Last letter from Tim May

grarpamp grarpamp at
Mon Dec 17 19:46:40 PST 2018

> CoinDesk asked cypherpunk legend Timothy May, author of the “Crypto
> Anarchist Manifesto,” to write his thoughts on the bitcoin white paper on
> its 10th anniversary.

Enough with the ICO-Me-So-Horny-Get-Rich-Quick-Lambo Crypto
Timothy C. May
Oct 19, 2018 at 04:00 UTC
Updated Dec 17, 2018 at 08:34 UTC

CoinDesk asked cypherpunk legend Timothy May, author of the “Crypto
Anarchist Manifesto,” to write his thoughts on the bitcoin white paper
on its 10th anniversary. What he sent back was a sprawling 30-page
evisceration of a technology industry he feels is untethered from

The original message is presented here as a fictional Q&A for clarity.
The message remains otherwise unchanged. Read more in our White Paper
Reflections series.

CoinDesk: Now that bitcoin has entered the history books, how do you
feel the white paper fits in the pantheon of financial cryptography

Tim: First, I’ll say I’ve been following, with some interest, some
amusement and a lot of frustration for the past 10 years, the public
situation with bitcoin and all of the related variants.

In the pantheon, it deserves a front-rank place, perhaps the most
important development since the invention of double-entry

I can’t speak for what Satoshi intended, but I sure don’t think it
involved bitcoin exchanges that have draconian rules about KYC, AML,
passports, freezes on accounts and laws about reporting “suspicious
activity” to the local secret police. There’s a real possibility that
all the noise about “governance,” “regulation” and “blockchain” will
effectively create a surveillance state, a dossier society.

I think Satoshi would barf. Or at least work on a replacement for
bitcoin as he first described it in 2008-2009. I cannot give a ringing
endorsement to where we are, or generate a puff-piece about the great
things already done.

Sure, bitcoin and its variants – a couple of forks and many altcoin
variants – more or less work the way it was originally intended.
Bitcoin can be bought or mined, can be sent in various fast ways,
small fees paid and recipients get bitcoin and it can be sold in tens
of minutes, sometimes even faster.

No permission is needed for this, no centralized agents, not even any
trust amongst the parties. And bitcoin can be acquired and then saved
for many years.

But this tsunami that swept the financial world has also left a lot of
confusion and carnage behind. Detritus of the knowledge-quake, failed
experiments, Schumpeter’s “creative destructionism.” It’s not really
ready for primetime. Would anyone expect their mother to “download the
latest client from Github, compile on one of these platforms, use the
Terminal to reset these parameters?”

What I see is losses of hundred of millions in some programming
screw-ups, thefts, frauds, initial coin offerings (ICOs) based on
flaky ideas, flaky programming and too few talented people to pull off
ambitious plans.

Sorry if this ruins the narrative, but I think the narrative is
fucked. Satoshi did a brilliant thing, but the story is far from over.
She/he/it even acknowledged this, that the bitcoin version in 2008 was
not some final answer received from the gods..

CoinDesk: Do you think others in the cypherpunk community share your
views? What do you think is creating interest in the industry, or
killing it off?

Tim: Frankly, the newness in the Satoshi white paper (and then the
early uses for things like Silk Road) is what drew many to the bitcoin
world. If the project had been about a “regulatory-compliant,”
“banking-friendly” thing, then interest would’ve been small. (In fact,
there were some yawn-inducing electronic transfer projects going back
a long time. “SET,” for Secure Electronic Transfer, was one such
mind-numbingly-boring projects.)

It had no interesting innovations and was 99 percent legalese.
Cypherpunks ignored it.

It’s true that some of us were there when things in the “financial
cryptography” arena really started to get rolling. Except for some of
the work by David Chaum, Stu Haber, Scott Stornetta, and a few others,
most academic cryptographers were mainly focused on the mathematics of
cryptology: their gaze had not turned much toward the “financial”

This has of course changed in the past decade. Tens of thousands of
people, at least, have flocked into bitcoin, blockchain, with major
conferences nearly every week. Probably most people are interested in
the “Bitcoin Era,” starting roughly around 2008-2010, but with some
important history leading up to it.

History is a natural way people understand things… it tells a story, a
linear narrative.

