Daniel Bernstein – The Reason Bitcoin Can’t Be Outlawed

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  • Daniel Bernstein is a man who Bitcoiners probably don’t know but to whom they owe a lot
  • Bernstein is the reason why Bitcoin code can never be outlawed
  • Bernstein took on the U.S. government over some software he created and won

The cypherpunks of the 1990s paved the way for the current generation of cryptocurrencies, creating versions of what would eventually be Bitcoin. But there is one man who fought the government for seven years over the principles of computer code, and in particular encryption, with a result that left us able to answer the immortal question ‘can Bitcoin be shut down?’

Introducing Daniel Bernstein

Daniel Bernstein was a mathematics professor at the University of Illinois at Chicago who, in the late 1980s, developed a mathematical encryption algorithm called Snuffle. Bernstein wanted the algorithm published online and reviewed in a scientific journal, which would naturally include publishing elements of the source code.

At the time however, encryption techniques and the associated code were judged to be a military munition, a hangover from the Cold War. This was because, in the mid 1990s, nobody apart from the military needed, or used, encryption. Needless to say, it was, and still is, illegal for civilians to sell munitions, at least without export licenses for each sale.

Freedom of Speech

In line with the law at the time, the State Department refused to allow Bernstein to publish details about Snuffle, judging the code to be a “defense article” and therefore subject to munitions export laws. In response, Bernstein sued the State Department, arguing that the code he had created was a form of free speech, and that preventing him from publishing or exporting it contravened his First Amendment rights.

The case was heard by Ninth Circuit District Court judge Marilyn Hall Patel, who, in 1996, ruled in Bernstein’s favor, citing First Amendment grounds to declare that free-speech rights protected Snuffle’s source code. The government pushed back, changing the law in order to prevent Bernstein from freely distributing the code. This caused Patel to reaffirm her ruling in 1997, reasserting Bernstein’s First Amendment in the process.

The Government Fights Back

Still the government wouldn’t give in. They appealed the decision, but in 1999 a three-judge panel upheld Judge Patel’s verdict. This merely whetted the government’s appetite for battle however, and they continued to fight to get the verdict overturned. Three years of legal battles ensued until finally, in 2002, the government caved and conceded the case – Bernstein could finally publish his now wildly out of date source code without requiring an export license.

Of course by this point the matter was purely ideological, but the impact of Bernstein v. United States is significant. Computer code, and importantly cryptographic code in this case, has been legally classed as a form of free speech, protected under the First Amendment.

This means that the government can only go so far in terms of clamping down on cryptographic code and the projects that stem from them, which is good news for Bitcoin and the cryptocurrency industry as a whole. At a time when the US Treasury Secretary is calling cryptocurrencies a “national security issue”, knowing that there is only so far that they can go is reassuring.

Bernstein’s Legacy

Thanks to the likes of Daniel Bernstein, the government cannot stop cryptocurrencies like Bitcoin. Any attempts to ‘shut down’ cryptocurrencies or otherwise prevent their circulation, for example trying to outlaw uploading, downloading, or hosting of wallets or clients, will be legally challenged in court as an infringement of free speech.

And thanks to a handful of trailblazers, including Bernstein and others such as Phil Karn and Peter Junger, there are several legal precedents in place to ensure that we can definitively answer the question ‘can Bitcoin be shut down?’ with a simple ‘No’.