The 33-Year Crypto War: Began with Biden, Ended with Biden
TechFlow Selected TechFlow Selected
The 33-Year Crypto War: Began with Biden, Ended with Biden
In this war that has lasted for more than thirty years, a group of geeks driven by mathematical ideals ultimately changed the course of human civilization.
Navigating Web3 tides with focused insightsBy Chao
It was late autumn in 2024, Washington D.C. Golden maple leaves drifted slowly from the sycamores outside the White House as President Biden stood by the window of the Oval Office, gazing at the city he was about to leave.
Thirty-three years earlier, not far away on Capitol Hill, then-Senator Biden had introduced the now-infamous S.266 bill. At the time, he could never have imagined that this seemingly ordinary piece of legislation would ignite a "crypto war" lasting over three decades—or that this war would ultimately end in victory for the cypherpunks during his final days as president.
This is a story of failure and triumph, suppression and resistance, centralization versus freedom—an epic spanning an entire generation. In this more-than-thirty-year battle, a group of mathematically idealistic hackers ultimately changed the course of human civilization.
Part One: The Eve of War
The Embers of the Cold War
The story begins much earlier.
In 1975, at IBM's research laboratory, a team of scientists was developing a revolutionary encryption algorithm—what would later become the famous DES (Data Encryption Standard). At the time, the computer industry stood at a crossroads: personal computers were about to enter households worldwide, and encryption technology would determine the direction of this revolution.
But just as development neared completion, the U.S. National Security Agency (NSA) abruptly intervened. Citing national security, they demanded the key length be reduced from 128 bits to 56 bits. This seemingly technical adjustment actually weakened the algorithm’s security by trillions of times.
Under the shadow of the Cold War, no one dared question the decision. Encryption was treated as military equipment, strictly controlled. But as the personal computing revolution advanced, this Cold War mindset began to clash sharply with the needs of the new era.
The War Begins
In spring 1991, an internal NSA report stated: "With the spread of personal computers and the internet, the proliferation of encryption technology will become a major threat to national security. We must act before this situation spirals out of control."
This report eventually landed on Senator Joe Biden’s desk. As a key member of the Judiciary Committee, he decided to take action. He proposed S.266, the *Comprehensive Crime Control Act of 1991*. Section 1126 required: "Electronic communication service providers and device manufacturers must ensure government access to plaintext content of encrypted communications."
On the surface, it was an anti-crime bill. In reality, it marked the first attempt by the government to legislate control over the keys to the entire digital world.
Chapter Two: Code Is Speech
Rebellion in the Garage
While politicians in Washington debated the bill, a quiet revolution was unfolding in a garage in Colorado. Programmer Phil Zimmermann was creating PGP (Pretty Good Privacy), software that allowed ordinary people to use military-grade encryption.
When Zimmermann learned of S.266, he realized he had to complete PGP before the bill passed—a race against time.
But finishing development was only the first step. The U.S. government classified encryption software as munitions, banning its export. To circumvent this, Zimmermann devised a brilliant workaround: publish PGP’s source code as a printed book.
This became the famous "Zimmermann Publishing" incident. Under the First Amendment of the U.S. Constitution, publications were protected as free speech. The government could regulate software—but not ban a book of mathematics.
Soon, this seemingly obscure technical book circulated globally. Around the world, programmers bought it, retyped the printed code into their computers. PGP flowed like an unstoppable undercurrent, quietly spreading to every corner of the globe.
The Voice of Academia
The academic community also raised opposition. In early 1992, when Congress held hearings on encryption regulation, numerous experts testified against backdoor mandates. Their core argument was simple: an encryption system is either secure or insecure—there is no middle ground.
Facing strong resistance from the tech and academic communities, S.266 ultimately failed to pass. It was the first victory for crypto freedom—but the government clearly wouldn’t give up so easily.
Chapter Three: Rise of the Cypherpunks
The Birth of a New Force
1992, Berkeley, California.
