The Cypherpunk Manifesto
The term “cypherpunk” is a play on words, derived from the term “cyberpunk,” the sub-genre of science fiction pioneered by William Gibson and his contemporaries. The Cypherpunk Manifesto reads:
“Therefore, privacy in an open society requires anonymous transaction systems. Until now, cash has been the primary such system. An anonymous transaction system is not a secret transaction system. An anonymous system empowers individuals to reveal their identity when desired and only when desired; this is the essence of privacy. Privacy in an open society also requires cryptography… We cannot expect governments, corporations, or other large, faceless organizations to grant us privacy out of their beneficence. It is to their advantage to speak of us, and we should expect that they will speak. To try to prevent their speech is to fight against the realities of information. Information does not just want to be free, it longs to be free. Information expands to fill the available storage space. Information is Rumor's *****er, stronger cousin; Information is fleeter of foot, has more eyes, knows more, and understands less than Rumor. We must defend our own privacy if we expect to have any. We must come together and create systems which allow anonymous transactions to take place. People have been defending their own privacy for centuries with whispers, darkness, envelopes, closed doors, secret handshakes, and couriers. The technologies of the past did not allow for strong privacy, but electronic technologies do. We the Cypherpunks are dedicated to building anonymous systems. We are defending our privacy with cryptography, with anonymous mail forwarding systems, with digital signatures, and with electronic money.”
There would be many attempts to create digital money systems, some by the names on the mailing list. One of the individuals on the mailing list was Satoshi Nakamoto. Another was Tim May, the originator of crypto-anarchy; Wei Dai, an originator of the original concept of P2P digital currency; Bram Cohen, creator of BitTorrent; Julian Assange, who would later go on to found WikiLeaks; Phil Zimmerman, the creator of PGP encryption; Moxie Marlinspike, developer of the OpenWhisper protocol and the Signal Messenger application; and *****ko Wilcox-O’hearn of the Z-cash project.
Cryptographic systems acquire a “moral quality”
Modern-day engineers have made repeated efforts to create organizations which enforce ethical principles in their fields, including:
1964. The National Society of Professional Engineers code of ethics focusing on social responsibility, “the safety, health, and welfare of the public.”
1969. IEEE.22 The Union of Concerned Scientists is formed at MIT.
1982. International Association for Cryptologic Research (IACR) is formed to advance the use cryptography in the interest of public welfare.
1990. The Electronic Frontier Foundation (EFF) is formed.
The technological optimism that characterized 1990s Silicon Valley also laid some of the industry’s growing ethical traps. In a 2005 paper entitled “The Moral Character of Cryptographic Work,” UC Davis Computer Science Professor Phillip Rogaway suggested that practitioners of technology should examine closely the assumption that software by nature was “good” for anyone:
“If you’re a technological optimist, a rosy future flows from the wellspring of your work. This implies a limitation on ethical responsibility. The important thing is to do the work, and do it well. This even becomes a moral imperative, as the work itself is your social contribution.”
Rogway suggests technologists re-focus themselves on a moral duty to build new encrypted systems that empower ordinary people:
“All that said, I do believe it accurate to say that conventional encryption does embed a tendency to empower ordinary people. Encryption directly supports freedom of speech. It doesn’t require expensive or difficult-to-obtain resources. It’s enabled by a thing that’s easily shared. An individual can refrain from using backdoored systems. Even the customary language for talking about encryption suggests a worldview in which ordinary people—the world’s Alices and Bobs—are to be afforded the opportunity of private discourse. And coming at it from the other direction, one has to work to embed encryption within an architecture that props up power, and one may encounter major obstacles to success.”
“Responsible” hackers begin organizing in the 1990s
Many free software projects had third-party coders contributing improvements back to the project out of altruism, integrating improvements they’ve made on their versions to the original. In this way, free software projects accumulated the work of hundreds or thousands of otherwise uncoordinated individuals, without any central organizing agent. This form of organization has become known as “open allocation.”
Open allocation refers to a style of management allowing a high degree of freedom to knowledge workers, who are empowered to start or join any area of the project, and decide how to allocate their time more generally. It is considered to be a form of “self organization” and is widely practiced outside of any corporate or partnership structure in the world of free software.
In open allocation, decision-making capabilities lie with the people closest to the problem being solved. Projects have a ‘primary responsible person,’ which is usually the person who has been working in that area the longest, or with the most influence. There are no arbiters of the direction of a project outside of the person or persons working on it. Project leaders can rotate into being followers, or drift out entirely, only to be replaced by new collaborators. As opposed to traditional management structures, where power is fixed, in open allocation, positions of leadership are temporary distinctions.
How open allocation works, briefly
As we discussed in Section I, the “analysts” that make up the managerial corporate class typically have a vested interest in change. Marketing narratives may supercede engineering priorities. Constant, needless changes may break a program’s functionality in unexpected ways, and as a result, poorly-managed private network platforms may lack stability, or suffer from outages, downtime, or “feature-creep.”
