Cypherpunks Write Code: Adam Back and Hashcash

Not every cypherpunk is now working in digital assets, but that’s not the case for Adam Back. He’s a British cryptographer and known cypherpunk, who was born in London, England, in July 1970. He began his journey into computing by teaching himself Basic —the most popular programming language in the 70s and 80s.

His academic journey led him to pursue advanced studies in computer science, culminating in a PhD in distributed systems from the University of Exeter. During his doctoral research, Back delved into encryption, electronic cash, and remailers, demonstrating a keen interest in cryptography and its applications.

After completing his education, Back embarked on a career as a consultant, working with both startups and established companies. His work primarily revolved around applied cryptography, where he wrote cryptographic libraries, designed cryptographic protocols, and even analyzed and broke existing cryptographic systems.

Furthermore, Back is known for his advocacy and activism in promoting privacy and cryptography. He famously created a "Munitions" T-shirt adorned with cryptographic code, challenging the restrictive US regulations on civil cryptography. This activism reflects his commitment to defending privacy rights in the digital age, like all cypherpunks.

Hashcash & PoW

“Hashcash,” a Proof-of-Work (PoW) system created by Back in 1997, is mentioned in the Bitcoin whitepaper, and it’s considered the precursor of cryptocurrency mining. Let’s remember that PoW is an algorithm or mathematical tool that, when applied, ensures computational effort and energy to carry on a specific task. In this case, PoW was used to create a defense against email spam.

By using Hashcash, senders had to solve a computational puzzle, generating a unique identifier for each email. This puzzle entails repeatedly hashing a string until it produces a hash with specific characteristics, such as a certain number of leading zeros. This process demands computational resources, deterring spammers who seek to send large volumes of emails inexpensively.

The computational effort (PoW) required to generate a Hashcash stamp is typically insignificant for regular email users, as it only involves a few seconds of processing time on a standard desktop computer. However, for spammers who aim to send large volumes of emails, the cumulative computational burden becomes prohibitive, as they would need to expend significant resources to generate Hashcash stamps for each message. Therefore, the cost of computation acts as a deterrent for spammers only.

This mechanism inspired Satoshi Nakamoto, who adapted it for Bitcoin mining. Bitcoin's PoW algorithm requires miners to solve cryptographic puzzles with their own resources in order to create blocks and secure the network. “Hashcash - A Denial of Service Counter-Measure” by Adam Back is the sixth reference in the Bitcoin whitepaper.

Blockstream and Bitcoin

Despite being a pioneer of “mining,” participating in the same cypherpunk mailing list in which Bitcoin was born, and also being one of the first people to communicate with Nakamoto online, Back didn’t show real interest in Bitcoin until 2013. A year later, he was co-founding Blockstream, a Bitcoin development company and an important source of funds for Bitcoin Core —the main Bitcoin implementation so far. In late 2016, he was appointed as the CEO of Blockstream.

https://www.youtube.com/watch?v=CG_e3ZCPW5Y

This company specializes in various products and services aimed at advancing the functionality, security, and scalability of the Bitcoin network. One of its core focuses is the provision of infrastructure solutions to enable the seamless operation of Bitcoin and other cryptocurrencies.

A key aspect of Blockstream's offerings is its Liquid Network, a federated sidechain designed to facilitate faster and more confidential transactions for Bitcoin and other digital assets. The Liquid Network enhances Bitcoin's functionality by enabling rapid transfers between exchanges and institutions.

Additionally, Blockstream provides tools and services to support the development of decentralized applications (dApps) on the Bitcoin blockchain. It also offers its own hardware wallet (Jade), a Bitcoin mining colocation service, and a whole satellite network to make offline Bitcoin transactions.

Beyond Mining

Adam Back is still working on Bitcoin and mining, but there’s another step to decentralization and protecting privacy rights. While Bitcoin represents a significant advancement in decentralization compared to traditional fiat currencies, newer crypto ecosystems like Directed Acyclic Graph (DAG) networks, exemplified by projects like Obyte, offer a higher level of decentralization and privacy protection.

DAG systems eliminate the need for miners and intermediaries entirely, employing a block-free structure where transactions are linked to their predecessors and successors by the users who created them. This design, along with other features, helps to prevent double-spending and ensures transaction immutability without the reliance on centralized “validators”.

Unlike PoW blockchains where miners may exert influence over transaction sequencing, and unlike PoS blockchains where their block producers can do the same, DAG networks establish transaction order with the help of "Order Providers". These Order Providers regularly post transactions that serve as waypoints for transaction ordering but lack the authority to reject or manipulate transactions.

Furthermore, DAG systems prevent selective censorship by linking all transactions, making it impractical for any entity to censor one transaction without affecting others. The resilience of DAG networks against censorship and manipulation lies in their decentralized and open nature. This is demonstrated on a daily basis by the fact that there are no powerful centers of power and no middlemen. The next level of financial decentralization and online freedom is here.

Read more from Cypherpunks Write Code series:

Tim May & Crypto-anarchism

Wei Dai & B-money

Nick Szabo & Smart Contracts