 Government is not a monolithic thing, which is your enemy. It's a multitudinous thing, which is your enemy. Our dream was to enable the future of human freedom. In the early 1990s, a group of mathematicians, misfits, hackers and hobbyists came together around a shared belief that the internet would either demolish artificial walls or lay the groundwork for an Orwellian state. We can prevent the Ministry of Truth. They saw a branch of mathematics called cryptography as a weapon against central planning and surveillance in this new virtual world. And what is a cypherpunk? Cypherpunks are cryptography activists. The more I realized how it was a really pivotal technology for society. The National Security Agency declared the unrestrained public discussion of cryptographic research threatened our national security. I saw this as the critical fork in the road for the future of human freedom. Coming up, reason presents a four-part series and a movement that foresaw both the promise and the peril that lay ahead when the internet upended the world. It's like standing on top of the mountain and seeing that this is out there. You people who are here can say, OK, what kind of world do we really want to build and build it? Imagine, if you will, sitting down to your morning coffee, turning on your home computer to read the day's newspaper. Well, it's not as far-fetched as it may seem. The freedom issues were very important to us. This is a sample of what you can order through your computer. It combines the power of your computer with the convenience of your telephone. We saw that information technology could create a 1984-style tyrannical top-down control society, or it could develop into something that is a decentralized enabler of human freedom. And even back then, our dream was to enable the future of human freedom. In the late 1980s, at the dawn of the online age, a group of young computer scientists in Silicon Valley started grappling with what this new technology would mean for society. We took a look at the potential of computer systems and saw that for everything about civilization that enables it to work, we can enable it to work much better. The most influential figure in what would become the cypherpunk movement was the physicist Tim May, who envisioned the future internet as a place for what he would dub crypto-anarchy, where lawbreakers' radicals and political dissidents could shield their activities from government surveillance and control. People doing things that didn't require permissions from anyone because the people were untraceable and couldn't be stopped. But there was another group that saw the potential of computers to remake society gradually from within by decentralizing commerce and improving the dissemination of knowledge. They were dubbed the high-tech hyacinths because their worldview was influenced by the work of Austrian economist Friedrich Hayek. The fundamental insights of Hayekian economics was how separately formulated plans tend to mesh well. And we saw electronic media as an enabler of coordination, the complexity that the world previously was really not capable of. The clash of visions between the high-tech hyacinths who wanted to build a borderless, frictionless global marketplace and the crypto-anarchists who saw the internet as a technological means of undermining all governments set the course for the cypherpunk movement. If May was the father of crypto-anarchy, the central figure for the high-tech hyacinths was the economist and entrepreneur Phil Salem. Now if you own a personal computer, we are told you can shop at home in what's called the electronic mall. It was a few years before the invention of the World Wide Web, but computer companies were offering a new type of service in which customers could connect through their phone lines to post messages to a bulletin board, check their horoscopes, or go shopping. You can buy items from department stores ranging from Nordstroms to Neiman Marcus, all via computer screen. Salem, whose outlook was shaped by his careful reading of Hayek, understood that these services weren't merely a curiosity or a digital version of the old mail order catalog. They were the beginning of something that had the potential to one day erase national boundaries through trade and undermine government power. In a prescient 1991 essay, he foresaw how the internet would change the world by 1995, 2000, and beyond. The static role of store and shopper, seller and buyer, author and reader, systems defined by their one-way information flows will be replaced by new forms of media, enabling two-way information flows. Before getting involved with computers, Salem had run a private rocket company and had co-authored a congressional study critical of NASA's wasteful spending. But in his view, there was continuity between his interests in space travel and computing because in both industries, technology's purpose was to drive down the transaction costs that impede human activity, making it feasible to explore new frontiers and interact in ways that would otherwise be prohibitively expensive. Now, thanks to breakthroughs in computing, the ability to buy or obtain exactly the information you need, when you want it, and the form you want it, is about to explode at a speed, unmatched since the invention of printing. But Salem was foremost an entrepreneur, and in the mid-1980s he set out to launch one of those