At the home of Sun Microsystems’ fifth employee, John Gilmore, a group concerned with privacy and cryptography began meeting regularly. These gatherings attracted two dozen tech experts from the Bay Area, including Intel scientist Timothy May and cryptographer Eric Hughes. Every month, they convened in Gilmore’s conference room to discuss cryptography, privacy rights, and civil liberties in the digital age.
These meetings quickly became the birthplace of the cypherpunk movement. Participants realized S.266 signaled a long-term battle over digital civil liberties. After a few meetings, they decided not to let physical distance hinder them and launched the Cypherpunks mailing list—a name blending “cypher” and “punk.” Soon, the list drew hundreds of members: computer scientists, cryptographers, and libertarians.
A Declaration of Digital Independence
In March 1993, Eric Hughes published *A Cypherpunk’s Manifesto*. This document, later seen as the Declaration of Independence for the digital age, opened with:
"Privacy is necessary for an open society in the electronic age. Privacy is not secrecy. A private matter is something you don’t want the whole world to know, but you don’t mind if some people know. Privacy is the power to selectively reveal yourself to the world."
These words rapidly spread across the early internet. They perfectly captured the emerging ethos: in the digital age, privacy is not a privilege, but a fundamental human right—and encryption is the tool to protect it.
The Government Strikes Back
The rise of the cypherpunks unsettled the Clinton administration. In April 1993, the White House unveiled a new plan: Clipper Chip.
It was a carefully crafted trap. The government claimed the encryption chip would satisfy both privacy and law enforcement needs. They even convinced AT&T to commit to purchasing one million units.
But the plan soon suffered a fatal blow. In June 1994, AT&T researcher Matt Blaze published a paper proving the Clipper Chip’s security was fundamentally flawed. The revelation embarrassed the government, and AT&T immediately canceled its order.
More importantly, the public now clearly understood: government-controlled encryption cannot be trusted.
Beneath these public battles, deeper currents stirred. In 1994, Amsterdam. A secret gathering of cypherpunks discussed a more radical idea: digital currency.
"The real reason governments want to control encryption is to control money," one attendee said. "If we can create a currency beyond their reach, that would be true revolution."
Chapter Four: Institutional Evolution
Netscape’s Dilemma
1995, Silicon Valley.
A company called Netscape was rewriting history. Founded by 24-year-old Marc Andreessen and veteran Jim Clark, it brought the internet into everyday life. On August 9, Netscape went public: opening at $28, closing at $58.25, valuing the company at over $2.9 billion overnight. The internet age had begun.
At this pivotal moment, Netscape developed the SSL encryption protocol. But due to U.S. export controls, they had to release two versions:
-
Domestic version: 128-bit strong encryption
-
International version: only 40-bit encryption
This double standard proved disastrous. A French student cracked 40-bit SSL in just eight days. The news shocked the business world. "This is what government regulation gives us," Netscape engineers fumed. "They’re not enhancing security—they’re creating vulnerabilities."
In 2009, Netscape co-founder Marc Andreessen and Ben Horowitz founded a16z, which rapidly became one of the most active venture capital firms in the crypto space. As a corporate leader, Andreessen had to comply with government demands. But as an investor, he continued supporting the crypto cause.
The Rise of Open Source
In the crypto wars, an unexpected ally emerged: the open-source movement.
In 1991, Linus Torvalds, a Finnish student, released the first version of Linux. To bypass U.S. export restrictions, he deliberately placed encryption modules outside the kernel. This compromise allowed Linux to spread freely worldwide.
The open-source movement transformed the tech landscape. Ideas once dismissed as idealistic among cypherpunks began bearing fruit in reality:
-
Code should be free
-
Knowledge should be shared
-
Decentralization is the future
Bill Gates called open source a "cancer," but he was wrong—open source became the future.
The crypto war also strengthened the open-source movement itself. In 1996, in *Bernstein v. United States*, a landmark case challenging the government’s export controls on encryption software, the court ruled for the first time that computer code is protected speech under the First Amendment. This historic decision removed legal barriers for open source. Today, open-source software forms the foundation of the internet.
