BERKELEY, CALIFORNIA – On January 3, 2009, the pseudonymous author of the Bitcoin whitepaper, Satoshi Nakamoto, ‘mined’ the cryptocurrency’s first fifty tokens. The computational milestone was dubbed the “genesis block” and followed by the first Bitcoin transaction about a week later, when ten of the digital coins were sent to American software developer Harold “Hal” Finney, thus proving the network’s functionality and establishing the main pillar of foundational Bitcoin lore.
The true identity of the person or persons behind the fictional Japanese moniker has never been determined, although several pretenders have come out of the woodwork since. Most notably, Australian technologist Craig Wright, who has gone to court to prove his claim, with varying degrees of success. Finney himself has been floated as a possible candidate, given his significant contribution to the development of the proof-of-work approach used in Bitcoin’s authentication methods, as well as fellow cryptographer and legal scholar Nick Szabo, inventor of “smart contracts” and philosopher king of the latter-day crypto clique.
All three belonged to the so-called “cypherpunks” mailing list, started sometime between 1989 and 1991 by a former Sun Microsystems engineer turned millionaire tech consultant, a retired senior scientist at Intel, and a Mormon mathematician from Virginia. The catchy name was the brainstorm of Judith Milhon, a.k.a., “St. Jude”, senior editor of Wired magazine’s predecessor publication, Mondo 2000, who was dating the mathematician when the technophiles first started meeting in-person at her partner’s Berkeley home.
Milhon was no groupie. One of the first women to pursue a career in the male-dominated world of computer programming, she moved to Berkeley, California, in the early seventies where she found her niche as a “cyber-feminist”, advocating for women’s “right to technology”. Long before the cypherpunks, Milhon became involved in the creation of the very first computerized bulletin board system, Community Memory – a project developed by a Silicon Valley systems engineer with a computer donated by the president of Bank of America to a band of UC Berkeley dropouts at the heart of the ‘countercultural’ movement that laid the groundwork for the cypherpunks, and their flagship political construct, Bitcoin.
Welcome to the Machine
Lee Felsenstein had an epiphany in 1970 during a computer language training course mandated by his employer, Ampex Data Systems Corporation, where he “realized that a network of computers could facilitate formation and re-formation of communities of interest without requiring centralization”. The discovery came as his instructors described the intricacies of timeshare (multi-user) systems, that the US defense department had been developing for more than a decade together with agencies like the Advanced Research Projects Agency (ARPA) and their partners in the private sector and academia.
Felsenstein wasn’t the only one to grasp the profound implications that a shared computing system might have for society, but he was among the relatively few who had the technical ability to tinker with the idea. However, what he possessed in programming skills he lacked in resources. Computers were prohibitively expensive in 1970 and even the simplest machines could run into the thousands of dollars in addition to taking up valuable real estate.
Struggling to find an outlet for his professional frustrations, Felsenstein decided to go back to school at UC Berkeley in 1971, which was then a hub for the latest research in computer science and counted with some of the future leading lights of the information age among its student body, including Peter Deutsche and Apple co-founder, Steve Wozniak, who transferred there from a community college in Cupertino that same year.
Although he credits psychotherapy for the career move, Felsenstein’s decision was equally motivated by the existence of a “technological commune” in San Francisco’s warehouse district whose members not only shared his vision of using networked computers to engage “communities of interest”, but actually had access to a critical component required for its realization: a timeshare-capable mainframe computer.
Absolutely state-of-the-art at the time, only one such machine was commercially available in 1971 and it retailed for around $150,000 on the low end and up to $400,000 for a complete system. The SDS-940 had been designed at UC Berkeley under the ARPA-sponsored Project Genie using the SDS-930, an older model manufactured by Scientific Data Systems, and adapted to run the Time-Sharing Software System developed by a team of Berkeley graduate students.
When the SDS-940 was put on the market in 1967, one of the first customers was none other than the Stanford Research Institute (SRI), which installed it at their Palo Alto headquarters to serve as a node for ARPANET. SRI’s 940 would make history two years later as the recipient of the truncated message sent from another computer in UCLA over a 350-mile phone line that kick started the Internet prototype project.
Other customers included a company called Tymshare, which was initially operated directly out of UC Berkeley for clients in the financial services industry. Somehow, one of Tymshare’s 23 prohibitively expensive machines would end up in the basement of a building in San Francisco as part of a tech-slash-social experiment carried out by Felsenstein and the new friends he’d made through a classified ad in a popular underground newspaper called the Berkeley Barb.