About the future I won’t speculate much. I was vocal about some
“obvious” consequences from 1988 to 1998, starting with “The Crypto
Anarchist Manifesto” in 1988 and the Cypherpunks group and list
starting in 1992.

CoinDesk: It sounds like you don’t think that bitcoin is particularly
living up to its ethos, or that the community around it hasn’t really
stuck to its cypherpunk roots.

Tim: Yes, I think the greed and hype and nattering about “to the
Moon!” and “HODL” is the biggest hype wagon I’ve ever seen.

Not so much in the “Dutch Tulip” sense of enormous price increases,
but in the sense of hundred of companies, thousands of participants,
and the breathless reporting. And the hero worship. This is much more
hype than we saw during the dot-com era. I think far too much
publicity is being given to talks at conferences, white papers and
press releases. A whole lot of “selling” is going on.

People and companies are trying to stake-out claims. Some are even
filing for dozens or hundreds of patents in fairly-obvious variants of
the basic ideas, even for topics that were extensively-discussed in
the 1990s. Let’s hope the patent system dismisses some of these
(though probably only when the juggernauts enter the legal fray).

The tension between privacy (or anonymity) and “know your customer”
approaches is a core issue. It’s “decentralized, anarchic and
peer-to-peer” versus “centralized, permissioned and back door.”
Understand that the vision of many in the privacy community —
cypherpunks, Satoshi, other pioneers — was explicitly of a
permission-less, peer-to-peer system for money transfers. Some had
visions of a replacement for “fiat” currency.

David Chaum, a principal pioneer, was very forward-thinking on issues
of “buyer anonymity.” Where, for example, a large store could receive
payments for goods without knowing the identity of a buyer. (Which is
most definitely not the case today, where stores like Walmart and
Costco and everybody else compiled detailed records on what customers
buy. And where police investigators can buy the records or access them
via subpoenas. And in more nefarious ways in some countries.)

Remember, there are many reasons a buyer does not wish to disclose
buying preferences. But buyers and sellers BOTH need protections
against tracking: a seller of birth control information is probably
even more at risk than some mere buyer of such information (in many
countries). Then there’s blasphemy, sacrilege and political activism.
Approaches like Digicash which concentrated on *buyer* anonymity (as
with shoppers at a store or drivers on a toll-road), but were missing
a key ingredient: that most people are hunted-down for their speech or
their politics on the *seller* side.

Fortunately, buyers and sellers are essentially isomorphic, just with
some changes in a few arrow directions (“first-class objects”).

What Satoshi did essentially was to solve the “buyer”/”seller”
track-ability tension by providing both buyer AND seller
untraceability. Not perfectly, it appears. Which is why so much
activity continues.

CoinDesk: So, you’re saying bitcoin and crypto innovators need to
fight the powers that be, essentially, not align with them to achieve
true innovation?

Tim: Yes, there is not much of interest to many of us if
cryptocurrencies just become Yet Another PayPal, just another bank
transfer system. What’s exciting is the bypassing of gatekeepers, of
exorbitant fee collectors, of middlemen who decide whether Wikileaks —
to pick a timely example — can have donations reach it. And to allow
people to send money abroad.

Attempts to be “regulatory-friendly” will likely kill the main uses
for cryptocurrencies, which are NOT just “another form of PayPal or

More general uses of “blockchain” technology are another kettle of
fish. Many uses may be compliance-friendly. Of course, a lot of the
proposed uses — like putting supply chain records — on various public
or private blockchains are not very interesting. Many point that these
“distributed ledgers” are not even new inventions, just variants of
databases with backups. As well, the idea that corporations want
public visibility into contracts, materials purchases, shipping dates,
and so on, is naive.

Remember, the excitement about bitcoin was mostly about bypassing
controls, to enable exotic new uses like Silk Road. It was some cool
and edgy stuff, not just another PayPal.

CoinDesk: So, you’re saying that we should think outside the box, try
to think about ways to apply the technology in novel ways, not just
remake what we know?

Tim: People should do what interests them. This was how most of the
innovative stuff like BitTorrent, mix-nets, bitcoin, etc. happened.
So, I’m not sure that “try to think about ways” is the best way to put
it. My hunch is that ideologically-driven people will do what is
interesting. Corporate people will probably not do well in “thinking
about ways.”

