The 33-Year Crypto War
It Began with Biden, It Ends with Biden
Late autumn of 2024, Washington D.C. Golden maple leaves drift gently from the sycamore trees around the White House. President Biden stands by the window of the Oval Office, gazing out at the city he is about to bid farewell to.
Thirty-three years ago, not far from here on Capitol Hill, then-Senator Joe Biden introduced the now-famous S.266 bill. Little did he know that this seemingly ordinary piece of legislation would ignite a "crypto war" that would last over three decades. Nor could he have imagined that this conflict would ultimately conclude in his final moments as president, ending with a victory for the cypherpunks.
This is a story of failure and triumph, suppression and resistance, centralization and freedom—a modern epic that spans an entire generation. Throughout this prolonged struggle, a group of cypher enthusiasts and tech geeks ultimately altered the course of human civilization.
Part One: The Eve of War
The Embers of the Cold War
The story begins even earlier.
In 1975, at IBM's research labs, a team of scientists was developing a revolutionary encryption algorithm, which would later become known as DES (Data Encryption Standard). The computing industry was at a pivotal moment: personal computers were about to enter households worldwide, and encryption technology would determine the trajectory of this revolution.
Just as their work was nearing completion, the National Security Agency (NSA) intervened. Citing national security concerns, they demanded that the key length be reduced from 128 bits to 56 bits—a technical alteration that, in reality, weakened the algorithm's security by trillions of times.
Under the shadow of the Cold War, no one dared to challenge this decision. Encryption technology was considered military equipment and had to be strictly controlled. However, as the personal computer revolution advanced, this Cold War mentality began to clash sharply with the needs of a new era.
The War Begins
In the spring of 1991, an internal NSA report stated: "With the proliferation of personal computers and the growth of the internet, the spread of encryption technology will become a major threat to national security. We must act before this issue spirals out of control."
This report eventually landed on the desk of Senator Joe Biden. As a key member of the Judiciary Committee, he decided to take action. He introduced the S.266 bill, known as the "Comprehensive Counter-Terrorism Act of 1991." Section 1126 of the bill required that "electronic communication service providers and equipment manufacturers must ensure that the government can obtain the plaintext content of encrypted communications."
On the surface, it was a bill targeting crime. In reality, it was the government's first attempt to legislatively control the keys to the entire digital world.
Part Two: Code as a Weapon
Rebellion in a Garage
While politicians in Washington debated the bill, programmer Phil Zimmermann was quietly orchestrating a revolution in a Colorado garage. He was developing PGP (Pretty Good Privacy), software that would allow ordinary people to use military-grade encryption technology.
Upon hearing about the S.266 bill, Zimmermann realized he had to complete PGP before the legislation passed. It became a race against time.
But finishing the development was just the first step. The U.S. government classified encryption software as munitions, prohibiting its export. Facing this obstacle, Zimmermann devised a brilliant plan: he published PGP's source code in book form.
This was the famous "Zimmermann Publisher" incident. According to the First Amendment of the U.S. Constitution, publications are protected as free speech. The government could regulate software but couldn't ban the export of a mathematical book.
Soon, this seemingly esoteric technical book circulated globally. Programmers worldwide purchased the book and re-entered the printed code into computers. PGP spread like an unstoppable undercurrent, quietly reaching every corner of the globe.
The Voice of Academia
The academic community also raised objections. In early 1992, during a series of congressional hearings on encryption regulation, numerous experts stood up to oppose backdoor mechanisms. Their core argument was simple: encryption systems are either secure or insecure; there is no middle ground.
Under strong opposition from the tech and academic communities, the S.266 bill ultimately failed to pass. This was the first victory for encryption freedom, but the government was not about to give up easily.
Part Three: The Rise of the Cypherpunks
The Birth of a New Force
In 1992, Berkeley, California.
At the home of John Gilmore, the fifth employee of Sun Microsystems, a group concerned about privacy and encryption began meeting regularly. These gatherings attracted about 20 to 30 tech experts from the Bay Area, including Intel scientist Timothy May and cryptographer Eric Hughes. Each month, they would convene in Gilmore's conference room to discuss cryptography, privacy rights, and civil liberties in the digital age.
