A Political History of DAOs
Kelsie Nabben

Thu Aug 11 2022

The story of the Cypherpunks Mailing List, an obscure ‘90s email server that developed decentralized technology as a path to new forms of human organization.

The Cypherpunks Mailing List was a little-known ’90s email server started by three Silicon Valley misfits with an interest in digital privacy. In 1992, Eric Hughes, a 20-something mathematician and computer programmer, had just returned to the Bay Area after working at a digital cash startup in Europe and was thinking of applying to graduate school. Timothy C. May, a 34-year-old electronic engineer with a fierce libertarian streak, had recently left his job as a senior scientist at Intel, opting to live off his stock options so he could pursue his interests in “Crypto-Anarchy,” science fiction writing, and rifles.

Hughes and May met at a party hosted by John Gilmore, a 37-year-old computer programmer turned privacy activist who’d founded a digital rights advocacy organization called the Electronic Frontier Foundation. Bonding over a shared interest in cartography, the study and development of secure communication techniques, Hughes, May, and Gilmore co-founded The Cypherpunks Mailing List in September 1992, hoping to create a space where privacy “anarchists, utopians, and technologists” could talk about anonymous online networks, politics, and philosophy.

Though it was little more than a passion project, reaching 700 members and around 30 messages a day at its peak, this early digital community would end up having an outsized influence on the world of crypto as we know it: There is a substantial body of scholarship that posits that the Cypherpunk Mailing List incubated the ideas that would eventually lead to the creation of Bitcoin, the first fully functional, peer-to-peer cryptocurrency network. “Satoshi,” the individual or group of individuals who presumably invented Bitcoin, is also believed to have been a member of the list.

The Cypherpunks were a group of cryptographers, hippies, computer programmers, hackers, activists, and philosophers who were concerned with the profound changes in the nature of our economic and social systems that the invention of cyberspace would engender. They were united by a belief that people should be able to live free from state interference in private matters, and a conviction that this freedom could be achieved through the use of digital encryption technology that allowed people to communicate without being surveilled. “Privacy is necessary for an open society in the electronic age,” wrote Hughes in “A Cypherpunk’s Manifesto,” a founding document for the group.

“Computer technology is on the verge of providing the ability for individuals and groups to communicate and interact with each other in a totally anonymous manner. Two persons may exchange messages, conduct business, and negotiate electronic contracts without ever knowing the True Name, or legal identity, of the other. Interactions over networks will be untraceable… These developments will alter completely the nature of government regulation, the ability to tax and control economic interactions, the ability to keep information secret, and will even alter the nature of trust and reputation.” Timothy C. May, “The Crypto Anarchist Manifesto,” 1988

To safeguard individual privacy against the threat of state and corporate surveillance, the Cypherpunks pursued the development of decentralized, cryptographically secure digital infrastructure. At in-person meet-ups in the Bay Area, they used role-playing games to simulate private online networks that were impervious to outside interference. For example, numerous conversations on the Mailing List concerned experiments to develop “remailers,” tools that allow people to send anonymous, email-type messages without anyone being able to identify the sender.

The Cypherpunks’ main weapon against the threat of corporate and government surveillance was public key cryptography, a form of encryption that uses mathematical algorithms to enable secure communications over insecure channels between two parties. Through my work as a social scientist and researcher at RMIT University, I have been analyzing how the relatively niche Cypherpunk counterculture laid the foundation for self-organizing through public blockchain-based infrastructures, building on a lineage of innovations that date as far back as the emergence of distributed computing in the 1960s and breakthroughs in public key cryptography in the 1970s and ’80s.

In other words, my research explores how the Cypherpunks set the stage for the world of cryptocurrencies, Web3, and DAOs as we know it today — though not only because of the technical innovations they gave rise to. Their idea of combining distributed computing architecture and public key cryptography with an emphasis on private digital networks — probably their greatest contribution to Web3 — was a means of furthering their political goal of self-organization, demonstrating how crypto is in fact a socio-political phenomenon rather than just a technical domain.

DAOs, after all, are groups of people who come together to form self-governing communities using blockchain technology to make decisions. If you want to know how this form of distributed, digital human organization came about — or, maybe, for certain readers of this essay, how you ended up at a forest festival being thrown by a DAO — then the history of Cypherphunks is a good place to start.

