The Second Crypto War: Part I

24th May 2023 | ZebPay Trade-Desk

A diverse range of stakeholders, including cryptography scholars, privacy advocates, public authorities and technology companies were involved in the Second Crypto War as was the case for the first crypto war. The struggle between the individuals who want privacy and the government is evident in the second crypto war. In this article, we’ll take a look at the history of the Second Crypto War, understand its roots in the first crypto war, examine key players involved and what it means for crypto assets.

The crypto war first began in the mid 1990s and then erupted in the early days of the internet as governments and privacy advocates fought for control of encryption technologies. This established the strong & steady foundation to create applications of decentralised nature via cryptographic technologies which ultimately led to the birth of Bitcoin & other crypto assets as we know today.  The lasting influence of the First Crypto War can still be seen today.

  • The Evolution of Bitcoin: Bitcoin was created in direct response to the centralization of financial eco-systems and the perceived lack of privacy and control over one’s own assets. It was made on the principle of the first war which was essentially facilitating secure transactions and financial sovereignty for the people who used it.  
  • The ever increasing demand for privacy-focused digital currency: Privacy-enhancing virtual assets, like Monero and Zcash, have emerged as a further extension of the battle for digital privacy rights.
  • Decentralised Cryptographic Technologies: Technological advances such as the invention of the proof-of-work system were the cornerstone for innovation & development in the decentralised space during the first war 

A number of major events, which have served as a catalyst for an ongoing worldwide discussion on encryption, privacy and security, triggered the Second Crypto War. Edward Snowden, a former NSA contractor and whistleblower, revealed in 2013 that the U.S. government has been collecting metadata and other information from millions of citizens around the world. The revelation of Snowden has started a public debate regarding the right to privacy, access to information to the government and encryption. 

The proliferation of end to end encryption on communication platforms was another important development. Prominent examples include. 

  • WhatsApp-2014: With a view to ensuring only the sender and receiver can have access to messages, WhatsApp introduced end-to-end encryption in 2014 which has been fully implemented in 2016. 
  • Signal-2013: A texting application started in 2013 whose key principles is privacy and security  of customers.
  • Apple’s iMessages-2011: After the introduction of iMessage, and with subsequent  release of iMessage 8 in 2014, it became an encrypted end to end texting application. 

The second crypto war was much more wider and comprehensive compared to the first war. For example the discussion about the distribution and exportation of certain encryption technologies dominated much of the period leading up to the early 1990s crypto war. The Second Crypto War, meanwhile, deals with the widespread uptake of encryption in a Digital World. It was globally spread — important associates were governments and their agencies (NSA), tech companies and privacy advocates. 

The impact and consequences of the second crypto war are much wider than just one nation or region, given that Internet and Digital technologies continue to play an increasingly prominent role in everyday life around the world.  In addition, rapid expansion in the digital infrastructure and technology is underway. Encryption and privacy tools are also becoming increasingly used as technology continues to innovate and spread.

  • The US “Clipper Chip” Proposal (1993): This was the US government’s first attempt to create a system that could encrypt communications but had a “back door” for security forces to decrypt the messages through a legal process.
  • The UK Investigatory Powers Act 2016: Also known as the “Snooper’s Charter”, it grants law enforcement authorities and intelligence agencies in the United Kingdom access to metadata relating to communications of users; however, there are certain cases where electronic protection applied by companies or individuals is required to be removed.

The Apple vs. Federal Bureau of Investigation 2016 case is an example of the heated debate about encryption and government access.  After the terrorist’s attack on San Bernardino , Apple was asked to help in unlocking an iphone belonging to one of the accused who was deceased.  It refused to do so, saying that the creation of software “back doors” would undermine security on its devices and create a dangerous precedent. After a long standoff, with the help of some third party tool, the FBl managed to obtain access to this device and put an end to its litigation against Apple.

Read more: 6 Global Companies Building up the Metaverse

The issue of encryption and government access to information has arisen because of the Apple vs. FBI case. As a result, the balance between privacy rights, security and law enforcement needs has been widely debated in the public. The case intensified an ongoing conflict between technology companies and public bodies, with both sides doubling down on their positions regarding encryption and back door access.

The rise of global terrorism has brought new challenges as extremist groups use encrypted communication platforms to covertly plan and execute attacks. This prompted governments to consider implementing legislative measures to address the potential encryption threat. 

  • Australian Access and Assistance Act (2018): This Act gives Australian law enforcement authorities the power to require companies to provide technical assistance to access encrypted communications when required. Many critics argue that this legislation sets a dangerous precedent and poses potential risks to digital security and privacy.
  • The US EARN IT Act (since 2020): Interactive Technologies (EARN IT) Act aims to hold companies accountable for user-generated content that encourages the exploitation of children. However, critics argue that it poses a threat to online privacy and freedom of expression. They argue that the bill would weaken encryption standards and could lead to government crackdown and censorship. Critics also argue that the bill’s focus on the sexual exploitation of children is an excuse to undermine online privacy and safety.

We’ll talk about key players and implications of the second crypto war, balancing privacy with government surveillance, as well as how it affects crypto assets in the next part of this article which is going to be released on 31st May. Stay tuned for further updates.

Disclaimer: Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Each investor must do his/her own research or seek independent advice if necessary before initiating any transactions in crypto products and NFTs. The views, thoughts, and opinions expressed in the article belong solely to the author, and not to ZebPay or the author’s employer or other groups or individuals. ZebPay shall not be held liable for any acts or omissions, or losses incurred by the investors. ZebPay has not received any compensation in cash or kind for the above article and the article is provided “as is”, with no guarantee of completeness, accuracy, timeliness or of the results obtained from the use of this information.

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