These meetings soon became the birthplace of the Cypherpunk movement. Participants realized that the introduction of the S.266 bill signaled a prolonged battle over civil liberties in the digital era. After a few meetings, they decided not to let physical limitations hinder them and created the Cypherpunk mailing list. The name combined "cipher" and "punk." Quickly, the mailing list attracted hundreds of members, including computer scientists, cryptographers, and libertarians.
The Declaration of the Digital Age
In March 1993, Eric Hughes published "A Cypherpunk's Manifesto." This document, later regarded as the Declaration of Independence for the digital age, began:
"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."
These words rapidly spread across the early internet. They accurately expressed the core philosophy of an emerging group: in the digital age, privacy is not a privilege but a fundamental human right. The tool to protect this right is encryption technology.
Government Pushback
The rise of the Cypherpunks unsettled the Clinton administration. In April 1993, the White House unveiled a new initiative: the Clipper Chip.
This was a carefully crafted trap. The government claimed that this encryption chip would satisfy both privacy protection and law enforcement needs. They even convinced AT&T to commit to purchasing one million units.
But the plan quickly faced a fatal blow. In June 1994, AT&T researcher Matt Blaze published a paper demonstrating that the Clipper Chip's security was virtually nonexistent. This discovery embarrassed the government, and AT&T promptly abandoned its procurement plans.
More importantly, this episode made the public acutely aware that government-controlled encryption systems were untrustworthy.
Beneath these public battles, deeper currents were flowing. In 1994, in Amsterdam, a secret gathering of Cypherpunks took place. They discussed an even more disruptive idea: digital currency.
"The real reason the government wants to control encryption is to control money," one attendee said. "If we can create an uncontrolled currency, that would be the real revolution."
Part Four: Evolution of Systems
Netscape's Dilemma
1995, Silicon Valley.
A company named Netscape was rewriting history. Founded by 24-year-old Marc Andreessen and seasoned entrepreneur Jim Clark, Netscape was bringing the internet into everyday life. On August 9, Netscape went public. Opening at $28 per share and closing at $58.25, the company's market value surpassed $2.9 billion overnight. This marked the dawn of the internet era.
At this critical juncture, the Netscape team developed the SSL encryption protocol. However, due to U.S. government export controls, they had to release two versions:
U.S. Version: Utilized 128-bit strong encryption
International Version: Limited to 40-bit encryption
This double standard proved disastrous. A French student cracked the 40-bit SSL in just eight days. The news shocked the business world. "This is the result of government regulation," Netscape engineers fumed. "They're not protecting security; they're creating vulnerabilities."
In 2009, Marc Andreessen co-founded the venture capital firm Andreessen Horowitz (a16z) with Ben Horowitz. a16z quickly became one of the most active investors in the crypto space. As a corporate leader, Andreessen had to comply with government demands. But as an investor, he continued to support the crypto war.
The Rise of the Open Source Movement
Another unexpected ally in the crypto wars was the open-source movement.
In 1991, a Finnish student named Linus Torvalds released the first version of Linux. To avoid U.S. export restrictions, he deliberately kept encryption modules outside the core system. This seemingly compromising decision allowed Linux to spread freely worldwide.
The open-source movement transformed the entire tech landscape. Ideas once considered idealistic by the Cypherpunks began to bear 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 became the future.
The crypto wars greatly supported the open-source movement itself. In 1996, in the landmark case of Daniel Bernstein vs. the U.S. Government over encryption software export controls, the court ruled that computer code is speech protected by the First Amendment. This decision removed legal obstacles for open-source development. Today, open-source software forms the backbone of the internet.
The End of the First Phase of the War
By 1999, the tide was irreversible. The Clinton administration finally relaxed decades-long export controls on encryption technology. "This was not just a war about technology but a war about freedom," commented The Economist at the time.
The war's achievements were reshaping the world:
PGP became the standard for email encryption
SSL/TLS protected all online transactions
Linux and open-source software transformed the tech industry
Encryption technology became the infrastructure of the digital age
But this was just the beginning. The Cypherpunks had set their sights on an even more ambitious target: the monetary system itself.
