Before Bitcoin Pt.1 — 70s “Public Key Saga”

70s, 80s, 90s, 00s and the people behind the tech.

Part One’s Notes

If you ask people where does Bitcoin or cryptocurrency come from? You will get many answers, and if they are right, they will likely be vague jabs at the truth. What many do not know is that Bitcoin was a creation born out the cypherpunk movement. Originated during the 70s but formed in the 90s, it fought the US government’s injustices surrounding digital freedom and pioneered modern rights to personal privacy.


So… We want to understand cryptocurrency and it’s history.

So what is public key cryptography?

Cryptography is the practice of securing and protecting information against ‘enemies’ or people who have no right to the information. It is the underlying mechanism that secures the authenticity and integrity of information, and also ultimately what makes blockchains and cryptocurrency possible.

How does it work?

Essentially, public key cryptography allows people to send encrypted information to a public address over unsecured channels. And only people with access to the public address’s corresponding private key can decrypt the information. The private key is also used to sign off and authenticate information sent away to verify the legitimacy of its origin.

Easy video outline the concept of public key encryption

This was an extremely important concept for cryptography and would lead to the first big interest in cryptography…

Three cryptographers known as Martin Hellman, Whitfield Diffie and Ralph Merkle would be behind. And they have an very interest story…

Martin Hellman, a young ambitious man

Hellman grew up as a nerd where he was exposed to science at an early age by his father, a physics teacher at a local high school. He remembers that:

Early Career

Following his interest, he studied electrical engineering from New York University and completed his masters degree in electrical engineering at Stanford University in 1967. Fairly well suited to academia, he did well and enjoyed his time at school.

Early influences of Harry Feistel & Peter Elias

So off he went to go work for IBM at the Thomas J. Watson Research Centre in New York. Hellman worked in the Pattern Recognition Department building machines that tried to recognise numbers from photographs (captcha lol).

Pursuing research

In 1971, Hellman returned to Stanford. This time as an Assistant Professor. While he continued his worked on decision making research, by the end of 1971, he had started to pursue cryptographic research.

Martin Hellman at Stanford (1973)

Whitfield Diffie, a very bored young man

In contrast to Hellman, Diffie was first introduced to cryptography early at the 10 year old, when his Father, a history professor, brought home cryptography books from a local library. He loved mathematics but hated school. Diffie was described to have “performed competently” and how he “never did apply himself to the degree his Father hoped”. Diffie barely graduated.

Skimming day jobs to work on AI & ‘The Codebreakers’

Just when he graduated, the US government started to draft young men to fight in Vietnam. Machine guns and screaming Vietcong did not particularly interest Diffie so instead, he took at job developing software and doing other “low class work”. At the same time, he also started to work ‘part time’ at MIT’s Project MAC’s Artificial Intelligence Laboratory run by two pretty smart people: Marvin Minsky and John McCarthy.

IBM Thomas J. Watson Laboratory in Yorktown Heights

Hellman meets Diffie

Data Encryption Standard (DES)

In early 1975, the government published the DES. It was the first encryption cipher that was approved for public and commercial use. The NSA pushed for the adoption of the DES by financial services and other commercial sectors where strong encryption was needed (SIM cards, network devices, routers and modems).

1970s Stock photos from the NSA!

How the DES was designed

The need for a national encryption cipher was realised after a study conducted in 1972 by the the National Bureau of Standards (now known as NIST, National Institute of Standards and Technology). Basically a shell of the NSA. They requested design proposals from research centres around the US in 1973 and 1974. After running up dry the first time, in 1974, IBM conceived a cipher called Lucifer.

Hellman and Diffie’s criticisms

Hellman and Diffie initially embraced the DES with open arms as they saw it as a huge step towards bringing cryptography into the public view. But as they looked closer, they foresaw how the shortened key length was vulnerable to brute force attacks.

Merkle, the kid who knew nothing

Soon after the release of the DES, Hellman and Diffie released a technical paper called “Multi-User Cryptographic Techniques”, and they soon learnt of Ralph Merkle, a young 23 year old computer science student from Berkeley, (Hellman was 30 years old at the time and Diffie was only one year older).

Merkle’s Puzzles

Before meeting Hellman and Diffie, Merkle had already been working on his own early concept of public key encryption, which would be later known as Merkle’s puzzles. He started working on his ideas during his computer science course CS244 where he stumbled across the riddle: how do you reestablish secure communications when a hostile enemy already knows everything? He needed to complete a personal project for the course and this seemed perfect for him to develop his ideas.

Covers of 1970s CACM editions
Merkle on the left, Hellman in the middle, Diffie on the right (1977)

New Directions in Cryptography

In November 1976, the paper: ‘New Directions in Cryptography’ was released. It discussed fundamental problems of cryptography, public key cryptography and protocols that facilitated authenticated communication.

Closing statement

These three cryptographers would break down the barrier for cryptography. A cryptography in the 80s, known as David Chaum, would go on to directly build upon their work and conceptualise the need for anonymous communications, payments and ultimately the need for decentralised services. Chaum’s work however would only be made possible through the dedication of Hellman, Diffie and Merkel.

  • Exposure to greatness: Hellman and Diffie were mentored by some of the most smartest people in computer science history (Feistel who designed the DES, Elias who worked with Claude Shannon and McCarthy who invented artificial intelligence).
  • Merkle had absolutely little knowledge of cryptography but managed to solve the unsolvable riddle.

1kx. MetaCartel. Venture DAO.

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