Sex, Drugs and International Bankers
The Community Memory project was just one of the many interdisciplinary tech-based endeavors emanating out of a former candy factory located between Howard and 10th street in San Francisco’s industrial zone. Described by Felsenstein himself as the “first public-access social media system”, a local record store operated by UC Berkeley’s student government served as the real world front-end for the inchoate digital bulletin board.
Resting on a table in front of an actual, paper bulletin board was a rented Teletype Model 33 ASR computer terminal encased in a makeshift cardboard box with a clear vinyl window to reveal the screen, and two slots for accessing the keyboard. Next to the contraption sat “a young person, dressed similarly to most of the students”, beckoning store patrons to try out the device, repeating a canned marketing pitch for the “electronic bulletin board”.
Rudimentary by today’s standards, this early search engine was a hit among the students and counterculture scene that gathered at the record shop, who used the free service to digitally recreate the typical fare found on the real bulletin board behind the machine, among other novel uses. Under the table, a 300 baud modem box contained a Bell model 500 telephone, which connected to the SDS-940 timeshare mainframe computer twelve miles away, across San Francisco Bay.
“What we wanted to do is what you can easily do now with Google,” says Pamela Hardt-English, Community Memory’s fairy god mother and putative founder of the parent project that procured the decommissioned 940 mainframe and a $100,000 in start-up capital (the equivalent of three quarters of a million dollars today) donated by Bay Area elites, including Bank of America CEO and President, A. W. “Tom” Clausen.
By the summer of 1973, when Community Memory made its debut, Hardt had moved on to other things and left the project in the hands of Felsenstein and the group he recruited through the classified ad in the Berkeley Barb, which brought in fellow programmer and UC Berkeley alum, Efrem Lipkin along with his roommates, Mark Szpakowski and budding cyber-feminist Judith Milhon.
The foursome had initially been tasked to work on Hardt’s original project, Resource One, which had set out to build an information-sharing service for the San Francisco switchboards – a phenomenon that emerged during the mass migration of disaffected “hippies” and anti-war nonconformists to the city, that culminated in the Summer of Love in 1967. Local resident, Al Rinker, started the switchboard in his office to connect new arrivals with “crash pads” and other public services, which would become known as the Haight Ashbury Switchboard.
After a couple of years in operation and expansion, the community telephone relay system became too burdensome for its founder as San Francisco continued to be flooded with young, rebellious teenagers and college dropouts from across the country looking for an alternative to the American Dream, which had quickly turned into a nightmare as the Vietnam war raged on, flanked by political assassinations, terrorist bombings and egregious repression of social movements by the FBI and other alphabet agencies on the loose.
Rinker passed the switchboard over to Hardt and two of her UC Berkeley classmates, and left town himself. Together with computer science majors, Christopher Macie and Chris Neustrup, Hardt incorporated the switchboard as a non-profit under the name Resource One. While Neustrup (Class of ’69) would soon move on to greener pastures, Macie and Hardt would plant the seeds of a “computer counterculture” at the first warehouse community in San Francisco, known as Project One.
Socially and economically distinct from the vast majority of the people who comprised the counterculture movement in the United States during the late 1960s and early 1970s, the crop of systems programmers, computer scientists and trained tech professionals, like Felsenstein and the much younger Hardt, sought to align themselves politically and ideologically with the masses and often allude to these sympathies in their origin stories. But, their consistent appeal to technology as the solution to these profound political and social problems betray their ulterior, if subconscious, motives.
Without questioning their sincerity, it can also be argued that they – along with the rest of the “computer” counterculture – were taking advantage of issues at the periphery of their own experience to drive their technological agendas forward. At the same time, the unbroken link between Resource One and its Community Memory spinoff project to the hierarchies of power its founders were ostensibly fighting on behalf of “the people”, tends to dilute their claims of solidarity with the downtrodden.
According to Felsenstein, Hardt’s ability to attract so much cash to Resource One can be explained by the establishment’s confused reaction to the “counterculture phenomenon” and an apocryphal encounter with Bank of America CEO, Tom Clausen at a retreat, where the fiery 21-year old was said to have “corner[ed]” the powerful banker and urged him to do something about his “inadequate largesse”. But, Hardt herself paints a significantly different picture in a recent interviewthat adds vital context to how – and perhaps why – the future president of the World Bank came to bankroll a computer network that sought to connect all of the counterculture centers of Northern California.
Clausen had just been elected to the Bank’s top position on the eve of a crucial turning point in the world economy. The Nixon White House was preparing to take the dollar off the gold standard and inaugurate the floating currency system, which would unleash the era of fiat money and global capital flows. Clausen’s immediate predecessor, Rudolph Peterson, had recently delivered the report for the Presidential Task Force on International Development, commissioned by the President to repurpose the World Bank for the burgeoning impact finance and sustainable development regime, which Clausen himself would promote as president of the global financial institution under the Reagan administration.