Part Five: The Currency Wars
Pioneers of Digital Currency
In 1990, cryptographer David Chaum founded DigiCash, pioneering the fusion of cryptography and electronic payments. Using "blind signature" technology, DigiCash created a system that protected privacy while preventing double-spending. Although the company eventually declared bankruptcy in 1998, its impact was profound.
Over the next decade, a series of groundbreaking concepts emerged:
In 1997, Adam Back invented Hashcash. Initially designed to combat spam, it was the first practical implementation of the "Proof of Work" concept.
In 1998, Wei Dai published the B-money proposal, the first to describe a distributed digital currency system where participants create money by solving computational puzzles—what we now know as Proof of Work. Wei Dai's contribution was so significant that years later, Ethereum founder Vitalik Buterin named the smallest unit of ether "Wei" in his honor.
Between 1998 and 2005, Nick Szabo proposed the concept of Bit Gold. He not only cleverly combined Proof of Work with value storage but also introduced the revolutionary idea of "smart contracts."
The Birth of Bitcoin
These pioneers seemed to brush the edge of their dreams but always lacked the final piece of the puzzle. How could all participants reach consensus without a centralized authority? This question had plagued cryptographers for 20 years.
On October 31, 2008, a mysterious figure using the pseudonym Satoshi Nakamoto published the Bitcoin whitepaper on a cryptography mailing list. The proposal ingeniously integrated several existing technologies:
Adopted a Proof of Work system similar to Hashcash
Drew on B-money's decentralized design principles
Used Merkle trees for transaction verification
Innovatively introduced the blockchain to solve the double-spending problem
This new system resolved the issue that all previous digital currency proposals couldn't: how to achieve consensus in a fully decentralized environment.
More importantly, the timing of the release was delicate. Just a month earlier, Lehman Brothers had collapsed, triggering a global financial crisis. People began to question the stability of traditional financial systems.
On January 3, 2009, Bitcoin's genesis block was mined. Satoshi Nakamoto embedded a message in the block: "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks."
This headline from The Times was not only a timestamp but also a silent protest against the traditional financial system.
The recipient of the first Bitcoin transaction was Hal Finney, who had once interned at DigiCash. When he received 10 bitcoins from Satoshi Nakamoto in January 2009, he simply tweeted, "Running bitcoin."
This ordinary tweet became one of the most famous records in digital currency history. From DigiCash's lab to the Cypherpunk mailing list to the birth of Bitcoin, a revolution brewing for nearly two decades had found its new form.
The First Clash
In 2011, Bitcoin caught Washington's attention for the first time.
After being blocked by credit card companies and banks, WikiLeaks began accepting Bitcoin donations. This was the world's first glimpse of Bitcoin's true power: it was uncensorable and unblockable.
Senator Charles Schumer promptly issued a warning at a press conference, calling Bitcoin a "digital form of money laundering." This was the first public statement by the U.S. government targeting Bitcoin.
The Storm Approaches
In 2013, an unexpected crisis gave Bitcoin newfound legitimacy.
During the Cypriot financial crisis, the government forcibly seized deposits from citizens' bank accounts. The world witnessed the fragility of traditional financial systems: your deposits didn't truly belong to you.
Bitcoin's price surpassed $1,000 for the first time. But this surge was met with harsher government crackdowns. That same year, the FBI shut down the dark web marketplace Silk Road, seizing 144,000 bitcoins. The government seemed to be proving that Bitcoin was a tool for criminals.
Institutional Pushback
In 2014, cryptocurrencies faced their first major crisis. Mt. Gox, the world's largest Bitcoin exchange, suddenly closed, and 850,000 bitcoins vanished into thin air—about 7% of all bitcoins at the time.
Governments worldwide began tightening regulations under the guise of protecting investors. In 2015, New York State introduced the stringent BitLicense regulations, forcing many crypto companies to leave New York.
Yet each crisis only made the industry stronger. Importantly, these crises proved a key point: while centralized exchanges might fail, the Bitcoin network itself remained rock-solid. This was the value of decentralized design.
