belonged to neither country.

On April 13th 2015 Vit Jedlička, a Czech right‑libertarian and activist, announced the creation there of an independent sovereign state. It has not received diplomatic recognition from United Nations member states.

Liberland’s motto is “live and let live”, and its official currency is bitcoin. The state has its own Wikipedia page, website, flag and coat of arms. The chosen form of government is a republic with elements of direct democracy.

Hundreds of people have received Liberland citizenship and over half a million have applied. According to its founder, Liberland needs maximal personal and economic freedom, to be achieved with the latest blockchain technologies.

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