In open allocation free software projects, you propose changes you build. Non-technical managers are not there to think up spurious features, and even if such features are proposed, it’s unlikely anyone else will pick them up and build them.
Features or changes which are proposed, are generally expected to be implemented by the proposer, who is only permitted to commit code if the rest of the maintainers of the project agree that the problem being solved is real, and the solution is appropriate.
This alternative model for organizing work relations is considered the primary accomplishment of the free and open source software movement.
Benefits of working open allocation
This system has many benefits, one of which is that it minimizes “technical debt.” Technical debt is a metaphor for the additional work created later, by quick and dirty solutions used today. In practice, technical debt can accrue easily from frivolous feature requests, redirections, changes, poor communication, and other issues. Technical debt can also be introduced by regulation and legislation enforced on software companies.
In this way, corporate management and governmental oversight are indistinguishable, both sources of forcible, monotechnic, ceremonial, spurious technological development—and debt.
If technical debt accumulates, it can be difficult to implement meaningful improvements to a program later on. Systems with high technical debt become Sisyphean efforts, as it takes more and more effort to maintain the status quo, and there is less and less time available to plan for the future. Systems like this require slavish dedication. They are antithetical to the type of work conducive to happiness. Technical debt has high human costs, as recounted by one developer’s anecdotal description (edited for length):
Unpleasant Work:
A code base high in technical debt means that feature delivery slows to a crawl, which creates a lot of frustration and awkward moments in conversation about business capability. When new developers are hired or consultants brought in, they know that they’re going to have to face confused looks, followed by those newbies trying to hide mild contempt. To tie this back to the tech debt metaphor, think of someone with mountains of debt trying to explain being harassed by creditors. It’s embarrassing, which is, in turn, demoralizing.
Team Infighting:
Not surprisingly, this kind of situation tends to lead to bickering among the team. Again, the metaphor holds as one would expect this kind of behavior from a married couple with crippling debt. Teams draw battle lines. They add acrimony on top of the frustration and embarrassment of the problem itself.
Atrophied Skills:
As embarrassment mounts and the blame game is played more vigorously, team members can feel their professional relevance slipping away. Generally speaking, they want to touch things as little as humanly possible, because doing so further impairs their already lethargic process. It’s too slow and it’s too risky.
Technical debt usually results from beginning a software project without having a clear conception of the problem being solved. As you add features, you misapprehend the actual goal of your intended users. As a result, you end up in an “anti-pattern.” Anti-patterns are patterns of design and action which, despite looking like the right path at the moment, turn out to induce technical debt. Anti-patterns are project- and company-killers because they heap on technical debt.
By contrast, in an open allocation project with global significance, the benefits of open allocation governance are maximized. Those benefits include:
Coordination:
the people conceiving of the work are the ones doing the work.
Motivation:
You’re choosing your own project, so you have more at stake.
Responsibility:
Because you choose your assignment and you solve your own problems, you have nobody to blame but yourself if something doesn’t work.
Efficiency:
Trusted with their own time, new collaborators set immediately to work. No bureaucratic hassles slow down programming.
As it turns out, people love open allocation. In 2005, MIT Sloan and Boston Consulting Group did a study about the motivations of open source software engineers. The study reports:
We found that... enjoyment-based intrinsic motivation, namely how creative a person feels when working on the project, is the strongest and most pervasive driver" for voluntarily working on software... Many are puzzled by what appears to be irrational and altruistic behavior by movement participants: giving code away, revealing proprietary information, and helping strangers solve their technical problems… FOSS participants may be seeking flow states by selecting projects that match their skill levels with task difficulty, a choice that may not be available in their regular jobs.
This has led to an acknowledgement within managerial science of the sins of the 20th century. Now they are looking for ways to reorganize to push decision making to the operators!
Commercial software makers become begrudging copycats
The “open source” movement officially emerged in 1996, as a marketing program for free software adoption within businesses. It framed free software adoption in a way that businesses could understand.
Stallman, the GNU creator, says the difference between free and open source software is a moral one: “Most discussion of ‘open source’ pays no attention to right and wrong, only to popularity and success.”
Whatever the distinction, corporate technology giants panicked at the sudden invasion of software that anyone could license, copy, fork, deploy, modify, or commercialize. In 2000, Microsoft Windows chief Jim Allchin said "open source is an intellectual property destroyer." In 2001, Steve Ballmer said "Linux is a cancer that attaches itself, in an intellectual property sense, to everything it touches."