platforms for buying and selling information. He called it the American Information Exchange, or AMEX. This business that we're doing is to make possible a new kind of thing, which is being able to buy and sell information online. AMEX was a radical idea in the mid-1980s. Users could buy or sell advice about the real estate market, writing software, or what companies to invest in. Now you can say to somebody, so it's like eBay or like Price Line or like Amazon, when we try to explain this to people, they simply couldn't get it, they could not wrap their heads around this. Some of them, I think, couldn't imagine the computational end of it. Milton Friedman didn't get it. Though it was similar in ways to the online marketplaces that would launch a decade later, AMEX was more than just an idea before its time. What set it apart was its grounding in political philosophy and its lofty goal of elevating individual decision-making over central planning. It was an instantiation of Austrian economics, now put into code and put online. Something like this could have profound human consequences, and that was the vision. A fluid, transaction-oriented market system with two-way feedback, Salem wrote, would result in crowding out monolithic, mostly government bureaucracies. We were laying the philosophical foundations of what is e-commerce, that you can now have creative explosion. It's going to change the world. Yes, that's right. Intermediating among large populations of human beings through electronic means results in all kinds of fascinating, emergent and social behavior. AMEX's chief architect was the pioneering software engineer, Chip Morningstar, who had come from a stint at George Lucas' production studio, where he oversaw the creation of Habitat, which was one of the first online virtual communities. After joining AMEX, Morningstar co-authored an essay, which argued that in building a world in software, detailed central planning is impossible. The world is just more complicated. People are more complicated. You cannot know what all their goals are. What you can do is you can put them into an environment in which certain kinds of things are possible. What you can't do is tell people what they want. Phil Salem, Mark Miller, and Chip Morningstar's ideas about how a future internet could decentralize society inspired Tim May to first articulate a radically different vision. May, who would go on to become the most influential figure in the cypherpunk movement, was introduced to Salem by Morningstar in December of 1987. Chip said, there's this guy out in Santa Cruz that you ought to talk to. As a scientist at Intel, May had solved an issue affecting the reliability of the company's memory chips called the alpha particle problem. Rich on stock options, he'd been spending his days at the beach reading science fiction novels, thinking about how networked personal computers could turn some of their futuristic scenarios into reality. So I met with Phil in Redwood City, and he described how AMEX would work. And I said, people aren't going to be selling meaningless stuff like surfboard recommendations. In May's view, AMEX could be useful as a tool for undermining state power, but only by shattering legal and social norms. I said it's going to be corporate information. It's going to be bomber plans for the B-1 bomber. Who wants to buy that? A competitor or a company. Who wants to sell that? Someone who has access to that information. It's two different types of libertarians. He didn't understand the extent to which you could benefit the world by lowering transaction costs for everybody. Like Salem and the high-tech Hayekians, May saw the personal computer as enabling technology for sweeping societal changes. But he had a different vision of a virtual marketplace for any and all goods and services, which he dubbed blacknet, or a technological means of undermining all governments. On AMEX, user activity was out in the open, but blacknet would be impervious to government tracking and surveillance, and perhaps it would be a network with no owners at all. Many people's first response would be to say that blacknet won't be allowed to happen. Perhaps, but technology would probably make it inevitable. If you don't physically meet the person, if you don't even know what continent they're on, you can't coerce them. Tim May's a smart guy. He was great for honing our ideas and technologies against, but I think of him as sort of the shock jock for cipher punks. I want to live in the world that surrounds us rather than try and construct one from scratch. We saw this as emerging from inside the world and carrying the world along with it. In 1988, AMEX was acquired by the software giant Autodesk, a growing scene of young technologists came together around Salem and the high-tech Hayekians, all working towards a common vision of enhancing human freedom through networked personal computing. It was this hot house of ideas from which a world view was brilliant. Salem died of cancer in 1991, the same year that the World Wide Web became publicly available, but its intellectual contributions and conflict with May had laid the groundwork for what would come next for the cipher punks. The long effort to build a self-sovereign and anonymous form of digital money and the embrace of a branch of mathematics called cryptography, which they came to view as the key to personal liberation on the internet.