A Pre-History of the Cypherpunks

To understand the innovations of the Cypherpunks, it’s useful to go back in time to the dawn of distributed computing and public key cryptography, tools that the Cypherpunks would amalgamate with their political vision.

In the 1960s, government-funded researchers developed distributed computing, a method of distributing computer hardware across multiple geographical locations. By “decentralizing” physical computing units in this way, Cold War-era intelligence and national security agencies hoped to create “survivable” communications networks that were resilient against attack, so government officials could continue to communicate even if critical infrastructure was disabled.

The idea that the distribution of hardware and networking could be used to create “resilient” communications originated in large part from engineer Paul Baran, who authored 13 papers on “distributed communications” while working at a U.S. government-funded research and development think tank called the RAND Corporation in the 1960s. His research included a number of breakthroughs that are relevant to public, decentralized technologies to this day, including “message blocks” (a component in blockchain technology) and advocacy for private digital networks via cryptography. According to journalist Katie Hafner, Baran stated that the problem of building a more resilient communications infrastructure was “the most important work he could be doing” for the betterment of society.

“Most of the technology to provide the needed protection is already available in the form of contemporary cryptography and its allied disciplines.” – Whitfield Diffie, message to the Cypherpunks Mailing List, 1993

Public key cryptography, or the use of encryption to secure information against unwanted access by third parties, was discovered by government security agency cryptography researchers at the UK Government Communications Headquarters (GCHQ) in 1973, and independently by cryptography researchers Whitfield Diffie, Martin Hellman, and Ralph Merkle in 1978. Cryptographers at the GCHQ created a high-level classified encryption scheme called “non-secret encryption,” and eventually shared it with the National Security Agency in the U.S.

Because encryption was seen as a national security tool, research on and access to encryption technologies were highly embargoed. The NSA, for example, monitored all patent requests regarding cryptography and would legally classify any cryptography patents it deemed too powerful for the public. In 1975, the U.S. government also introduced the Data Encryption Standard, a national encryption standard for public and commercial use. It was just one in a series of regulations limiting citizens’ access to cryptography knowledge and tools, and part of a decades-long battle over data privacy known as the “Crypto Wars.”

In 1976, however, researchers Whitfield, Diffie, and Martin Hellman published a paper, titled “New Directions in Cryptography,” that introduced public key cryptography to the world. (Ironically, it was funded by the U.S. National Science Foundation). According to journalist Steven Levy, Diffie resented that a well-developed technology was being kept secret, and said he believed in a “decentralized view of authority,” where people could protect their personal data privacy using cryptographic tools.

Cryptography carries with it its own infrastructural politics, imaginaries, and possibilities at the intersection of the national and the personal. Digital encryption is a fundamentally political security technology, and a site of struggle for privacy, freedom, and democracy that scholar Linda Monsees has termed “Crypto Politics.” Later on in his career, Diffie would end up being one of a number of public key cryptographers who would appear on the Cypherpunks Mailing List. Many of them were deeply engaged in efforts to influence and shape public policy debates around individual and commercial security at the arrival of the digital era.

By the end of the 1980s, one of the most influential cryptography academics was David Chaum, a computer scientist and inventor widely considered to be the forefather of electronic currencies. In 1989, after authoring pioneering research papers on “Untraceable Electronic Mail” and “Blind Signatures for Untraceable Payments,” he founded an early electronic cash company called DigiCash.

Employees at the Amsterdam-based startup included individuals who would go on to become key protagonists in the story of modern-day cryptocurrency. One of them was Nick Szabo, probably best known as the inventor of the phrase “‘smart contracts” and the founder of the ecash project “Bit Gold.” Another was Zooko Wilcox, the future co-founder of the privacy crypto-coin Zcash. Before he moved back to the U.S. and co-founded the Cypherpunks Mailing List, Eric Hughes even worked for a short time as a computer programmer at Digicash, though he would decide he disliked the internal politics and the overall direction of the company. (DigiCash went bankrupt in 1988, following clashes in vision, personalities, and failed business deals.)