Money is speech. Checks, IOUs, delivery contracts, Hawallah banks, all
are used as forms of money. Nick Szabo has pointed out that bitcoin
and some other cryptocurrencies have most if not all of the features
of gold except it also has more features: it weighs nothing, it’s
difficult to steal or seize and it can be sent over the crudest of
wires. And in minutes, not on long cargo flights as when gold bars are
moved from place to another.

But, nothing is sacred about either banknotes, coins or even
official-looking checks. These are “centralized” systems dependent on
“trusted third parties” like banks or nation-states to make some legal
or royal guaranty.

Sending bitcoin, in contrast, is equivalent to “saying” a number (math
is more complicated than this, but this is the general idea). To ban
saying a number is equivalent to a ban on some speech. That doesn’t
mean the tech can’t be stopped. There was the “printing out PGP code,”
or the Cody Wilson, Defense Distributed case, where a circuit court
ruled this way,

Printed words are very seldom outside the scope of the First Amendment.

CoinDesk: Isn’t this a good example of where you, arguably, want some
censorship (the ability to force laws), if we’re going to rebuild the
whole economy, or even partial economies, on top of this stuff?

Tim: There will inevitably be some contact with the legal systems of
the U.S., or the rest of the world. Slogans like “the code is the law”
are mainly aspirational, not actually true.

Bitcoin, qua bitcoin, is mostly independent of law. Payments are, by
the nature of bitcoin, independent of charge-backs, “I want to cancel
that transaction,” and other legal issues. This may change. But in the
current scheme, it’s generally not know who the parties are, which
jurisdictions the parties live in, even which laws apply.

This said, I think nearly all new technologies have had uses some
would not like. Gutenberg’s printing press was certainly not liked by
the Catholic Church. Examples abound. But does this mean printing
presses should be licensed or regulated?

There have usually been some unsavory or worse uses of new
technologies (what’s unsavory to, say, the U.S.S.R. may not be
unsavory to Americans). Birth control information was banned in
Ireland, Saudi Arabia, etc. Examples abound: weapons, fire, printing
press, telephones, copier machines, computers, tape recorders.

CoinDesk: Is there a blockchain or cryptocurrency that’s doing it
right? Is bitcoin, in your opinion, getting its own vision right?

Tim: As I said, bitcoin is basically doing what it was planned to do.
Money can be transferred, saved (as bitcoin), even used as a
speculative vehicle. The same cannot be said for dozens of major
variants and hundreds of minor variants where a clear-cut,
understandable “use case” is difficult to find.

Talk of “reputation tokens,” “attention tokens,” “charitable giving
tokens,” these all seem way premature to me. And none have taken off
the way bitcoin did. Even ethereum, a majorly different approach, has
yet to see interest uses (at least that I have seen, and I admit I
don’t the time or will to spend hours every day following the Reddit
and Twitter comments.)

“Blockchain,” now its own rapidly-developing industry, is proceeding
on several paths: private blockchains, bank-controlled blockchains,
pubic blockchains, even using the bitcoin blockchain itself. Some uses
may turn out to be useful, but some appear to be speculative,
toy-like. Really, marriage proposals on the blockchain?

The sheer number of small companies, large consortiums, alternative
cryptocurrencies, initial coin offerings (ICOs), conferences, expos,
forks, new protocols, is causing great confusion and yet there are new
conferences nearly every week.

People jetting from Tokyo to Kiev to Cancun for the latest 3-5 days
rolling party. The smallest only attract hundreds of fanboys, the
largest apparently have drawn crowds of 8,000. You can contrast that
with the straightforward roll-out of credit cards, or even the
relatively clean roll-out of bitcoin. People cannot spend mental
energy reading technical papers, following the weekly announcements,
the contentious debates. The mental transaction costs are too high,
for too little.

The people I hear about who are reportedly transferring “interesting”
amounts of money are using basic forms of bitcoin or bitcoin cash, not
exotics new things like Lightning, Avalanche, or the 30 to 100 other

CoinDesk: It sounds like you’re optimistic about the value transfer
use case for cryptocurrencies, at least then.

Tim: Well, it will be a tragic error if the race to develop (and
profit from) the things that are confusingly called “cryptocurrencies”
end up developing dossiers or surveillance societies such as the world
has never seen. I’m just saying there’s a danger.