The former Standard Oil executive and Bohemian Grove member was deeply entwined within the nexus of finance, energy and defense sectors that represented a large and important slice of California’s economy, then governed by Ronald Reagan. Clausen was on the advisory council of the SRI when it was forced to sever its ties to Stanford University in January, 1970, following sustained student protests throughout 1969 over the research center’s intimate ties to the Pentagon and the some of the most nefarious projects of the military industrial complex, like biological weapons research and – significantly – development finance in Third World nations.
Hundreds of miles away in Southern California the following February, University of California, Santa Barbara (UCSB) students reportedly set fire to a Bank of America building. Provoked by police, the students set their sights on the most conspicuous symbol of capitalism they could find as they made their way out of Harder Stadium, where renowned civil rights activist and radical defense attorney, William Kunstler, had just delivered a speech. The newly-built bank branch was only steps away from campus and became the immediate target of the frustrated students.
Accounts differ about what transpired next, but the building would catch fire twice over the course of the night. Some contend that saboteurs were responsible for the fire, which would consume everything but the brick walls of the bank’s Isla Vista branch. Governor Reagan declared a state of emergency the following day and deployed the national guard to the area, in addition to imposing a curfew that was enforced by the SWAT teams of neighboring Los Angeles County. Tensions continued to flare up for the rest of the year and turn the seaside college town into a virtual war zone.
“Appalled” by the Isla Vista riots and the torching of one of his bank’s branches, Clausen vowed to “find new ways to work with young people,” blaming himself for being “so disconnected to the community that he served”, according to Hardt. It was at this point that Clausen, not Hardt, took the initiative to bring the Bay Area business community together to raise funds for Resource One. Bank of America plunked down $25,000 of the initial $100,000 and Clausen arranged for TransAmerica insurance – the bank’s original parent company – to donate a leased SDS-940 mainframe that had been decommissioned as a result of Tymshare’s hardware overhaul.
Building the Hackerdome
Five decades later, Hardt still isn’t “100% sure” how she came to make all those contacts in San Francisco’s elite business circles, but she does remember how easy it seemed to procure funding from the various foundations she was taught how to approach by another group called Pacific Change Foundation, which she described as the “sons and daughters” of the wealthiest members of Bay Area society, who just happened to come along at the same time to coach Hardt on how to squeeze money out of other non-profits. By 1974, Pacific Change disappeared and Hardt, herself, had left Resource One to work at a publication called Science for the People (SFTP), dedicated to political activism around the life sciences.
Meanwhile Resource One’s SDS-940 never quite left the orbit of UC Berkeley’s defense department-linked timeshare development team. Peter Deutsche, one of the students who had worked on Project Genie installed the ARPA-sponsored operating system on the donated machine in 1972. One year later, Felsenstein’s Community Memory project would absorb Resource One altogether and the SDS-940 was moved from the Project One warehouse into a special-built room inside the record store.
Community Memory went on for another 19 years, undergoing several system upgrades as technology advanced. The 940 was eventually replaced by faster systems and Felsenstein started moderating meetings of the Homebrew Computer Club in 1975, which would eventually come to include practically every major figure of Silicon Valley of the 21st century, from Apple co-founders Steve Wozniak and Steve Jobs to countless other people who were highly instrumental in the development of the PC and ICT infrastructure.
Project Genie’s chief research scientist co-founded the Xerox Palo Alto Research Center (PARC) soon after the SDS-940 went to market, and Scientific Data Systems itself was acquired by Xerox not long after. Xerox PARC would play a central role in the emergence of the “crypto anarchists” who gave birth to the cypherpunks, as the “computer counterculture” of the late ’60s and 70s morphed into an unrecognizable amalgam of extreme, often contradictory political views and radical reformulations of reality verging on science fiction called hacker culture.
The foundations for it were laid in places like Project One, where scores of artists, musicians, students and technologists intent on reinventing social structures via technology reveled in the primitive cybernetic playgrounds. Observing, counting and measuring were people like Felsenstein and his colleague at AMPEX, Larry Ellison, who would go on to found Oracle. The systems engineers and programmers who built the playgrounds themselves were just getting started.
Community Memory was a fun, little project that yielded some valuable insights. But mass adoption of these technologies was still on the horizon, and in order to achieve it stories had to be created to foster buy-in. The 60s and 70s proved the concept of resistance worked as a framing for technological adoption. The next two decades would see the model scale up and lay the foundations for the introduction of digital currency.