The fact remained: the methodologies of open source and open allocation-style governance were enjoyable, and produced very successful software. In 2001, a movement grew to bring open allocation methodologies into corporations. It was called “Agile Development,” and it was a desperate measure by the commercial software companies to hang onto relevance. If they couldn’t beat open source, they could join it and build commercial services and products on top. Copying the Cypherpunks and Cyberspace enthusiasts before them, the Agile proponents wrote a founding document. The Agile Manifesto read in part:
“In order to succeed in the new economy, to move aggressively into the era of e-business, e-commerce, and the web, companies have to rid themselves of their Dilbert manifestations of make-work and arcane policies. This freedom from the inanities of corporate life attracts proponents of Agile Methodologies, and scares the begeebers (you can’t use the word ‘shit’ in a professional paper) out of traditionalists. Quite frankly, the Agile approaches scare corporate bureaucrats—at least those that are happy pushing process for process’ sake versus trying to do the best for the "customer" and deliver something timely and tangible and "as promised"—because they run out of places to hide.”
Free, open source Unix variants succeed wildly
Microsoft finally integrated Linux and the open source technologies into its enterprise Azure platform in 2012. Linux, for its part, bested Windows and other proprietary operating systems to become the foundation of the Web. Unix-like operating systems power 67 percent of all servers on Earth. Within that 67 percent, at least half of those run Linux. No matter what kind of computer or phone you’re using, when you surf the Web, you’re probably connecting to a Linux server.
Other free open source libraries have also been successful within a corporate setting. Bloomberg LP uses and contributes code back to the open source Apache Lucene and Apache Solr projects, which are critical for search functions in its Terminal. BSD, another open source Unix derivative, was the basis for macOS and iOS. Google’s Android is based on Linux.
BMW, Chevrolet, Mercedes, Tesla, Ford, Honda, Mazda, Nissan, Mercedes, Suzuki, and the world's largest automobile company, Toyota all use Automotive Grade Linux in their vehicles. Blackberry and Microsoft both have vehicle platforms, but they are used by a minority of car OEMs. Volkswagen and Audi are moving to a Linux-based Android platform as of 2017.
Tesla, for its part, is open-sourcing its Linux distribution for the Model S and X cars, including the Tesla Autopilot platform, the kernel sources for hardware, and the infotainment system.
These examples serve to demonstrate two counter-intuitive lessons about software generally:
The success of software frequently has an inverse relationship with the amount of capital behind it.
Many of the most meaningful advances in computer technology have been the product of enthusiasts working outside the corporate or university system.
Modern organization design emerges in the hackers’ image
Today, many software companies experiment with some way to reduce reliance on management hierarchy. Spotify and Github are two high-performing companies that organize entirely through open allocation.
Spotify, for its part, has produced two in-depth videos about how its independent project teams collaborate. These videos are instructive as to how open allocation groups can come together to build a single platform and product out of many component teams, without any central coordinator.
Open allocation works inside companies similarly to the way it works outside a company structure, with a few exceptions. While companywide rank doesn’t determine project allocations, it is often a factor in compensation.
“Responsive Organization” is a movement anchored by Microsoft to adopt open allocation style organizational design inside itself and Yammer, the corporate messageboard system it acquired in 2012. Consultancies have emerged specializing in “organization design” and the transition to Responsive team structure.
Ultimately, attempts at creating “ideal engineering conditions” inside a corporation may only last as long as the company is comfortably situated in their category. Google began its life with a version of open allocation governance known as “20 percent time,” but later eliminated it when the company grew and adopted stack ranking.
Broader study reveals power is not truly migrating to the “makers” in most companies. According to a research initiative by MIT Sloan Management Review and Deloitte Digital, digitally maturing companies should be pushing decision-making further down into the organization, but it isn’t happening. Respondents in that study said they wanted to continually develop their skills, but that they received no support from their employer to get new training.
This finding mirrors the aforementioned MIT study on the motivations of open source contributors, which found that programmers enjoyed working on open source projects because it was a path to developing new, durable, and useful skills, at their own volition.
Summary
In this section we introduced hacker culture and its approach to creating software around a specific set of design principles and values. We’ve shown how hacker culture developed an organizational pattern, and we have suggested that these patterns have made computer software more accessible to non-professional and non-academic people, undermining the social divisions created by strict licensing and closed-source code. We’ve demonstrated the success of the free and open source approach at the foundational level, with software such as Linux and Apache.
Finally, we have shown the ways commercial software companies have tried to mimic the open allocation ways of working. With free and open source software, the hacker movement effectively destroyed the institutional monopoly on research and development. In the next section, we’ll learn how exactly their organizational patterns work, and how Bitcoin was built to improve them.
According to PricewaterhouseCoopers, four of the 10 biggest proposed initial coin offerings have used Switzerland as a base, where they are frequently registered as non-profit foundations. The Swiss regulatory agency FINMA stated that it would take a 'balanced approach' to ICO projects and would allow 'legitimate innovators to navigate the regulatory landscape and so launch their projects in a way consistent with national laws protecting investors and the integrity of the financial system.' In response to numerous requests by industry representatives, a legislative ICO working group began to issue legal guidelines in 2018, which are intended to remove uncertainty from cryptocurrency offerings and to establish sustainable business practices.