With “know your customer” regulations, crypto monetary transfers won’t
be like what we have now with ordinary cash transactions, or even with
wire transfers, checks, etc. Things will be _worse_ than what we have
now if a system of “is-a-person” credentialing and “know your
customer” governance is ever established. Some countries already want
this to happen.

The “Internet driver’s license” is something we need to fight against.

CoinDesk: That’s possible, but you could make a similar claim about
the internet today isn’t exactly the same as the original idea, yet
it’s still be useful in driving human progress.

Tim: I’m just saying we could end up with a regulation of money and
transfers that is much the same as regulating speech. Is this a reach?
If Alice can be forbidden from saying “I will gladly pay you a dollar
next week for a cheeseburger today,” is this not a speech restriction?
“Know your customer” could just as easily be applied to books and
publishing: “Know your reader.” Gaaack!

I’m saying there are two paths: freedom vs. permissioned and
centralized systems.

This fork in the road in the road was widely discussed some 25 years
ago. Government and law enforcement types didn’t even really disagree:
they saw the fork approaching. Today, we have tracking, the wide use
of scanners (at elevators, chokepoints), tools for encryption, cash,
privacy, tools for tracking, scanning, forced decryption, backdoors,

In a age where a person’s smartphone or computer may carry gigabytes
of photos, correspondence, business information – much more than an
entire house carried back when the Bill of Rights was written – the
casual interception of phones and computers is worrisome. A lot of
countries are even worse than the U.S. New tools to secure data are
needed, and lawmakers need to be educated.

Corporations are showing signs of corporatizing the blockchain: there
are several large consortiums, even cartels who want “regulatory

It is tempting for some to think that legal protections and judicial
supervision will stop excesses… at least in the US and some other
countries. Yet, we know that even the US has engaged in draconian
behavior (purges of Mormons, killings and death marches for Native
Americans, lynchings, illegal imprisonment of those of suspected
Japanese ancestry).

What will China and Iran do with the powerful “know your writers” (to
extend “know your customer” in the inevitable way)?

CoinDesk: Are we even talking about technology anymore though? Isn’t
this just power and the balance of power. Isn’t there good that has
come from the internet even if it’s become more centralized?

Tim: Of course, there’s been much good coming out of the Internet tsunami.

But, China already uses massive databases – with the aid of search
engine companies – to compile “citizen trustworthiness” ratings that
can be used to deny access to banking, hotels, travel. Social media
corporate giants are eagerly moving to help build the machinery of the
Dossier Society (they claim otherwise, but their actions speak for

Not to sound like a Leftist ranting about Big Brother, but any civil
libertarian or actual libertarian has reason to be afraid. In fact,
many authors decades ago predicted this dossier society, and the tools
have jumped in quantum leaps since then

In thermodynamics, and in mechanical systems, with moving parts, there
are “degrees of freedom.” A piston can move up or down, a rotor can
turn, etc. I believe social systems and economies can be characterized
in similar ways. Some things increase degrees of freedom, some things
“lock it down.”

CoinDesk: Have you thought about writing something definitive on the
current crypto times, sort of a new spin on your old works?

Tim: No, not really. I spent a lot of time in the 1992-95 period
writing for many hours a day. I don’t have it in me to do this again.
That a real book did not come out of this is mildly regrettable, but
I’m stoical about it.

CoinDesk: Let’s step back and look at your history. Knowing what you
know about the early cypherpunk days, do you see any analogies to
what’s happening in crypto now?

Tim: About 30 years ago, I got interested in the implications of
strong cryptography. Not so much about the “sending secret messages”
part, but the implications for money, bypassing borders, letting
people transact without government control, voluntary associations.

I came to call it “crypto anarchy” and in 1988 I wrote “The Crypto
Anarchist Manifesto,” loosely-based in form on another famous
manifesto. And based on “anarcho-capitalism,” a well-known variant of
anarchism. (Nothing to do with Russian anarchists or syndicalists,
just free trade and voluntary transactions.)

At the time, there was one main conference – Crypto – and two
less-popular conferences – EuroCrypt and AsiaCrypt. The academic
conferences had few if any papers on any links to economics and
institutions (politics, if you will). Some game theory-related papers
were very important, like the mind-blowing “Zero Knowledge Interactive
Proof Systems” work of Micali, Goldwasser and Rackoff.