End of the First Phase
By 1999, the tide had turned irreversibly. The Clinton administration finally relaxed decades-long export controls on encryption technology. The Economist commented: "This was not merely a war about technology, but a war about freedom."
The fruits of this victory reshaped the world:
-
PGP became the standard for email encryption
-
SSL/TLS secured all online transactions
-
Linux and open-source software transformed the tech industry
-
Encryption became infrastructure for the digital age
But this was only the beginning. The cypherpunks had set their sights on a more ambitious target: the monetary system itself.
Chapter Five: The Currency War
Pioneers of Digital Money
In 1990, cryptographer David Chaum founded DigiCash, pioneering the fusion of cryptography and electronic payments. Using "blind signatures," DigiCash created a system that preserved privacy while preventing double-spending. Though the company went bankrupt in 1998, its influence endured.
Over the next decade, a series of groundbreaking ideas emerged:
In 1997, Adam Back invented Hashcash—a system initially designed to combat spam, which first made the concept of "proof-of-work" practical.
In 1998, Wei Dai published the B-money proposal. This was the first fully described decentralized digital currency system, where participants created money by solving computational puzzles—what we now know as PoW. 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 conceived BitGold. He ingeniously combined proof-of-work with value storage and introduced the revolutionary concept of "smart contracts."
The Birth of Bitcoin
These pioneers seemed to touch the edge of a dream, yet always lacked one final piece: how to achieve consensus among participants without a centralized authority? This question plagued cryptographers for twenty years.
On October 31, 2008, a mysterious figure using the pseudonym Satoshi Nakamoto posted the Bitcoin whitepaper to a cryptography mailing list. The solution elegantly 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 double-spending
This new system solved the problem that had eluded all previous digital currency attempts: achieving consensus in a fully decentralized network.
More importantly, the timing was profound. Just one month earlier, Lehman Brothers collapsed, triggering a global financial crisis. People began questioning the stability of the traditional financial system.
On January 3, 2009, Bitcoin’s genesis block was mined. In it, Nakamoto inscribed: "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks."
This headline from The Times was not just a timestamp—it was a silent indictment of the traditional financial system.
The recipient of the first Bitcoin transaction was Hal Finney, who had interned at DigiCash. When he received 10 bitcoins from Nakamoto in January 2009, he simply tweeted: "Running Bitcoin."
This unassuming message became one of the most iconic records in digital currency history. From DigiCash’s lab, to the cypherpunk mailing lists, to Bitcoin’s birth—the revolution that had simmered for nearly two decades finally found its form.
First Conflict
In 2011, Bitcoin first caught Washington’s attention.
After being cut off by credit card companies and banks, WikiLeaks began accepting Bitcoin donations. For the first time, the world saw Bitcoin’s true power: censorship-resistant, unblockable.
Senator Charles Schumer issued a warning at a press conference, calling Bitcoin a "digital form of money laundering." It was the U.S. government’s first public stance against Bitcoin.
The Storm Breaks
In 2013, an unexpected crisis gave Bitcoin newfound legitimacy.
The Cyprus banking crisis erupted, with the government forcibly seizing deposits from citizens’ accounts. The world saw the fragility of the traditional financial system: your money isn’t truly yours.
Bitcoin’s price surpassed $1,000 for the first time. But soon after came harsher crackdowns. That same year, the FBI shut down the dark web marketplace Silk Road, seizing 144,000 bitcoins. The government seemed to prove: Bitcoin is a tool for criminals.
Institutional Counterattack
In 2014, cryptocurrencies faced their first major crisis. Mt. Gox, the world’s largest Bitcoin exchange, suddenly collapsed, and 850,000 bitcoins vanished—about 7% of all Bitcoin in circulation at the time.
Countries tightened regulations, citing investor protection. In 2015, New York State introduced the strict BitLicense regime, dubbed the "monster-revealing mirror" for digital finance, forcing many crypto firms to leave the state.
