Home / Headlines / Did the NSA Outline Bitcoin In 1996?
4 min read

Did the NSA Outline Bitcoin In 1996?

Last Updated March 4, 2021 4:41 PM
P. H. Madore
Last Updated March 4, 2021 4:41 PM

The NSA was one of the first organizations to describe a Bitcoin-like system. About twelve years before Satoshi Nakamoto published his legendary white paper to the Metzdowd.com cryptography mailing list, a group of NSA information security researchers published a paper entitled How to Make a Mint: the Cryptography of Anonymous Electronic Cash in two prominent places, the first being an MIT mailing list  and the second being much more prominent, The American Law Review (Vol. 46, Issue 4  ).

The paper outlines a system very much like Bitcoin in which secure financial transactions are possible through the use of a decentralized network the researchers refer informally to as a Bank. They list four things as indispensable in their proposed network: privacy, user identification (protection against impersonation), message integrity (protection against tampering/substitution of transaction information – that is, protection against double-spending), and nonrepudiation (protection against later denial of a transaction – a blockchain!).

“We will assume throughout the remainder of this paper that some authentication infrastructure is in place, providing the four security features.” (Section 1.2)

It is evident that SHA-256, the algorithm Satoshi used to secure Bitcoin, was not available because it came about in 2001. However, SHA-1 would have been available to them, having been published in 1993.

Also read: The Extropian Roots of Bitcoin

NSA: How to Make a Mint

The paper refers to David Chaum, whom Bitcoin aficionados know to be one of the earliest proponents of anonymous digital financial transactions. Chaum developed ecash  way back in 1983, long before the large scale propagation of the world wide web. Chaum was a proponent of anonymity in transactions, with the express demand that banks and governments would have no way of knowing who had purchased what. So it is important to recognize that when we say “user identification,” we are not talking about user “accounts,” as the credit card industry has, but rather about the ability to digitally sign, verifying that the account is owned by the person who says it is owned by them. This implies the ability of a transactor to know for sure that they are sending the money to the right place in the midst of a given transaction.

“…it is necessary that the Bank [network] not be able to link a specific withdrawal with a specific deposit.” (Section 2.3)

The paper alternatively refers to the currency outlined as “coins” and “tokens.” Overall, it makes for a legitimate precursor to our beloved Bitcoin, which utilized SHA-256 and was released by the pseudonymous Satoshi Nakamoto. Could Nakamoto actually have been an NSA researcher or retired NSA researcher realizing an earlier aspiration? Is he Laurie Law, Susan Sabett, or Jerry Solinas? Or would that be too easy?

Certainly, information security and the National Security Agency are intertwined. The NSA regularly publishes new stable and experimental algorithms. It is up to the public how we implement and use them. Those who value their privacy know never to put anything on a computer which they wouldn’t want to make it into the hands of someone else. It’s just common sense. You can achieve a degree of security through the use of cryptographic protocols, but nothing is ever permanently safe from prying eyes online.

If it comes out that the NSA has been behind Bitcoin all along, does that change its value? After all, the NSA is the biggest snoop in town these days, keeping massive logs of metadata on phone calls with many speculating that they are doing a little more than that even. That they are keeping the contents of the phone calls as well. And as for secure e-mail: PGP was declared dead  almost a year ago.

What do you think? Is Satoshi in fact an NSA agent? What does this imply for the sanctity of Bitcoin? Does this prospect comfort or discomfort you? Comment below!

Images from Pixabay and Shutterstock.