Chaum’s electronic currency was designed using a system that involved centralized currency issuance, transaction confirmations, and settlement. In other words, it was not that different from nation-state banking systems, with the system itself serving as a trusted middleman between users. User privacy was vulnerable to the banking interfaces, and Digicash was not censorship-resistant. Chaum valued privacy, but he believed that the best way for cryptography to gain widespread adoption was by integrating it with existing financial systems. The Cypherpunks — which included a handful of former Digicash employees, including Hughes — disagreed.

From Cryptographers to Cypherpunks (1990s - 2008)

By 1994, the Cypherpunk Mailing List had grown to hundreds of members. Being a Cypherpunk offered a sense of belonging, an alignment of purpose, and a shared identity that only the internet could provide. It was a melting pot of personalities engaged in a dynamic exchange of ideas, and many of those present also possessed the technical acumen and hacking skills to manifest those ideas in real-life.

Conversations on the Mailing List tended to circle back to the potential of cryptography to radically transform society. The Cypherpunks were interested in harnessing cryptographic tools to build anonymous communication networks and markets that would be impervious to government censorship or interference. In other words, they saw them as infrastructural building blocks that would allow people to create alternatives to modern-day nation-state structures, and as a means of self-organizing.

The Cypherpunks hoped these technologies would make it possible for people to inhabit “temporary autonomous zones” — the socio-political tactic of creating temporary spaces in the physical world or cyberspace that elude formal systems of control, identified in 1985 by Peter Lamborn Wilson, an anarchist writer and future Mailing List member also known Hakim Bey. Back in 2020, the American public got a taste of these ideas with the creation of anarchist encampments like the “Capitol Hill Autonomous Zone” in Seattle, where activists took over six city blocks during the Black Lives Matters protests. Today, blockchain communities refer to the digital manifestations of this political theory as “Decentralized Autonomous Organizations” and “Network States.” It was the Cypherpunks who pointed to a path forward for these ideas in the context of cyberspace.

Naturally, this political theory of autonomous statehood lent itself to a deep interest in the emancipatory capacity of a non-state, non-centrally-issued currency. Drawing inspiration from the democratic ethos of the public key cryptographers, as well as Chaum’s work on blind signatures, private digital cash, and electronic remailers, the Cypherpunks used their mailing list to document various attempts at building an electronic coin network. This included “e-gold,” in 1996; an anti-spam proof-of-work algorithm called Hashcash by Blockstream founder Adam Back, in 1997; an anonymous proof-of-stake electronic cash network called b-money by Wei Dai, in 1998; and Bit Gold, a proof-of-work string of cryptographic hashes by Nick Szabo in 2005 that foreshadowed the architecture of the Bitcoin blockchain.

In 2008, a developer or group of developers working under the pseudonym Satoshi Nakamoto released a whitepaper on the Cryptographers Mailing List, a fork of the Cypherpunks Mailing List. The whitepaper presented the idea of Bitcoin, a “peer-to-peer electronic cash” representing the first public, permissionless, cryptographically secure peer-to-peer protocol. Based on the ideas incorporated into Bitcoin, scholars and members of the cryptography community believe, Satoshi must have been hanging out on the original Cypherpunk Mailing List for years: It was an independent, collectively governed, technologically and politically decentralized digital infrastructure that was cryptographically secure. Later, in 2010, Satoshi would write on a Bitcointalk forum that Bitcoin was “an implementation of Wei Dai's b-money proposal […] on Cypherpunks […] in 1998” and “Nick Szabo's Bitgold proposal.”

In 2009, Cypherpunk Hal Finney became the first person to transact Bitcoin with Satoshi, as well as the first maintainer of the Bitcoin software code base. Encoded in the “genesis” block of the Bitcoin blockchain was a hidden message: a Times headline from January 2009 that read, “Chancellor on brink of second bailout for banks.” This couched political statement on the global financial crisis and the failure of nation-state banking was a reminder of the origins of Bitcoin. It wasn’t just a currency; it was a tool in a larger project to create decentralized economic, political, and organizational structures in society.

By the early 2000s, after years of vigorous exchange, the Cypherpunks Mailing List began to buckle under the weight of its internal politics. Although contributors continued to write about privacy and encryption technology, an increase in noise, spam, and in-fighting put a damper on the vibe. Some participants took issue with the politics of May, who voiced increasingly violent and racist rhetoric in the name of libertarianism. May eventually left the Mailing List, and chatter between the original Cypherpunks almost entirely died down. Though the server still exists today, the interesting characters with an intense interest in exchanging ideas on cryptography-based software and building things have moved on. Many of the Mailing List archives, however, are still available.