I explored the ideas for several years. In my retirement from Intel in
1986 (thank you, 100-fold increase in the stock price!), I spent many
hours a day reading crypto papers, thinking about new structures that
were about to become possible.

Things like data havens in cyberspace, new financial institutions,
timed-release crypto, digital dead drops through steganography, and,
of course, digital money.

Around that time, I met Eric Hughes and he visited my place near Santa
Cruz. We hatched a plan to call together some of the brightest people
we knew to talk about this stuff. We met in his newly-rented house in
the Oakland Hills in the late summer of 1992.

CoinDesk: You mentioned implications for money… Were there any
inclinations then that something like bitcoin or cryptocurrency would
come along?

Tim: Ironically, at that first meeting, I passed out some Monopoly
money I bought at a toy store. (I say ironically because years later,
when bitcoin was first being exchanged in around 2009-2011 it looked
like play money to most people – cue the pizza story!)

I apportioned it out and we used it to simulate what a world of strong
crypto, with data havens and black markets and remailers (Chaum’s
“mixes”) might look like. Systems like what later became “Silk Road”
were a hoot. (More than one journalist has asked me why I did not
widely-distribute my “BlackNet” proof of concept. My answer is
generally “Because I didn’t want to be arrested and imprisoned.”
Proposing ideas and writing is protected speech, at least in the U.S.
at present.)

We started to meet monthly, if not more often at times, and a mailing
list rapidly formed. John Gilmore and Hugh Daniel hosted the mailing
list. There was no moderation, no screening, no “censorship” (in the
loose sense, not referring to government censorship, of which of
course there was none.) The “no moderation” policy went along with “no

While a handful of maybe 20 people wrote 80 percent of the essays and
messages, there was no real structure. (We also thought this would
provide better protection against government prosecution).

And of course this fits with a polycentric, distributed,
permission-less, peer to peer structure. A form of anarchy, in the “an
arch,” or “no top” true meaning of the word anarchy. This had been
previously explored by David Friedman, in his influential mid-70s book
“The Machinery of Freedom.” And by Bruce Benson, in “The Enterprise of

He studied the role of legal systems absent some ruling top authority.
And of course anarchy is the default and preferred mode of most
people—to choose what they eat, who they associate with, what the read
and watch. And whenever some government or tyrant tries to restrict
their choices they often finds way to route around the restrictions:
birth control, underground literature, illegal radio reception, copied
cassette tapes, thumb drives ….

This probably influenced the form of bitcoin that Satoshi Nakamoto
later formulated.

CoinDesk: What was your first reaction to Satoshi’s messages, do you
remember how you felt about the ideas?

Tim: I was actually doing some other things and wasn’t following the
debates. My friend Nick Szabo mentioned some of the topics in around
2006-2008. And like a lot of people I think my reaction to hearing
about the Satoshi white paper and then the earliest “toy” transactions
was only mild interest. It just didn’t seem likely to become as big as
it did.

He/she/they debated aspects of how a digital currency might work, what
it needed to make it interesting. Then, in 2008, Satoshi Nakamoto
released “their” white paper. A lot of debate ensued, but also a lot
of skepticism.

In early 2009 an alpha release of “bitcoin” appeared. Hal Finney had
the first bitcoin transaction with Satoshi. A few others. Satoshi
himself (themselves?) even said that bitcoin would likely either go to
zero in value or to a “lot.” I think many were either not following it
or expected it would go to zero, just another bit of wreckage on the
Information Superhighway.

The infamous pizza purchase shows that most thought of it as basically
toy money.

CoinDesk: Do you still think it’s toy money? Or has the slowly
increasing value sort of put that argument to rest, in your mind?

Tim: No, it’s no longer just toy money. Hasn’t been for the past
several years. But it’s also not yet a replacement for money, for
folding money. For bank transfers, for Hawallah banks, sure. It’s
functioning as a money transfer system, and for black markets and the

I’ve never seen such hype, such mania. Not even during the
bubble, the era of and people talking about how much money
they made by buying stocks in “JDS Uniphase.” (After the bubble burst,
the joke around Silicon Valley was “What’s this new start-up called
“Space Available”?” Empty buildings all around.)

