wallet/docs/manifesto/tim_may_on_bitcoin.md

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# notmine
lang: en
title: Enough with the ICO-Me-So-Horny-Get-Rich-Quick-Lambo Crypto
---
*CoinDesk asked cypherpunk legend Timothy May, author of the “**[Crypto Anarchist Manifesto](https://www.activism.net/cypherpunk/crypto-anarchy.html),**” 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 reality.*

*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](/category/bitcoin-white-paper-reviewed/)** series.*

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

**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 book-keeping.

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” aspects.

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 Visa.”

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 things.

**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, escrow.

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 compliance.”

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 themselves).

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 leaders.”

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 Law.

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 like.\]

I’ve never seen such hype, such mania. Not even during the dot.com bubble, the era of Pets.com 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.