Ultimately, the Cypherpunks’ most enduring contribution to the development of public, decentralized blockchain technology was the idea that self-governed societal infrastructure and political decentralization could be achieved through technology. Social Scientist Lana Swartz has described Bitcoin as both a “theory of the larger social order” and a challenge to it, a technology with the potential to reimagine the very nature of money and alter society and culture in the process.

Not all of the original Cypherpunks agreed with this point: Hal Finney, for example, who was also a member of an adjacent mailing list called the Extropians, wrote that “we need to win political, not technological, victories in order to protect our privacy.” What is certain, however, is that over the past 13 years, the conceptual frameworks that Bitcoin is built upon have themselves continued to evolve, informing an abundance of further research and development in the field of cryptographically secure and decentralized tools and infrastructures. Much like Bitcoin itself, these tools are shaped and molded according to the personal, political, and ideological concerns of the people who create and use them.

From Cypherpunks to Web3

The three historical epochs I have described in this piece — distributed computing, public key cryptography, and the Cypherpunks subculture — show how decentralized technology evolved from a computing architecture developed by governments to the basis of a political philosophy advocating for the creation of alternatives to incumbent social and economic infrastructures. Understanding where we’ve come from sheds light on the broader social aspirations and capabilities of these tools in the hands of the communities that use them today. It reminds us that decentralized technologies, at their core, are a social and political phenomenon.

Still, it was the Cypherpunks who introduced the somewhat radical idea that distributed, encrypted network technology could be used to promote forms of self-organizing that represented an alternative to nation-state structures. This sociological theory of decentralization is grounded in political aims, where the politics are “freedom” (at least in the cyberlibertarian sense, which holds that digital media technology can and should constitute spaces of individual liberty), and the means are technological.

The idea of linking technological principles of decentralization to a sociological theory of political decentralization continues to inform public blockchain communities today, from projects like 1Hive, which aims to build its its own open-source software, free from external intervention or coercion, to Gitcoin DAO, which moves millions of dollars in crowdsourced funding to support the development of open-source projects as freely accessible “public goods.” In 2013, before the idea of blockchain-based DAOs existed, Dan Larimer, co-founder of Bitshares, Steem, and the EOS blockchain, described Bitcoin as a “Decentralised Autonomous Corporation” (DAC), likening holders of the currency to shareholders in an organization that generates income by providing services on the free market. Five days later, a young blogger at Bitcoin Magazine named Vitalik Buterin responded to Larimer’s claim by pointing out that corporations are “nothing more than people and contracts all the way down.”

In 2014, Buterin began advocating for a society mediated by decentralized digital infrastructure, laying out a system of thought based on the notion that blockchains should be programmable. It wasn’t long before the Ethereum smart contract blockchain with Virtual Machine was born, and with it, the idea of using blockchain technology to create self-governing, decentralized organizations. “Instead of a hierarchical structure managed by a set of humans interacting in person and controlling property via the legal system, a decentralized organization involves a set of humans interacting with each other according to a protocol specified in code, and enforced on the blockchain,” Buterin wrote in 2014.

Re-inspecting our origins invites us to consider what it means to be part of a DAO like Friends With Benefits today. Some DAOs want to run investment clubs. Other players in the space want to move past a world of hyper-financialization and find other fun, creative, and social uses for cryptography and cryptocurrencies. Like the Mailing List, though, these new forms of human organization all offer us something that can feel increasingly hard to come by on the heavily surveilled internet of today: an opportunity to carve out a rare space of existence where we can connect with people whose values and ideas inspire us, where we collectively have the power to conceive of the world as we would like it to be.

Kelsie Nabben is a researcher at the RMIT University Blockchain Innovation Hub. On Saturday, August 13, she will be delivering a talk at  FWB FEST  titled “What are we LARPing about?”, drawing on her research on the political origins of blockchain to prompt the audience to consider how the cultural expressions of writing, music, and art lead change in society, and the kind of change the FWB community is hoping to bring about.

Graphics by Fiona Carty.