The History of Crypto Goes Further Back Than You Think

Published November 21, 2022

FINN BRUNTON: The history of cryptography, for thousands of years, is defined by one single problem. No matter how you make your code, right, the key that you use to encrypt the message needs to be the same key as the other person has to decrypt it.

VINTAGE NEWSREEL: Here, the important work of decoding messages whose information must be carefully guarded and transcribed with perfect accuracy.

NEHA NARULA: Now, the problem with that is that if anybody figured out the secret code, well, then you were kind of out of luck. They can now read all of the messages that you were going to send back and forth.

NARRATOR: This is what happened when the Allies famously cracked the code of the German’s Enigma machine, in World War II, and helped turn the tide of the war.

FINN BRUNTON: That was the fundamental limit to your ability to create secret messages for all of human history, until the 1970s, when a group of computer scientists make a series of extraordinary breakthroughs.

NARRATOR: The big breakthrough was figuring out how to replace the vulnerable single-key system with a novel two-key approach. Each side holds a pair of mathematically linked keys, essentially a string of characters, one shared publicly, the other kept private. The sender encrypts the message using the recipient’s public key; the message can only be unscrambled using the recipient’s private key. The sender can also use their private key to encode a unique digital signature into the message, proving that they sent it.

NEHA NARULA: The thing that’s really cool about this is that I don’t need to know your secret key. No one needs to know your secret key. It never leaves your device or your piece of paper, your home. It stays completely secret. The only thing that leaves is the public key, and I can’t figure out what your secret key is from your public key.

NARRATOR: As long as everyone’s private keys stay private, secret messages are uncrackable, and signatures can’t be forged. The trick lies in how the keys are linked through a type of math problem using large prime numbers, which is easy to compute in one direction but nearly impossible to reverse-engineer.

NEHA NARULA: It’s this idea that it’s very easy to take a set of factors and see that they multiply to a number. It’s very, very hard to take a large number and figure out what the factors are that divide into it. It would have required even someone with a supercomputer, you know, hundreds or thousands of years to try to break the cryptography and get access to the information.

MARK MILLER: That is a revolutionary change in the world. Up to that point, we were all kind of helpless against efforts by those forces that would target us. And now, suddenly, mathematics had given us this amazing gift, this tool that we could now use to communicate secretly in a way that even those large forces cannot corrupt.

NARRATOR: A column in Scientific American described the breakthrough, but the actual algorithms remained unpublished in a paper at M.I.T. Miller feared the approach, known as “public key encryption,” was so powerful, that the government might try to classify it as a military secret.

MARK MILLER: I saw this as a hard fork in the road that was bigger than me. And I decided, “I have to do what I can to make sure that this idea is not suppressed.” So, I went to the M.I.T. campus, and I hung around and talked to people, until, finally, I managed to get my hands on a paper copy. I went to a variety of copy shops. Never made too many copies in any one place. And I mailed it from a variety of mailboxes. To home and hobbyist computer magazines and clubs all across the country. And I also gave copies of the paper to a few select friends of mine, telling them, if I disappear, make sure this gets out. I have absolutely no idea, and I will never have any idea, whether my actions had any influence at all, but the cat was out of the bag.

NARRATOR: The paper was eventually published in 1978, and the ideas spread like wildfire. The government tried to keep these algorithms from the public, but, determined to fight against centralized control, programmers put the codes on everything from t-shirts to their own bodies.

FINN BRUNTON: Cryptographers were in the unique position, especially once people started getting tattoos of this string of characters, of being able to say, like characters in martial arts movies, that their bodies were classified as deadly weapons.

NARRATOR: Some coders joined forces, working in loose groups to design technologies, including new forms of money, that could free people from centralized control.

FINN BRUNTON: We could call them visionaries, we could call them radicals. We could also call them weirdos: eccentric, technologically sophisticated, very smart, deeply strange people who wanted to change the world through transforming how money worked.

HOME VIDEO OF MARK MILLER: Ahhh! A space alien!

LANA SWARTZ: They anticipated that there was a coming economy that was going to be built around all of our data, the surveillance of our data, that, very soon, we were all going to be living more and more of our lives communicating through digital technologies. And a crucial piece of this puzzle, that hadn’t really ever been fully solved, was figuring out how to do money online.

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NARRATOR: For the first time, public key encryption made it possible to securely use credit cards and conduct other private business online. Without it, online commerce might never have become a reality. But for activist coding groups, the fact that banks and credit card companies kept a ledger of all transactions, opened the door for Big Brother. The most infamous of these groups was known as the “cypherpunks.”

ISAIAH JACKSON: Their culture was, hey, we want to create privacy, because we can see where this is going. They had the foresight to see that any big enterprise, there are going to be big companies and regulators who will try to control it.

NARRATOR: The cypherpunks mostly communicated through a mailing list.

FINN BRUNTON: The hard core of the cypherpunks looked at digital money as a way to not just guarantee privacy, but as a way that they could potentially destroy existing governments and states completely.

ISAIAH JACKSON: It was basically developers creating tools for freedom. And one of those tools was digital cash.

NARRATOR: Not just digital transactions like the banks were providing, but a new kind of money altogether. Across dozens of new forums there were a number of attempts to design a system of digital cash. And then, on Halloween, 2008 a new name, Satoshi Nakamoto, appeared. Enter, Bitcoin, called by its inventor a “peer-to-peer electronic cash system.” Even now, no one knows who Satoshi Nakamoto, the inventor of Bitcoin is, but the paper was revolutionary.

FINN BRUNTON: This is one of the most significant technologies in recent human history to have been created by someone who is still wholly anonymous.

STEVEN MCKIE (Computer Programmer): Who is Satoshi is a question that may never be answered, but in actuality, that sort of mystique is kind of what adds to the allure that made Bitcoin really interesting to begin with, I think.

CLEVE MESIDOR: When you look at who Satoshi could be, I say it has to be a group of women, because men would have taken credit a long time ago.

ISAIAH JACKSON: Whoever Satoshi, is it’s amazing that they were able to fit all of what they wanted Bitcoin to be in eight pages.

NARRATOR: Satoshi’s paper synthesized decades of work, by hundreds of cryptographers and computer scientists, into an elegant whole. It showed how to create a digital payment system, based on a new currency, that eliminated banks,…

PROTESTOR CROWD CHANTS: All day, all week, occupy Wall Street!

NARRATOR: …at the exact moment the 2008 financial crisis shook the public trust that gave them their power.

CBS NEWS 2008 NEWS CLIP: It was a manic Monday in the financial markets. The Dow tumbled.

STEVEN MCKIE: People were like, if the world’s financial economy is, you know, like taking a big hit, how do we make ourselves more anti-fragile towards these things in the future?

LANA SWARTZ: What Bitcoin proposed to do, what Satoshi proposed to do was produce a kind of digital cash that didn’t require those intermediaries. Instead of transactions going through a web of connected computers owned by banks and other intermediaries, it would go through a web of connected computers owned by the people conducting that transaction.

NARRATOR: “Bitcoins” were simply “bits” of computer code in a digital ledger. Each person would hold their coins in an anonymous digital wallet, identified only by its public key. The holder of that wallet could only spend those coins by using their private key to sign the transfer and authorize the transaction. But the real breakthrough was something called the “blockchain,” a technology that ensured the ledger hadn’t been tampered with and that people hadn’t spent the same coin more than once, all without needing a bank or other central authority to keep track.

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