Free Markets Don’t Create Free People: Bitcoin’s Tech Success Masks Its Failure

James Bridle is a writer working across technologies and disciplines and author of “The New Dark Age: Technology and the End of the Future.” His work can be found at The following work will appear as an introduction to “The White Paper by Satoshi Nakamoto” to be published by Ignota Books. 

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It’s difficult to know when humans first started securing or ‘encrypting’ messages to hide them from unwanted readers; the practice must, by human nature, be almost as old as written language, although examples are sparse. We know, for example, that Julius Caesar used a simple form of letter substitution to communicate with his generals, shifting each character three steps down the alphabet in order to scramble it.

The ancient Greeks, particularly the military-minded Spartans, used a device called a scytale, which allowed a hidden text to be read by wrapping a strip of parchment around a cylinder of a particular size so that the letters lined up in a particular order. Tales of the Greco-Persian Wars are full of secret messages, not least the story of Histiaeus, a commander who, according to Herodotus, shaved the head of his favorite slave and had it tattooed with a message urging revolution in the city of Miletus.

When the slave’s hair grew back he was dispatched to the city, with the instructions that the recipient should shave him once again and read the message there revealed.

Such extreme measures were taken due to the fear of government surveillance, a justification often cited today. The Persian king controlled the roadways, and had the power to examine any message – and messenger – that travelled on them. From the very beginning, cryptography has been both a military technology and a tool for undermining existing powers.

Cryptography’s value as a military tool is double-edged, of course.

Like other weapons, its effectiveness depends on the ability of one side to outgun the other. For a long time, this balance mostly held, with efforts by one side to crack the secrets of the other forming long-running and fascinating backstories to many conventional conflicts. It was an act of decryption that brought the United States into the First World War when British intelligence services decoded the infamous Zimmermann Telegram proposing an alliance between Germany and Mexico.

In the closing months of the war, the cracking of Germany’s ADFGVX cipher by French cryptanalysts enabled the Allies to stave off a final German offensive on Paris.

Cryptography was first mass-manufactured in the Second World War, in the form of the Third Reich’s Enigma machines, and then digitized in the form of the Colossus, the world’s first programmable electronic computer, developed to break the German military’s Lorenz cipher. The wild invention and ultimate success of the Bletchley codebreakers over their Nazi adversaries can be read as the first of many instances of the digital overcoming the physical; the Lorenz SZ42 was a massive, complex machine of rotating cogs and wheels which defied codebreakers for years.

By the end of the war, it was completely readable by an electronic machine. The secrecy around the Colossus itself meant that its existence had little influence on future computer design, but it marks the point at which cryptography changed radically in nature – because what is digital is ultimately distributable, although it would take the growth of the internet in the 1990s for this to become widely understood.

In 1991, a computer security researcher called Phil Zimmermann created a programme called Pretty Good Privacy (PGP), which enabled users of home computers to strongly encrypt email messages using a combination of numerous well-known algorithms. What turned PGP from another homemade software product into one of the most contentious artifacts of the decade wasn’t how it was made, but how it was distributed. Since the Second World War, nations had been forced to legally define cryptography as a weapon; like any other munition, cryptography was subject to something called the Arms Export Control Act.

At the time of PGP’s release, any cryptosystem which used keys – the strings of randomly generated numbers which secured hidden messages – longer than 40 bits required a licence for export.

PGP used keys which were 128 bits long and almost impossible to crack at the time, and this made it precisely the kind of technology that US authorities wanted to prevent falling into foreign hands. Zimmermann never intended to export PGP, but, fearing that it would be banned outright, he started distributing it to friends, saying, “I wanted to strengthen democracy, to ensure that Americans could continue to protect their privacy.”

Shortly after that, PGP found its way onto the internet and then abroad. In 1993, the US government started a formal…

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