Yet each crisis made the industry stronger. More importantly, they proved a crucial point: even if centralized exchanges fail, the Bitcoin network itself remains rock-solid. This was the value of decentralization.
Institutional Breakthrough
2017 marked a turning point. Bitcoin surged from $1,000 to $20,000. But more significantly, institutional breakthroughs occurred: the Chicago Mercantile Exchange (CME) and Chicago Board Options Exchange (CBOE) launched Bitcoin futures contracts.
This signified Wall Street’s formal acceptance of an asset once confined to the underground. Regulators began shifting subtly—from outright rejection toward understanding and oversight.
But the real turning point came in 2020. Amid the pandemic, nations unleashed unprecedented monetary expansion. Against this backdrop, institutional investors reevaluated Bitcoin’s value.
In August, MicroStrategy CEO Michael Saylor announced converting the company’s treasury reserves into Bitcoin. This triggered a chain reaction across corporate America. By February 2021, Tesla announced a $1.5 billion Bitcoin purchase, shaking the entire financial world.
Chapter Six: The Final Battle
In 2021, the Biden administration launched a comprehensive crackdown on the crypto industry. This assault was more organized and sweeping than ever before. Thirty-three years after S.266 failed, the government could no longer stop the spread of encryption. Now, they sought to control cryptocurrency through regulation.
But the landscape had changed. Beneath the surface storm, crypto had deeply embedded itself into modern society: over 50 million Americans now held crypto; mainstream payment companies adopted crypto payments; Wall Street built full crypto business lines; traditional financial institutions began offering crypto services.
More importantly, a new generation had fully embraced cypherpunk ideals. To them, decentralization and digital sovereignty weren’t revolutionary concepts—they were self-evident truths. This shift in mindset was more profound than any technological innovation.
In 2022, the crypto market faced a severe crisis. FTX’s collapse plunged the industry into winter. By 2023, recovery began. Each crisis made the industry more mature, more regulated. Regulators, too, began shifting—from pure suppression toward seeking reasonable frameworks.
A Historical Turn
In 2024, an ironic twist unfolded. Trump made support for crypto innovation a key campaign plank, promising a friendlier regulatory environment. His running mate, Ohio Senator J.D. Vance, was himself a Bitcoin holder and longtime advocate for crypto innovation. They won the election in a landslide.
Thirty-three years earlier, when Biden introduced S.266, he believed he was defending order. Yet history is full of irony: that very bill became the spark for a revolution that changed human civilization. Now, he was about to hand the presidency to a successor who supported crypto. The turn felt natural: when a revolution finally triumphs, even former opponents must acknowledge its value.
But for the cypherpunks, government recognition was never the ultimate goal. As Satoshi once said, Bitcoin is a tool that gives everyone financial sovereignty. Government attitudes are merely mile markers along the road—witnessing how crypto has moved from an underground movement into mainstream life, evolving from a technical experiment into a world-changing force.
From the early resistance of cryptographers and programmers, to today’s billions using cryptocurrency; from garage-based hacker experiments to a force shaking the global financial system; from dismissed utopian dreams to the foundation of a new world—the cypherpunks were repeatedly underestimated. They were called idealists, extremists, even criminals. But they stubbornly believed: mathematical truth would ultimately prevail over political power, and decentralized freedom would overcome centralized control.
Now, their dream is becoming reality. Encryption is no longer a weapon hidden in darkness, but a torch illuminating a new civilization. It is restructuring every layer of human society: when wallets become cryptographic keys, when contracts execute via code, when organizations are governed by software, 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 crypto revolution’s triumph. But the real victory lies not in government approval, but in the awakening of millions of ordinary people.
This is the cypherpunks’ gift: a new world built in code, protected by mathematics. In this world, freedom, privacy, and trust are no longer slogans—they live in every line of code, every block, every peer-to-peer connection.
Join TechFlow official community to stay tuned
Telegram:https://t.me/TechFlowDaily
X (Twitter):https://x.com/TechFlowPost
X (Twitter) EN:https://x.com/BlockFlow_News
@cwweb3