Institutional Breakthroughs
2017 marked a significant turning point for cryptocurrencies. Bitcoin soared from $1,000 to $20,000. More importantly, institutional breakthroughs occurred: the Chicago Mercantile Exchange (CME) and the Chicago Board Options Exchange (CBOE) launched Bitcoin futures contracts.
This signaled Wall Street's formal acceptance of what was once an underground asset. Regulators' attitudes subtly shifted from outright denial to attempts at understanding and regulation.
But the real turning point came in 2020. The COVID-19 pandemic prompted unprecedented monetary expansion globally. Against this backdrop, institutional investors began reassessing Bitcoin's value.
In August, MicroStrategy CEO Michael Saylor announced the conversion of the company's reserve funds into Bitcoin. This decision sparked a chain reaction in the corporate world. By February 2021, Tesla announced a $1.5 billion purchase of Bitcoin, shaking the entire financial industry.
Part Six: The Final Battle
In 2021, the Biden administration launched a comprehensive crackdown on the crypto industry. This time, the government's offensive was more organized and thorough than ever before. Thirty-three years after the S.266 bill failed, the government could no longer halt the development of encryption technology. Now, they aimed to control cryptocurrencies through regulation.
But the landscape had changed. Beneath the regulatory storm, cryptocurrencies had deeply embedded themselves into every facet of modern society:
Over 50 million Americans owned cryptocurrencies.
Mainstream payment companies integrated crypto payments.
Wall Street had established complete cryptocurrency business lines.
Traditional financial institutions began offering crypto services to clients.
More importantly, a new generation had fully embraced Cypherpunk ideals. For them, decentralization and digital sovereignty weren't revolutionary concepts but self-evident truths. This shift in perception had more profound implications than any technological innovation.
In 2022, the crypto market faced a severe crisis. The dramatic collapse of FTX plunged the entire industry into a deep freeze. By 2023, the crypto industry began to recover. Each crisis rendered the industry more mature and regulated. Regulators' attitudes subtly shifted from mere suppression to seeking reasonable regulatory frameworks.
A Historical Turning Point
In 2024, an ironic twist occurred. Donald Trump made supporting crypto innovation a key campaign policy, promising a more friendly regulatory environment for the crypto industry. His running mate, Ohio Senator J.D. Vance, was himself a Bitcoin holder and had long been at the forefront of crypto innovation. They won the presidential election in a landslide.
Thirty-three years ago, when Biden introduced the S.266 bill, he believed he was defending order. But history is full of ironies: that very bill became the fuse for a revolution that would change human civilization. Now, he was about to hand over the presidency to a successor who supported crypto. The transition seemed so natural: when a revolution finally triumphs, even former opponents must acknowledge its value.
For the Cypherpunks, however, gaining government recognition was never the ultimate goal. As Satoshi Nakamoto once said, Bitcoin is a tool that allows everyone to achieve financial sovereignty. The government's attitude was merely a milestone, witnessing how encryption technology moved from an underground movement into mainstream life, transforming from a technical experiment into a world-changing force.
From the initial resistance by cryptographers and programmers to today's hundreds of millions using cryptocurrencies; from geeky experiments in garages to a force shaking the global financial system; from being viewed as a utopian ideal to becoming the foundation of a new world—the Cypherpunks have been underestimated time and again. They were called idealists, extremists, even criminals. But they stubbornly believed that the truth of mathematics would eventually triumph over political power, that decentralized freedom would ultimately overcome centralized control.
Now, their dream is becoming reality. Encryption technology is no longer a weapon hidden in the shadows but a torch illuminating a new civilization. It is reconstructing every layer of human society: when wallets become code, when contracts are executed by programs, when organizations are managed by algorithms, when trust is built on mathematics—the world stands at the threshold of a new era.
In future history books, 2024 may be recorded as the year of victory for the crypto revolution. But the true victory lies not in the acknowledgment of any government but in the awakening of countless ordinary people.
This is the Cypherpunks' gift—a new world built with code and safeguarded by mathematics. In this world, freedom, privacy, and trust are no longer mere slogans but are embedded in every line of code, every block on the chain, every peer-to-peer connection.