I still think cryptocurrency is too complicated…coins, forks,
sharding, off-chain networks, DAGs, proof-of-work vs. proof-of-stake,
the average person cannot plausibly follow all of this. What use
cases, really? There’s talk about the eventual replacement of the
banking system, or credit cards, PayPal, etc. is nice, but what does
it do NOW?

The most compelling cases I hear about are when someone transfers
money to a party that has been blocked by PayPal, Visa (etc), or banks
and wire transfers. The rest is hype, evangelizing, HODL, get-rich
lambo garbage.

CoinDesk: So, you see that as bad. You don’t buy the argument that
that’s how things get built though, over time, somewhat sloppily…

Tim: Things sometimes get built in sloppy ways. Planes crash, dams
fail, engineers learn. But there are many glaring flaws in the whole
ecology. Programming errors, conceptual errors, poor security methods.
Hundreds of millions of dollars have been lost, stolen, locked in
time-vault errors.

If banks were to lose this kind of my money in “Oops. My bad!”
situations there’d be bloody screams. When safes were broken into, the
manufacturers studied the faults — what we now call “the attack
surface” — and changes were made. It’s not just that customers — the
banks — were encouraged to upgrade, it’s that their insurance rates
were lower with newer safes. We desperately need something like this
with cryptocurrencies and exchanges.

Universities can’t train even basic “cryptocurrency engineers” fast
enough, let alone researchers. Cryptocurrency requires a lot of
unusual areas: game theory, probability theory, finance, programming.

Any child understands what a coin like a quarter “does,” He sees
others using quarters and dollar bills and the way it works is clear.

When I got my first credit card I did not spend a lot of time reading
manuals, let alone downloading wallets, cold storage tools or keeping
myself current on the protocols. “It just worked, and money didn’t
just vanish.

CoinDesk: It sounds like you don’t like how innovation and speculation
have become intertwined in the industry…

Tim: Innovation is fine. I saw a lot of it in the chip industry. But
we didn’t have conferences EVERY WEEK! And we didn’t announce new
products that had only the sketchiest ideas about. And we didn’t form
new companies with such abandon. And we didn’t fund by “floating an
ICO” and raising $100 million from what are, bluntly put, naive
speculators who hope to catch the next bitcoin.

Amongst my friends, some of whom work at cryptocurrency companies and
exchanges, the main interest seems to be in the speculative stuff.
Which is why they often keep their cryptocurrency at the exchanges:
for rapid trading, shorting, hedging, but NOT for buying stuff or
transferring assets outside of the normal channels.

CoinDesk: Yet, you seem pretty knowledgeable on the whole about the
subject area… Sounds like you might have a specific idea of what it
“should” be.

Tim: I probably spend way too much time following the Reddit and
Twitter threads (I don’t have an actual Twitter account).

What “should” it be? As the saying goes, the street will find its own
uses for technology. For a while, Silk Road and its variants drove
wide use. Recently, it’s been HODLing, aka speculating. I hear that
online gambling is one of the main uses of ethereum. Let the fools
blow their money.

Is the fluff and hype worth it? Will cryptocurrency change the world?
Probably. The future is no doubt online, electronic, paperless.

But bottom line, there’s way too much hype, way too much publicity and
not very many people who understand the ideas. It’s almost as if
people realize there’s a whole world out there and thousands start
building boats in their backyards.

Some will make, but most will either stop building their boats or will
sink at sea.

We were once big on manifestos, These were ways not of enforcing
compliance, but of suggesting ways to proceed. A bit like advising a
cat… one does not command a cat, one merely suggests ideas, which
sometimes they go with.

Final Thoughts:

    Don’t use something just because it sounds cool…only use it if
actually solves some problem (To date, cryptocurrency solves problems
for few people, at least in the First World).
    Most things we think of as problems are not solvable with crypto
or any other such technology (crap like “better donation systems” are
not something most people are interested in).
    If one is involved in dangerous transactions – drugs, birth
control information – practice intensive “operational security”….look
at how Ross Ulbricht was caught.
    Mathematics is not the law
    Crypto remains very far from being usable by average people (even
technical people)
    Be interested in liberty and the freedom to transact and speak to
get back to the original motivations. Don’t spend time trying to make
government-friendly financial alternatives.
    Remember, there are a lot tyrants out there.

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